Nigerian Textile Industry on Brink of Collapse Despite Revival Efforts

The Nigerian textile industry is on the brink of collapse despite multiple revival efforts, largely due to an increase in textile imports and unfavorable monetary policies. Once a vibrant sector in the 1970s to 1990s, contributing significantly to Nigeria’s GDP and providing employment, the industry has faced a steady decline since the early 2000s.

At its peak around 1990, Nigeria boasted about 180 textile mills employing over one million people. The industry was also supported by a robust cotton production value chain. However, by 2005, the sector started to decline, and today, only about five textile mills are operational, employing fewer than 2,000 people.

Several factors have contributed to this downfall, including widespread smuggling and importation of textiles, inadequate power supply, inconsistent government policies, insecurity in cotton-producing regions, and foreign exchange crises. These issues have made locally produced textiles uncompetitive against imported products.

Efforts to revive the industry have been largely unsuccessful. The Central Bank of Nigeria (CBN) has implemented various intervention programs, including financial support and foreign exchange restrictions on textile imports. However, these measures have not resulted in a significant boost for the sector.

The National Bureau of Statistics (NBS) reported that from 2019 to 2023, Nigeria’s textile imports totaled N1.4 trillion, while exports were only N50.7 billion, creating a significant trade deficit. In 2023 alone, textile imports reached N377.1 billion, despite a foreign exchange crisis. The sector’s contribution to GDP has also consistently declined, from 2.02% in 2019 to a negative 1.75% in the first quarter of 2024.

The influx of counterfeit textiles from China, particularly the adulterated Adire fabrics known as “Adire Chinese,” has further exacerbated the problem. These cheaper imports have flooded the market, threatening the local Adire industry. The Ogun State government has initiated steps to curb this influx, including legislative actions aimed at banning these counterfeit products.

The Manufacturers Association of Nigeria (MAN) has criticized the CBN’s tight monetary policy, which they claim reduces the competitiveness of Nigerian products in the global market. MAN’s Director General, Segun Ajayi-Kadir, pointed out that manufacturing export values have significantly declined due to high lending rates.

To address these issues, MAN and the National Union of Textile Garment and Tailoring Workers of Nigeria (NUTGTWN) have called for the enforcement of Executive Order 003. This order mandates government agencies to prioritize locally produced goods in their procurement processes. They argue that this could create two million jobs and reduce the country’s $4 billion annual import bill for textiles and apparel.

Despite these challenges, the Federal Government has announced a $3.5 billion plan to revamp the cotton, textile, and apparel industry. Minister of Industry, Trade, and Investment, Doris Uzoka-Anite, revealed that this investment aims to rejuvenate the sector and create 20,000 jobs. This initiative includes a partnership with Arise Integrated Industrial Platforms (Arise IIP) and Afreximbank, which recently signed a Memorandum of Understanding to establish a $3.3 billion industrial financing facility. This effort aims to unlock the potential of Nigeria’s textile industry and restore its former glory.