Introduction
The garment sub-sector in Nigeria is a rapidly expanding one. Until the late 1980s, many Nigerians depended heavily on imported clothing and wear. However, the prevailing economic circumstances culminating in massive devaluation of the local currency, have forced many Nigerians to start looking inwards. The tailoring/ fashion-design business has expanded considerably as the markets have become dominated by locally made garments – suits for men and ladies, ties, children’s wears, and under-wears. The design of traditional wear is becoming improved with fanciful embroideries.
The export potential of the garment sub-sector portends the hope that an average investor, with a proper guide, should excel in the business. Unfortunately, what is happening at the moment does not show that people are coming to grips with reality. Rather than rising, the tempo of export activity seems to be going down, notwithstanding government recent policies in addition to the inherent benefits of the African Growth and Opportunity Act (AGOA) and the upcoming African Free Trade Continental Area aimed at encouraging free trade. Ironically, local products are taking severe knocks from the unbridled smuggling of banned second-hand clothing, for which reason the government must double her efforts in the policing of the porous borders. On a large scale, the general export activity in the country is dropping day by day, even in the face of steady depreciation of the local currency, a situation that must be reversed.
AGOA
The African Growth and Opportunity Act, a United States trade policy, enacted in 2000 is a legislation that allows exporters from sub-Saharan Africa to export some goods to the United States duty-free. The export opportunity, which was supposed to last from 2000 to 2020, has just been extended to 2025. Under the policy, 38 African countries including Nigeria are eligible to export 7,000 product lines, tariff, and quota-free to the US market.
Although some of the SME operators in Nigeria have been trying to innovate quality products that could meet international standards, those products still require a lot of improvement; and issues around insecurity, poor infrastructure, weak manufacturing base and general high cost of doing business in Nigeria have continued to hinder businessmen from taking advantage of the AGOA policy.
It is indeed very worrisome that Nigeria is not fully determined to take advantage of the AGOA policy, even with its extension. In fact, before the extension, Nigeria had no clear-cut program on AGOA promotion. For instance, in 2014, nearly 15 years after the approval of AGOA, Nigeria’s exports to the US under the policy totaled only $2.6m while the exports from South Africa exceeded $1.2bn.
Specifically, the only meaningful trade relationship Nigeria had enjoyed with the US under AGOA had been in the area of petroleum products, and it was not surprising why Nigeria’s economy came crashing when the relationship diminished on the discovery of Shale oil by the US. This is evidently a reminder of the need to break the jinx of Nigeria’s dependence on oil as the dominant foreign exchange earner.
Hence, it is difficult to explain why Nigeria is still unable to develop her agro-allied or apparel industry? With the global decline in US imports from Sub-Saharan Africa, notwithstanding, Nigeria does not have any excuse not to be an exporting nation; especially with all the benefits to reap from AGOA.
Unfortunately, what is manifest is that in terms of quantity and value Nigeria’s export is declining. This may be because not many people have discovered the secret of the export business. The existing operators are surprising not fully adhering to international quality standards and protocols and many more are not following the official export channels and procedures.
It is indeed my pleasure to use this medium to demonstrate the huge profits one can make from an export-oriented garment business; given that the right information is obtained and the right strategies adopted. The production economics (cost and profitability profile) associated with a well-organized Clothing and Apparel business, with about eight product lines indicated in the Table below, gives a tip of the iceberg:
| COST & PROFITABILITY PROFILE OF SELECTED CLOTHING & APPARELS | ||||||||
| (A) | OUTPUT | UNIT COST OF RAW MATERIALS | UNIT COST OF SEWING | UNIT COST OF FINISHED CLOTHING | TOTAL COSTS | UNIT SELLING PRICE OF FINISHED CLOTHING | TOTAL INCOME | GROSS PROFIT |
| (No of Units) | N | N | N | N | N | N | N | |
| Skirt suits | 2,000 | 825 | 1,500 | 2,325 | 4,650,000 | 3,000 | 6,000,000 | 1,350,000 |
| Caftan | 5,000 | 1,200 | 1500 | 2,700 | 13,500,000 | 4,000 | 20,000,000 | 6,500,000 |
| Jeans Trousers (new) | 5,000 | 1500 | 1000 | 2500 | 12500000 | 4,500 | 22,500,000 | 10,000,000 |
| Jackets & Men’s suits | 4,000 | 3,900 | 3,500 | 7,400 | 29,600,000 | 10,000 | 40,000,000 | 10,400,000 |
| SUB-TOTAL | 28,250,000 | |||||||
| (B)
APPARELS |
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| Under-wears (e.g., Pants.) | 50,000 | 310 | 100 | 410 | 20500000 | 500 | 25000000 | 4,500,000 |
| Native caps | 60,000 | 335 | 100 | 435 | 26100000 | 600 | 36000000 | 9,900,000 |
| Head ties | 20,000 | 800 | 350 | 1,150 | 23,000,000 | 1,500 | 30,000,000 | 7,000,000 |
| Bed sheets | 20,000 | 1,100 | 500 | 1,600 | 32,000,000 | 1,900 | 38,000,000 | 6,000,000 |
| SUB-TOTAL | 9,970 | 18,520 | 217,500,000 | 27,400,000 | ||||
| OVERALL TOTAL | 55,650,000 | |||||||
The garment business, which can be started with less than N500,000could with time, say over a five-year interval, generate an annual gross profit of about N55.65 million. When fully operational, say at 10 hours daily, the factory could employ about 16 workers.
Details of the technical specifications and international quality standards specified for the products, appropriate garment machinery and equipment together with their procurement sources, international trade links and channels, export procedures and documentation, etc., will be embodied in a Feasibility Report for prospective investors.
