Is Government Ready To Bail Out The Textile Industry?

Recently, the federal government released the much anticipated bailout funds for the resuscitation of the prostrate Nigerian textile industry. As the Bank of Industry disburses the funds, relieved operators have also called on government to tackle other socio-political challenges that may militate against the actualization of its objectives. Eluwa Ndubuisi speaks to stakeholders on these issues.

The textile industry in Nigeria is a strategic non-oil sector. It also mostly makes use of indigenous raw materials such as cotton, leading to savings in foreign exchange. Some reports say that before 1997 it was the second largest textile industry in Africa, after Egypt, with over 250 vibrant factories and over 50 percent capacity utilization.
However, in the last few years the textile industry has suffered several setbacks culminating in its present comatose state. First, there is the belief in some quarters that the textile workers union, like their counterparts in the railways, suddenly grew bigger and more powerful than their employers and subsequently abandoned their first calling to pursue other political interests; a situation believed to have produced the likes of Adams Oshiomole, the present governor of Edo state.
Another school of thought believes, however, that other vices have been the bane of the textile industry. Unfavourable socio-political structures, local preferences for foreign goods and smuggling have been identified as factors that have brought the erstwhile robust industry to its knees. A more recent trend is the counterfeiting of popular locally made textiles to beat customs at the borders.
A textile trader at Oshodi, Mr Christian Ani, explains to M2 that “contrary to widespread beliefs, the so called made-in-Nigeria Ankara are all inferior materials smuggled into the country mostly from Asia. That is why they are cheaper.” Another distributor corroborates this position when he, amid complaints of harassment by customs personnel at the borders, discloses that strugglers have resorted to disguising contraband materials with made-in-Nigeria logos just to beat customs.
Observers believe this situation is made possible by the hostile operating environment which has led to closures of many textile companies. Atlantic Textile Mill, a well-known local manufacturer was fully rested in 2008 after its partial closure in 2007. Many existent factories have been cutting jobs to mitigate the high costs of production and aggressive competition from cheaper, and perhaps more inferior, Chinese products that are fast taking over the market.
In a bid to resuscitate the comatose sector, the federal government, at the twilight the Obasanjo administration, approved an intervention loan to help operators boost their production capacity. The loan which is to be disbursed by the Bank of Industry (BOI) was however released only recently.
The MD/CEO of the bank, Ms Evelyn Oputu, is quoted in a national daily as saying, “It is important to note that it is a soft loan and not a grant.” The fund is being disbursed to genuine operators in the sector under a scheme called the Cotton, Textile and Garment (CTG) Industry Revival Scheme; a set of strategies, policies and programme geared towards revitalising the cotton and textile industry. According to Oputu, “The scheme will increase power generation and distribution to core CTG industry centres around the country to address a critical inadequacy that is partly responsible for the downturn in the industry’s competitiveness.”
Despite these assurances from the BOI chief, there are fears in some quarters that the bailout funds may not be rightly channelled after all. Kunle Alake, an executive director at Dangote Group told Business Day last year that, “The Nigerian textile industry is dead. It has been dead since the last 5 years. It cannot be resuscitated with N70 billion; those pushing for the resuscitation are only after the sharing of this fund.”
Niyi Ishola, a concerned stakeholder says, “A lot of times you get to hear that billions have been disbursed to so and so sector but, at the end of the day, the impact of the billions will not be felt.” Making reference to the agricultural sector, Niyi stresses that if the several billions that have been committed to the sector had been justified, “at least one aspect of the textile industry – cotton farming – would have benefitted from that.”
In a telephone conversation with M2, Jaiyeola Olanrewaju, Director General, Nigerian Textile Manufacturers Association (NTMA), reveals that about N30bn has been released to BOI as at January. He expresses optimism that, “The funding will assist the industry to retool and provide working capital which the banks will ordinarily not give,” acknowledging that, “funding is just a part of the problems facing the textile industry.” He identifies other problems that government has to address as power generation and availability of inputs like fuel oil and gas, which are used to heat boilers and provide steam for operations.
As at today, the federal government has not been able to get any of the refineries working at full capacity and industry experts claim these may not serve 30 percent of the population even at full capacity. “We need the petrochemical industry to be operational because as at today, 40 per cent of fabrics we wear are made from petroleum products which is polyester fiber,” Olanrewaju says.
Traders who spoke to M2 assert that Nigerian textiles are among the best in the world but they stopped stocking them because consumers find the lower priced, lower quality, Chinese fabrics more pocket friendly. Chukwuma Emmanuel, a textile trader, maintains that they (traders) have no choice than to find a way of staying in business.  “Nigeria does not produce much yet government placed a ban on importation. Even when we produce the little we can, the prices are always out of the reach of consumers,” he adds.
Speaking on smuggling, Olanrewaju admits that the problem is way outside of the control of NTMA. “It is only government that can fight it and we are appealing to them to assist us because the industry has no wherewithal to curb smuggling.” He further discloses that the leadership of the association has scheduled several meetings with the Nigerian Customs Service to fashion out ways of curbing the menace while calling on government to sincerely rise to the occasion if the desired goals of the Textile Fund are to be achieved.
But Ishola argues that government is not sincere about combating smuggling. “Most of our leaders wear imported fabrics which are supposedly banned. Since these fabrics are banned, how they get them is the question we should be asking,” he charges.
While the bailout fund is perceived as a step in the right direction in resuscitating the hitherto comatose textile industry, the myriad of other equally serious problems and perceived government insincerity to decisively tackle smuggling have left keen observers wondering if the textile industry is any where near bailing out in the first place.