Following a series of ineffective revival efforts, the Nigerian Textile Industry is currently struggling to survive, as the incessant increase in Textile imports and unfavourable monetary policies continue to worsen the situation. Nigeria’s textile sector once flourished in the 1970s and 1990s and was recognized as a key contributor to the country’s GDP and job market, both locally and in West Africa. However, the industry began to decline around 2005 and has since struggled to regain its footing, even as the market demand increased due to population growth.
Reports indicate that only 5 textile mills remain in operation, with the cotton production value chain not more in existence. The total labor force has dwindled to under 2,000 employees, encompassing both direct and indirect job. Experts in the field believe that the industry’s downfall is linked to various obstacles such as unpredictable government tariff policies, widespread Smuggling and importing, costly financing, foreign exchange challenges, Security concerns in cotton-producing areas and inadequate power supply. These factors have collectively rendered the industry unable to compete with the influx of imports, resulting in its collapse.
Contribution to GDP was a negative 1.75 percent in Q1’24.
Despite efforts by the Central Bank of Nigeria (CBN), such as implementing intervention programs like restrictions on textile imports at the official exchange market, training initiatives and financial support, the sector has not shown the desired improvement. Statistics from the National Bureau of Statistics (NBS) from 2019 to 2023 have shown a consistent increase in imports. Within this timeframe, Trade in the sector reached a total of ₦1.5 trillion. Most of this value, about ₦1.4 trillion, was attributed to imports, while exports only accounted for ₦50.7 billion. This resulted in a trade deficit of ₦1.384 trillion.
Over the years, there has been a steady decrease in the sector’s impact on the actual GDP. In the first quarter of 2024, the National Bureau of Statistics reported that the sector’s contribution to GDP was a negative 1.75 percent, highlighting its status as one of the poorly performing sectors in the nation. The Manufacturers Association of Nigeria (MAN) criticized the CBN for persistently implementing rigorous monetary policies, arguing that these measures diminish the competitiveness of Nigerian products on the international stage.
$3.5b in investments was secured in the sector in 2023.
Meanwhile, the Minister of Industry, Trade, and Investment, Doris Uzoka-Anite has recently announced the beginning of a joint effort between the federal government, development partners, and the Private Sector to revitalize Nigeria’s cotton, textile, and apparel industry. She reported that $3.5 billion in investments was recently secured to revive the struggling sector. Also, during the side lines of the recent 2024 Afreximbank Annual Meetings in Nassau, Bahamas, the Minister formalized a partnership with Afreximbank by signing a Memorandum of Understanding for the creation of a $3.3 billion Nigeria Industrialization Financing Facility.
The agreement, which represents a collaboration between the ministry, Arise Integrated Industrial Platforms (Arise IIP), and Afreximbank was described by the minister as a significant step towards rejuvenating Nigeria’s cotton, apparel, and textile industry. The minister also emphasized that the financial assistance provided would result in the generation of 20,000 new jobs within the country. The implementation of this project will extend through the cotton zone in Nigeria, revitalizing the country’s once flourishing cotton and textile industry that was a source of national pride during the 1980s and 1990s.
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This initiative is poised to generate numerous employment opportunities, leveraging Nigeria’s expertise in cotton production. Nigeria’s textile and apparel sector encompasses all aspects of the clothing production process and is poised for substantial expansion thanks to the abundance of cotton and the country’s large consumer base. This sector has the potential to play a significant role in boosting the Economy by providing numerous job opportunities for workers of all skill levels. It has a strong ability to bring in Revenue through exports and foreign investments, ultimately aiding in the fight against poverty.