The Nigeria Institute of Social and Economic Research (NISER), Ibadan on Tuesday cautioned the Federal Government to be more strategic in relating with the World Trade Organization (WTO).
NISER noted that “a regime of trade liberalization as promoted by the WTO has been unhelpful to efforts aimed at revamping Nigerian textile sector”.
It, however, insisted that the Nigerian textile industry must be protected and given incentives that will enable it satisfy local demands and compete globally.
A Senior Research Fellow from Economic Policy Research Department, NISER, Bashir Adelowo Wahab gave this warning while delivering monthly lecture of the institute titled “Competitiveness of the Nigeria Textile Industry”.
Wahab charged textile firms in Nigeria to begin to look inwards in terms of fabricating local technology through investment in Research and Development (R&D), urging firms to plough back part of their profits to contribute to funding R&D activities to develop local engineering capacity.
He attributed the decline in the number of firms in the modern textile sector partly to inconsistent policies of various governments, including the WTO agreement, which he said affected the textile industry negatively by allowing inferior or low quality textile products to flood the country and the ineffective monetary policy and exchange rate volatility, which he observed affected the importation of raw materials used in the production of textile products.
According to him, although the N100 billion Cotton, Textile and Garments (CTG) revival Fund assisted some textile firms to replace some old machines, the fund was not enough for the required bail out for the sector.
He also observed that the interest rate on loans from commercial banks and microfinance banks were not affordable and thus made it difficult to acquire loan to expand their businesses.
To improve capacity utilization of firms, Wahab therefore canvassed the provision of critical infrastructure notably electricity, water, transport, etc. as a matter of topmost priority by government.
He also submitted that the CTG Intervention fund should be increased and extended to reach traditional textile firms through small and medium enterprises development agency (SMEDAN) and the Bank of Industry (BOI) while the activities of the bank should be strengthened and the procedures for acquiring loan be simplified to enhance easy accessibility.
He said that the ongoing efforts of the African Growth and Opportunity Act (AGOA) in training the traditional cloth weavers in the standardization and packaging of textile products for competitiveness should be encouraged and strengthened “because it is potent for removing the constraints on the competitiveness of the traditional textile firms”.
Wahab further suggested that the Nigerian textile firms should be encouraged to explore other African regional markets “since there is a growing market in neighbouring countries, as increased markets outlets and patronage will trigger the flow of foreign exchange into the sector which will boost its development and promote its competitiveness”.
He recalled that the contribution of Nigerian textile industry accounted for 25per cent of manufacturing employment between 1980 and 1999, and that until the 1980s, the textile industry was the biggest manufacturing industry in Nigeria, and the third biggest in the whole of Africa, after Egypt and South Africa.
He observed that contribution of Nigerian textile industry to manufacturing output and employment generation has been on the decline.
“There were about 128 modern textile firms operating in Nigeria in the 1980s but this decreased to less than 45 in 2008 and as at 2015, there were only 33 active firms.
“Presently, less than 30 modern textile firms are in operation. The two categories of firms operating in the textile industry (modern and traditional textile firms) were covered”, he said.
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