Bangladesh’s textile industry holds big lessons for Nigeria
At a time Nigeria’s total non-oil export is less than $2 billion, Bangladesh, once among the poorest countries in the world, is raking in $28 billion just from textile export.
Bangladesh’s oil is the textile industry, which accounts for over 70 percent of export revenue and 13 percent of the country’s gross domestic product.
One big reason why Bangladesh got its textile industry right was policy.
Bangladesh is reputed for having more investor-friendly policies than many of its neighbours and has cheaper skilled labour. According to Reuters, the country has tax-free access to 37 countries, including the European Union, Canada and Australia. This is different from Nigeria, which has continued to get its trade polices wrong and serially adopts protectionist policies that make free trade hard.
In fact, around 2011, Bangladesh wooed some investors in Pakistan, who discovered that it was easier to do business in the country.
After liberation in 1972, Bangladesh had opted for a socialistic economic policy by nationalising all big industries, including large textile mills, according to Mazharul Islam Kiron, textile consultant and researcher.
However, the country took a more capitalistic view of development by not only opting for a market-oriented economic policy but also handing over these mills to the private sector in phases.
This signalled a breakthrough in the industry, which today provides 4.5 to five million jobs for the people of the country.
The country today is an export-oriented economy, thriving on cotton and ready-made garments.
Last year, Bangladesh came up with a textile policy, targeted at expanding the export market.
One of the focal points of the policy is to strengthen the primary textile sector to fulfil the local demand of textiles and promote a medium and high value added export oriented garments industry.
Knitting industries in the country are self-sufficient. Bangladesh and Nigeria have things in common. The country has 163 million people and Nigeria’s population is 193 million. Two, both countries have energy challenges, with shortage of gas hurting many factories in Bangladesh. Nigeria too is hard hit by high energy cost, which raises expenditure of many manufacturers. However, Bangladesh has found a better way to manage its gas and electricity shortages.
More so, some raw materials needed by the textile industry are still imported, just like in Nigeria. This is draining the country’s foreign exchange just as it does in Nigeria. Local manufacturers in Nigeria constantly scramble for dollars with which to import inputs.
Both are also low middle-income countries.
However, the big difference is in the area of policy and business environment.
Bangladesh has a strong spinning, weaving, power loom, knitting, dyeing and finishing industries. Today, many factories are drooling to set up plants in the country to enjoy economies of scale.
Nigeria was a hub of textile manufacturing in 1970s and 1980s with companies such as Asaba Textile Mills, Aba Textile Mills, Kaduna Textile Mills, Afprint Nigeria Plc and Enpee Industries, among others, now rested, owing to unbridled smuggling of Asian textiles, high cost of energy, poor patronage, as well as lack of cotton to feed the mills.
There is a N100 billion Cotton, Textile and Garment Fund by government but players say funding is not the major challenge. Much of this fund has been disbursed yet the industry is at its lowest ebb.
According to the Textile Manufacturers Association, about 85 percent of the $1.4 billion worth of textiles that flood the country’s market is smuggled, mainly from neighbouring countries.
“What we need is the enabling environment. We cannot compete with the level of smuggling and counterfeiting going on now. We used to have about 127 textile firms in Nigeria but that has come down to two or three now,” said Grace Adereti, president of the Nigerian Textile Manufacturers Association (NTMA) in Lagos, at a Made-in-Nigeria stakeholders’ meeting recently.
“We had the revival loans but this didn’t work because our biggest problem has never been money,” Adereti said.
About 60 percent capacity utilisation was achieved in Nigeria’s textile industry in 1996, but this deteriorated to 28 percent in 2002.
The textile industry today is worse than it was in 2002 as only African Textile Manufacturers (ATM) Limited, Angel Spinning and Dyeing Limited, and Spinners and Dyers Nigeria Limited can be called textile firms. In fact, industry sources say only two are in operation. Even at that, fabrics production makes up less than 30 percent of their business. Most of what is called textile firms today are fashion designers. This does not constitute full-fledged manufacturing.
“It is inconceivable how a textile sector that is so viciously exposed to smuggling hawks can survive and grow, unless there are deliberately put-in-place measures to protect the industry,” a research report conducted by Martin Ike-Muonso, a professor, on ‘Discriminatory Margins of Preferences for Selected Manufacturers Association of Nigeria (MAN) Sectors’ said.
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