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Textile Feeling the FX Pinch too

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Monday, November 21, 2016 9:05 AM /FBNQuest Research 

The “textile, apparel and footwear” sub-sector remains the second largest contributor to the manufacturing sector, with a total output of N465bn (US$1.5bn) in Q2 2016 or 21.7% of manufacturing GDP. However, the segment is still performing below its full potential.
Given the fx illiquidity in the country, manufacturers within the textile industry are increasingly having to confront the possibility of suspending or halting production due to the inability to secure imported raw material such as chemical based products like polymer, dyes and other synthetic materials.

Based on data from the National Union of Textile Garment and Tailoring Workers of Nigeria, collective production output from the textile industry has not exceeded 55% of annual domestic consumption. This has resulted in the heavy inflow of imported textiles as well as garments.
 

Additionally, low productivity levels limit export capacity. We gather that Nigeria spends approximately N100bn on imported clothes.
 

The 10% textile development levy on imported fabrics by the FGN is aimed at assisting with developing operations of local textile manufacturers. However, the industry has seen very minimal impact.
 

According to Euromonitor International, the combined apparel and footwear market in sub-Saharan Africa is estimated to be worth US$31bn. Given its aim to promote trade among African countries as well as boost inter-regional collaboration, the Africa Development Bank recently launched a platform - ‘Fashionomics’ - geared towards developing Africa’s fashion industry at the recently concluded Lagos Fashion and Design Week.

 

The platform is expected to stimulate activity across the fashion value chain (textile included) and generate more jobs.

 

The Bank of Industry (BoI) is also committed to driving the textile and fashion industry forward. From the FGN’s N100bn textile revival fund, the BoI has disbursed N60bn for 70 projects within the Cotton Textile and Garment (CTG) value chain.

 

As with other sectors of the economy, the textile industry can achieve its full potential only under a favourable business climate i.e. policies that would encourage ease of doing business and drive private sector participation (local and foreign investors) 

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