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How Chinese operators killed Nigeria’s textile industry

By Odimegwu Onwumere on 24/01/2016

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Indigenous textile operators are howling that Chinese operators have taken over the Nigeria’s textile industry. From East to West, North to South there is ranting. The local operators weep stalks to the fact that China, which was formerly an import dependent country, had 16 textile factories in China devoted to tossing out textiles with a “Made in Nigeria” badge sewn in them around 1997, with Nigeria’s textile industry vibrantly operating over 300 vivacious factories. The vibrancy of the industry in Nigeria earned her the status of the second largest in Africa, battling with South Africa, after Egypt’s, then.

A Nigerian journalist, Ugboja Felix Ojonugwa, said in a civic appearance on May 20 2015, “Within a few decades, China has lifted some 300 million of its people from abject poverty, a feat without any precedence in the annals of economic development. Nigeria, the most populous country in Africa, with vast reserves of oil and gas, is yet gasping for the breath and is the toast of many global economic powers.”

China took over the importation and distribution of textiles in Nigeria. Nigeria becomes prospectively, the chief marketplace for China’s industrial products in Africa, today.

Ogonugwa added: “Nigeria’s imports from China account for over a third of its total trade with West Africa. President Jonathan’s visit to China in 2014 is significant as it underlines Nigeria’s growing economic relations with China. From the Nigerian perspective, closer economic ties with China have become imperative. The Chinese loan of $1.5billion brings to a total of nearly $15 billion China’s investments and loans to Nigeria in recent years, including the $2.5billion investment in the newly refurbished Lagos-Kano rail line.”

The irony is that in the 90s, Chinese factories were copying West African designs and as well opening their own distribution chains in the territory. As at 2012, Chinese investors whose textiles were once regarded to be of low worth, have had over 200 corporations at Kantin Kwari Market in Kano State, sending local investors who had controlled the market from beginning, packing.

A source that would not want the name in print said, “For a time the Chinese material was of a much lower quality than Nigerian originals, but that gap narrowed as Chinese standards rose. The Chinese began to take control of the market, with the unsuspecting Nigerian vendors as a willing tool.”

Some of the local traders become errand boys otherwise called middlemen to Chinese traders and are settled to the tone of N1,000 to N500 depending on the business outcome with the prospective buyer they brought to any Chinese traders. The distressing side is that China provides low interest loans for infrastructure in Nigeria and other African countries, whereas she is a leading player in global trade and Africa’s largest trading partner, making $198.5 billion in China-Africa trade as at 2012, compared with $99.8 billion for US–Africa trade.

According to another Nigerian business journalist, Yemi Olakitan, “In 1995, World Trade Organisation (WTO) adopted certain agreements on Textiles and Clothing, chief of them was that all allocations on textile and clothing will be removed among WTO member countries. The main beneficiary of the policy was China. The global textile market is said to worth more than $400bn at present. According to China Customs, the export value of China’s textile and garment alone amounted to $206.5bn.  The Nigerian textile industry was one of those that suffered, because of the cheap exports from China. Nigeria used to be the major supplier of (Ankara) good quality wax-resist textile. However, in the early 2000s, cheap imitations of these products were produced and exported from China to West Africa. Some would be slammed with Made-in-Nigeria labels and then sold in Nigeria.”

The Chinese rose by attacking “at the heart of the industry: the wax-print and African-print segment.” Although, condemned at the time by some business moguls as “100% illicit”, the locals were accounted to be doing the smuggling, experts at Business Journal, have said.

Nevertheless, not up to 10 percent of the indigenous factories are functional in the recent times. Many have closed shop and sidetracked to other perceived lucrative businesses. For example, the International Textile Industry (ITI) with factories in Isolo and Ikorodu, both in Lagos, has closed shop. And over 1,500 persons under its employ lost their jobs. The same fate befell the First Spinner Limited, Ikorodu, Lagos. Over 800 persons lost their jobs in this factory, too.

Others that enjoyed the boom in the Nigeria’s textile industry but today have closed shop were Kaduna Textile Ltd (KTL), Arewa Textiles Plc, United Nigerian Textile Plc, Supertex, Nortex Nigerian Ltd and Finetex Nigerian Ltd.  Others were Gaskiya Textiles Mill, Kano Textile Ltd, Aba Textiles, Zamfara Textiles Ltd, Asaba Textiles Ltd, African Textile Mill Plc, Tofa Textiles.

The story of textile factories that have closed shop is numerous. In all of this an estimated 250,000 persons have lost their jobs, out of about 350,000 that were occupying the industry. In 2014, many of the former workers of the closed textile industries in Kaduna were suffering.

It is applicable till date. They have resorted to riding Okada and engaged in menial jobs, since many of them have minimal academic qualifications to look for a white collar job elsewhere. The chairman of the Coalition of Closed Unpaid Textile Workers in Kaduna, Wardem Simdik told newsmen that this is the ugly fate that has befallen most of them and they have been protesting that the companies they once worked for should pay them their severance benefits.

Intervention

Despite the intervention by the successive governments in Nigeria to consolidate the country’s textile industry, the henchman of the National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN), Mr. Ladele Hunsu had his fears that the industry is yet to be viable no matter the money that successive governments have been pumping into the industry to revitalise it.

Hunsu lamented that there are many textiles coming into the country unchecked, adding that corruption, mismanagement, lack of constant electricity, lack of modern equipments and cost of production have endangered the country’s textile industry, hence giving room for China to steal show by shipping materials that are confirmed substandard into the country.

To redeem the textile industry, the Federal Government had to place a ban on importation of textiles into Nigeria. But this idea did not go down well in some quarters. Many persons in the industry felt shortchanged. They argued that the revenue from imported textiles that was supposed to come to the country was being reaped by neigbouring countries and smugglers, hence the call for lifting of the ban. There was the “Acting President Goodluck Jonathan Must Hear This” summit that took place in Port Harcourt, the capital of Rivers State, where the convener of the forum, Alhaji Ibrahim Dojo, said in bawling tone that the ban appeared to have ethnic colouration targeting the South-East and South-South.

It was believed that about 50 million Nigerians were rendered jobless as a result of the ban. The forum frowned that in the 70s and 80s the industry was generating about 25 per cent of the manufacturing GDP and contributing 20 percent of mutual taxation revenue in Nigeria. Today, there is an estimated $2.2bn textiles smuggled into Nigeria through Benin, per annum, making Nigeria’s production go down drastically.

Irked by China’s approach

While having business operation in Nigeria, China prefers to manufacture finished product in her country and ship to Nigeria, knowing that Nigerians prefer foreign goods to their locally made ones. In the light of this, experts are of the opinion that it will be difficult for Nigeria to survive.

Against this influence, many calls were made to China to build textile industries in Nigeria; not even the ban of 2002 by the ex-President Olusegun Obasanjo could deter China. The Emir of Kano, Muhammadu Sanusi II, was among the many Nigerians that have called on China to build industries in Nigeria.

“Our over-reliance on foreign products is hurting our economy and the only way to stop this trend is to tackle the problems in the manufacturing sector,” said the Emir, when he met with China’s Ambassador to Nigeria at his Palace recently.

Before leaving office in 2007, Obasanjo ‘launched’ a N70bn Textile Development Fund. Ex-President Yar’Adua increased the fund by an extra N30bn to N100bn. In 2005, a special inter-ministerial committee headed by the Minister of the Federal Capital Territory, Mallam Nasir el-Rufai destroyed by burning, smuggled textile materials worth over N4 billion. By 2010, ex-President Goodluck Jonathan lifted the ban.

Sanusi who was a former central bank governor, is believed in Nigeria to have known how the trade and economy of the world run. But swiftly, Sa’idu Adhama, a former textile factory owner, recapped his fears that since the government in Nigeria hardly give loans to local investors, it would be very hard for Nigerian traders to contend with their Chinese counterparts, whose country is always at their disposal by giving them loans at “single digit rates over a longer term.”

Imitations

“It was acknowledged that imitations of made-in-Nigerian goods are coming in shiploads of containers from China. They are branded with the Nigerian local brand name. While the truly made-in-Nigeria is selling for N570, the China imitations sell for N350. So people prefer to buy the one from China,” said Debo Oladimeji, a journalist with The Guardian.

In 2015, Nafiu Badaru, a junior civil servant in Kano (place regarded as a centre of weaving and textile manufacturing dating back centuries), told AFP that he could not afford to buy a piece of high-quality brocade (cloth), which costs around 10,000 naira ($50, 47 Euros), but with 1,500 Naira (less than $6), he could buy six pieces of cheap Chinese brocade (cloth) and keep a lot of balance and at the same time look good.

Taking open door policy for granted

Over a decade ago, China started taking advantage of the liberal policy of the Nigerian government to foreign trade, to undermine the country with her textiles. Instead of abiding by the law that prohibits foreign traders from retailing, some Chinese circumvented the law in May 2012, by retailing in the streets.

The authorities in the country apprehended them and deported 45 of them. This is excluding 4 of them that were earlier in that month arrested for smuggling mass produced fabrics, which were contained in 26 warehouses that were sealed by the authorities, which import duties were not paid.

Stakeholders assemble

As at 2014, the USA was playing the second fiddle in 142years following China in term of economy rating by the International Monetary Fund (IMF). Chinese economy was worth $17.61 trillion compared with $17.4 trillion for the USA. The IMF estimated that the economy of China will be worth just under $26.98 trillion in 2019. “That would be 20 per cent bigger than the U.S. economy, which is forecast to be worth $22.3 trillion by then,” the source said.

China achieved this economic feat through industrialisation. Worried by the collapse of the Nigeria’s textile industry, stakeholders assembled at the 6th Advisory Board Meeting of Fashion Textile Stakeholders’ Forum in Lagos in 2013. Mr. Joseph Ikemefuna Odumodu, the Director General/Chief Executive of Standards Organisation of Nigeria (SON), argued: “People only copy successful products. There is a challenge. Technology also changes our consumption habits. How can we ensure that our products are competitive?”

There is a clamour that the industry wants government protection, not only through monetary donation, but also by making strong the currency in the face of rising Chinese competition. In a different presentation, Ojonugwa said, “Nigeria needs China’s financial and technical assistance in the development of its decaying infrastructure.”

An ex-Minister of Trade and Investment, Dr Olusegun Aganga, once said: “The time is now, to look inward to patronise Nigerian made fabrics and other local raw materials. We must realise the damage we pose on our economy, on our cultural heritage, and our national pride when we shun local brands in preference for products from other economies. We must recognise our power as designers to dictate the taste (or better still, trend) of a population.”

•Odimegwu Onwumere is a Poet/Writer; he writes from Rivers State. (apoet_25@yahoo.com). Tel: +2348057778358.

 

Source News Express

Posted 24/01/2016 05:25:51 AM

 

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