Preface
As previously highlighted, the beautiful thing about the COVID_19 experience is that it would perfect us to think aright as a nation. It would make us to begin to look increasingly inwards for practically all we need, ranging systematically from food, clothing (garment) and footwear, to housing, infrastructures and other things in the needs hierarchy. It will do well to teach us that ‘we cannot connect the dots looking forward but we can only connect them looking backward’. One way we can connect the dots backwards is to begin to harness our abundant local cotton resources, hides and skin, all of which we had neglected in the past, in order to produce sufficient clothing that will meet our needs.
Overview of the Nigerian textile (clothing) industry
The textile industry in Nigeria – comprising the cultivation of cotton (upstream subsector), the production (manufacturing sub-sector) and the garment-sewing (downstream) sub-sector – is a rapidly expanding one. Right through the flamboyant post-civil war years until the late 1980s when the textile industry began to crumble many Nigerians heavily shifted attention to imported clothing and wears. However, the economic crises and the introduction of the Structural Adjustment policy of government in 1986 led to heavy devaluation of the Naira resulting ultimately in the escalation of the prices of imported materials. Consequently, many Nigerians started looking inwards for the supply of their garments and other wears.
With the return of Democracy in 1999, the well-to-do in Nigeria, once again began to cultivate a new liberty in favour of imported clothing and other articles of ostentation. Apparently endorsing this unrealistic national life-style, successive democratic governments ever since have been stampeded to take advantage of trade liberalization practices to open up the shores of our country’s markets to various kinds of imported clothing. Official importation later became overtaken by unbridled smuggling of clothing materials especially the second-hand varieties, through the country’s land boarders. The market for second-hand finished clothing is largely patronized by the low income people while the middle income and the affluent in the society patronize brand new wears.
The import-oriented attitude was persistently in vogue up until the first quarter of 2020 when the COVID-19 rampage began, accompanied soon after by the crash in oil prices which sent our local currency bleeding once again. The combined effects of Covid_19 and continuous fluctuation in oil-commodity prices will hopefully compel virtually everybody to patronize ‘made-in Nigeria’ goods, including clothing.
In apparent anticipation of mass patronage of indigenous clothing, smart local fashion designers have already begun to use local materials to make fanciful wears to meet the needs of the diverse market segments.
Past governments’ efforts at reviving the local textile industry
The inauguration (in 2006) of the Presidential Committee on the revival of the upstream and downstream segments of the textile industry in Nigeria was indeed a great incentive to the industry. It was geared to open up a window of new opportunities for operators wishing to revive or expand their businesses. At that time, a financial package was adeptly put in place for the revival of the Nigerian textile industry and specifically to improve the performance and competitiveness in the domestic and international markets. Eligible businesses that qualified to apply for the fund included all companies in the cotton and textile value chain; from cotton growers to ginners, spinners, weavers, finishers and garment manufacturers.
The Nigeria Export Import Bank (NEXIM) has a package called: ‘Textile Development Fund, Loan Facility’ for), any activity that improves the production volume of cotton or other textile industry raw material. Eligible businesses requested to submit Expressions of Interest include ‘all companies dealing in cotton and textile value chain, from cotton growers to ginners, spinners, weavers, finishers and manufacturers of made-up products and garments’.
The Nigerian Investment Promotion Council has put a number of incentive packages to support investors, including those operating in the textile industry. Both local and foreign investors are also encouraged to operate with one-hundred percent equity participation.
As an apparent extension of the Anchor Borrowers financial support Program, the Central Bank of Nigeria is currently leading a renewed campaign to resuscitate the cotton cultivation segment (upstream subsector), aimed at reactivating the garment sub-sector. Just recently, in July 2020, the Central Bank of Nigeria specifically approved N50b revival fund for the Textile Industry.
Market Opportunity
Nigerian garments are particularly cheap when compared to their foreign equivalents, made in America and Europe. Moreover, certain local fabrics or traditional wears are unique and hardly have close substitutes in Europe and America. In this category are embroidered and sewn Lace/ Brocade for men and women, Jumper with roped-Trousers, Aso-Oke, Adire, Bou-bou, Agbada and Caftan; even ladies’ Cloths, Head Ties, and men’s local Caps, etc. Nigerians and Africans in Diaspora have regard for culture or tradition; hence they readily patronize these local varieties of garment.
Cost implications of setting up a local Garment (Clothing) Factory
Thus, it may be necessary at this juncture to provide an estimate of costs for setting up a typical small-scale clothing (garment) factory.
Cost Items Total Amount (N)
Prelim./ Preoperational costs 2,230,000
Insurance 83,800
Machinery & Equipment (including Industrial Sewing Machines) 4,190,000 Fixed
Assets
Fixtures and Furnishings 227,900
3 months’ Provision for Raw Materials & Accessories 2,640,750
Working Capital
3 months’ Provision for Salaries 490,500
3 months’ Provision for Operating Expenses 142,476
Overall Total Costs 10,005,426
Sales Forecast (per annum)
The sales forecast commensurate with the above cost highlight, would be something like this:
Year 1 Year 2 Year 3 Year 4 Year 5
Projected Output (clothing units) 7,200 8,280 9,522 10,950 12,593
Average Selling Prices of Garments (comprising, cost of raw materials + cost of production + mark up (Naira per unit). 3,571 3,571 3,749 3,749 3,937
Sales Forecast (Naira) 25,710,000 29,566,500 35,701,549 41,056,781 49,576,063
Conclusion
From the above analyses, the picture of the profitability associated with a typical textile industrial venture (garment production specifically) is quite clear. The author will be willing to assist anyone who is interested in setting up a modern local garment factory. He can be reached via his email: chukwudiodili902@yahoo.com
