Thursday, March 29,
2018 /09:16 AM / FBNQuest
Research
The
textile, apparel and footwear sub-sector remains the second largest contributor
to Nigeria’s manufacturing (after food, beverage and tobacco). It posted total
output of N383bn (US$1.3bn) in Q4 2017 or 23.3% of manufacturing GDP.
The
segment grew by 1.6% y/y in Q4 2017, compared with 1.1% recorded in the
corresponding period of the previous year (see chart). Given Nigeria’s huge
appetite for fashion and related industries, the segment is still performing
well below its full potential.
Industry sources suggest
that the country's annual import bill for textiles and
ready-to-wear apparel is US$4bn. Meanwhile, trade statistics from the NBS tell
a different story, with imports of textile and clothing items of N37bn
(US$121m) in Q4.
Despite the naira
depreciation, there is still an influx of imported ready-to-wear garments. The
Nigerian Textile Manufacturers Association estimates an annual bill of US$1.2bn
from smuggled apparel.
There are concerns around
the recent signing of the pact forming the African Continental Free Trade Area
(AfCFTA) in Kigali. Stakeholders within Nigeria’s textile, apparel and footwear
industry are convinced that if the FGN signs this agreement, it would have an
adverse effect as it could accelerate the importation of cheaper imported
textiles and garments.
We understand that the FGN
has kicked off the creation of special economic zones (SEZs), starting with a
zone for garment manufacturing. On a macro level, this should attract
investment within the sector, boost output and assist with easing pressure on
the job market.
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