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HomeNewsPicturesAudioSubscriptionAbout UsContact Us LinksHomeGeneral NewsSportsPoliticsEntertainmentBusinessEducationFeaturesHealthEditorialInterviewsLyfe Styles News ArchiveLoginGeneral News THE COLLAPSE OF NIGERIA’S MANUFACTURING SECTOR 1/16/2008 IT IS TIME FOR PRESIDENT YAR’ADUA TO REVIVE THIS SECTOR. BY DR. O. A. AJAYI, Dutch disease is an economic concept that explains the seeming relationship between theexploitation of natural resources and a decline in the manufacturing sector. The theory is that anincrease in revenue from natural resources will reindustrialise a nat ion’s economy by raising its exchange rate, which makes the manufacturing sector less competitive.Dutch disease srcinated in The Netherlands during the 1960s when the high revenue generatedby its natural gas discovery led to a decline in the competitiveness of its other non-boomingtradable sectors. Despite the revenue windfall the new discovery brought, The Netherlands experienced a drastic decline in economic growth. Nigeria’s economy has therefore suffered from Dutch disease since the advent of oil syndrome which shifted attention from other sectors of theeconomy to oil sector. It is not surprising to find a private company like the United NigerianTextiles PLC (UNTL) collapsed; neither is the textile industry, the only distressed sector in Nigeria.Only a few firms are still active. Big-time employers that have collapsed or being crippled includethe Nigeria Railway Corporation, Nigeria Airways, Nigerian Coal Corporation, NigeriaTelecommunication Ltd. (NITEL), etc. Little wonder that the level of poverty, unemployment andcrime is embarrassingly high in the country! The closure of the United Nigerian Textiles PLC (UNTL), one of the Nigeria’s leading textile firms,again opened another unpleasant chapter in the Nigeria’s economic history. The UNTL wa sestablished in 1964 by the Northern region government of Sir Ahmadu Bello in the heat of thehealthy competition that existed among Western, Eastern and Northern regions for industrialsupremacy. By 1989, when the company celebrated its silver jubilee anniversary, it was already one of the largest companies in Northern Nigeria as a whole. It was at a time, the biggest textilefactory in Africa.At the peak of its production, in the 90s, the company had well over 20,000 employees but when itrecently closed shop, the work force had shrunk to only 4,000, all of whom have now been throwninto the unemployment market. The factors responsible for the closure of UNTL are: high cost of operation (including inadequate supply of water, power, and raw materials), unstable businessenvironment, the activities of smugglers and pirates of textile products, high cost of loans frombanks, non-release of the promised N70 billion Textile Revival Fund, inconsistent governmentpolicies, the negative effect of globalization and energy problems. Set to close shop are manymore mills in an industry that has shrunk from more than 200 mills employing over one millionworkers in the 1980s to 20 mills now employing fewer than 20,000 workers. UNTL was thereforethe last textile mill standing in Kaduna, several others are already dead.The problem in the industry started in the days of the Structural Adjustment Programme (SAP),when the cotton commodity boards responsible for the growth and sustenance of cotton, themost important raw material for textile manufacturing, were scrapped. The government thenintroduced an Approved User Scheme which made the importation of raw materials, such asviscose and polyester yarns, an arduous task for textile manufacturers. In addition, deregulation, privatisation, and now globalisation have added another dimension to it. Nigeria’s policy makers will do well to disregard the prescriptions of outsiders and formulate policies that will protect theinterests of local industries and the less privileged ones. Any reform programme that cannot makeNigerians have jobs, eat well and live well cannot be in the interest of the country. Obviously,these factors are not limited to the textile sector alone, as many companies from other sectors areclosing shop for the same reasons. The textile sector is only worse hit because of the highincidence of smuggling.According to the management representative of UNTL, Senator Walid Jibrin, 80 per cent of textileconsumption in Nigeria comes from smuggled textile materials from China and other Asiancountries. Only 20 per cent of consumption is from the local industries, while 40 million litres of textile chemicals are smuggled to Africa from China, out of which Nigeria alone consumes 40 percent of this. The collapse of Nigeria’s refineries and the consequent importation of Low Pour Fuel Oil or Black Oil, an indispensable fuel used to start up industrial machines, constitute anoth erfactor in the death of Textile industries in Nigeria. Be it as it may, Nigeria’s policy makers should accept responsibility for not initiating real policies to vigorously diversify the Nigeria’s economy with the advent of oil boom. If the problems in the textile industry and the manufacturing sector as a whole are to be effectively tackled, the Nigeriangovernment and Nigerians in particular must take definite measures to revive the manufacturing sector through deliberate and the implementation of policies that would overhaul the country’s infrastructure and give locally manufactured goods better patronage. Additionally, the Nigeriangovernment should encourage those Asian countries like India, Korea, China, Malaysia, etc. fromwhich textile products are smuggled into Nigeria to invest in the country rather than see the giantof Africa as a dumping ground!! Nigeria, to observers, is a nation full of paradoxes. While the realsector that provides jobs for the people and revenue for governments is collapsing, serviceindustries like banks are declaring billions of Naira as profits yearly. Banks have not been
