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Economy, World

Bangladesh’s $33bn fabrics industry holds lessons for Nigeria’s textile dreams

For knit products, 80 percent of the yarn requirements is met by domestic supplies because the country has a competitive advantage in that area.
However, only 20 percent of the woven requirements for the garment sector is catered to by local firms.

The country’s parliament passed a bill specifying the level of quality which all export firms must meet in order to beat China to number one in competitiveness. Hence, emphasis was laid on competitiveness, with the government providing market access for companies through trade negotiations targeted at removing international barriers.

Moreover, some of Bangladesh citizens were sent to China and Europe to acquire the skills needed to run the mills.

Again, the country paid closer attention to the use of modern technology to lower costs.
Big global brands such as Walmart, H&M, Benetton, Gap and Zara were partnered with to distribute Bangladeshi ready-made garments.

Stitch Dairy, a local Bangladeshi publication, said that the South Asian country was able to enjoy duty-free advantage to export garments to the European Union, the US and Malaysia.


Experts equally attribute Bangladesh’s success to a convivial business environment with minimal government influence and low taxes, which attracted Chinese and Vietnamese firms to Bangladesh.

Textile Today reported in 2015 that firms from Singapore, Japan, Taiwan and South Korea, which had traditionally relied on low-cost production in China, were shifting out of China and making their way to Bangladesh as a result of well-developed Bangladeshi textile value chain that guarantees three to five years return on investments.

Another key factor in Bangladesh is cheap labour with minimum monthly wage of a garment worker at $197, which makes it have the last but one lowest wage among 21 textile-making countries in the world.

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However, Nigeria has even more advantage than Bangladesh in terms of labour cost as its recent minimum wage hike to N30,000 amounts to only $83.3 per worker.

“The government of Bangladesh provides cash incentives as export subsidies, amid other supporting policies, to promote exports in various business sectors. There is no alternative to the export-led growth of the economy to achieve its goal of becoming a middle-income country by 2021,” said two researchers, Afsana Arafin and Belalur Rahman, in a paper entitled ‘Cash Incentives for Export Oriented Industries of Bangladesh: A Critical Evaluation’.

However, the number of full-fledged textile mills in Africa’s most populous country has whittled down to two, from over 180 in 1985. Industry players say the number of players is 24, but findings show that most of them are manufacturers of rugs, handkerchiefs, sweaters, towels and stockings.

“Some of the mills have even gone into receivership as they could not repay their loans. The lesson is that we should deal with the fundamental issues of production competitiveness in our economy. The textile industry needs to be saved from the excruciating burden of high operating and production cost,” Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry (LCCI), said.

The Central Bank of Nigeria (CBN) recently set up an additional N50 billion intervention fund to facilitate the takeover of existing debt and offer additional long-term loans and working capital to existing companies in the cotton, textile and garment sector.

As of 2016, N3.4 billion had been disbursed to local firms.
Recently, the Central Bank of Nigeria (CBN) placed access to FX for all forms of textile materials on the FX restriction list.

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Smuggling has turned textile hubs in the main cities of Kano, Kaduna and Lagos into solitary camps and event centres, the Manufacturers Association of Nigeria (MAN) said.
“The hitherto manufacturing hubs in Kano, Kaduna and Lagos are now solitary camps with most of their factory sheds now used as event centres and warehouses to store smuggled textile materials,” MAN, which is an association of over 2,500 manufacturers in Nigeria, said in its review of 2018 performance of the sector.

Hamma Kwajaffa, director-general of Nigeria Textile, Garment and Tailoring Employers Association (NTGTEA), told BusinessDay that the problem is importation and smuggling.
“The level of importation and smuggling in this country are killing the few surviving companies. They used to run three shifts but they have closed down these shifts,” Kwajaffa said.

“The Executive Order 003, for instance, has been pronounced, but it is not being implemented. So we have low patronage in the industry,” he added.

Executive Order 003 mandates government agencies and departments to patronise local firms by as much as 40 percent during contracts or bids.

Independent checks show that a few Nigerian textile firms are still competing with imports. They include African Textile Mills, Angel Spinning and Dyers Limited, Sunflask, Nichemtex, among others.

Source: By ODINAKA ANUDU & GBEMI FAMINU

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