CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY.

Nigeria is the largest country in black Africa with a population forecast of 150 million people broken into 36 states with Abuja as the capital. With this population and clothing being a basic need of life, it is evidently clear that Nigeria constitutes a very large market for clothing items – Textile Materials.

The local textile needs is presently being met by locally manufactured textiles, cheap textiles dumped in the country as well as high quality textiles entering through unofficial trade.

In 1990, there were 175 textile factories operating in Nigeria but today we have 42 epileptic operators. Only 12 of these can boast of operating at 30% capacity. Among these, 4 textile factories produce embroidery lace materials as part of their product brands. This further establishes the inadequacy of the local supply of textile products in Nigeria.

For instance, over $760 million worth of embroidered lace materials/textiles exported from South-East Asian countries to sub-Saharan Africa annually, at  least 75% of this export is consumed in Nigeria. In other words, Nigeria imports over $540 million worth of lace fabrics yearly. The Nigerian embroidery lace Co. Ltd. AF print Group Ltd., Bhojsons, Empec Industries Ltd and Kaduna Textile Mills, which are the major local producers of these products cannot meet the demand, with an average annual output of $281 million, when Nigeria annual demand estimate for embroidery lace alone totals $821.5 million. Textile Watch(2004).

In 1990,the Nigeria textile industry was the largest in Africa after Egypt and South Africa. The industry which currently accounts for less than 25% of manufacturing value has gone through various phases of growth. In 1960s, the investment and savings policies induced steady growth which gave rise to an average of 12.5% growth rate in the 1970s. The recession of the early to mid 1980 dealt with the industry and took its toll. The cumulative Textile Production (1972 – 2000) declined from 4271 to 171.1 in 1984 and 112.8 in 2003.

The industry recovered in the late 1980’s achieving an annual growth rate of about 67% between 1985 and 1991, with the embroidery lace alone accounting for about 20% of the recorded growth. The industry was the largest employee of labour in the manufacturing sector within these periods. Capacity utilization integration programme embarked upon by many firms in the industry in compliance with the government policy issued on that in the mid 1980’s was a positive contributing factor. Thus the level of domestic sourcing of raw materials witnessed a steady improvement from 52% in 1987, 57% in 1998 to 64% in 1991.

However, this improved performance was not universal among the firms in the industry. The embroidered lace Fabrics or textile had the reverse experiences. The few producers of lace textiles who were producing less than 20% of the total textile output in 1980 dropped to 12% in 1994 and less than 8% in 2003. This decline could be traced to the quality and quantity of the type of cotton used. For other types of textile production the level of local raw materials usage increased because they can be obtained locally while that of the lace material can only be imported.

As at May 29th 2003, the 42 Textile firms in Nigeria were operating 1,020345 spindles and 57,451 yarns. This marginal output can only meet 32.5% of the annual domestic demand which still confirms that there is a large market for textile products in Nigeria. The textile exports constitutes less than 17 of Nigeria total exports despite the fact that Nigeria has a cotton based textile industry.

According to Funsho(2002),Local textile needs presently is being met by local industry,cheap textiles dumped in the country as well as high quality fabrics entering the country through unofficial trade Uk Holland, Austria,Japan,China,Spain etc.

This situation worsened in 1994 when the Abacha regime liberalized the textile industry and subsequently in 1997 when the Federal government in a bid to comply with the world trade Organisation agreement to which it was a signatory lifted the ban on importation of textiles materials literally turning the country into a dumping ground.

The Obasanjo regime in a bid to revive the textile industry in October 2002 placed a 4 year ban on importation of textiles.This move was aimed at controlling the intense competition with imported textiles.

Despite the fact, that Nigeria has favourable trade agreements, its exports declined whilst imports increased dramatically leading to a situation that the Nigerian textile industry had a market share study of about 34% in the home market, a market share of only 34.2% of the domestic market, it is evidently clear that Nigeria textile product market constitutes a promising potential market. However, it is imperative to identity these factors that are responsible for the low acceptance of locally or domestic manufactured textile products.

Definitely, Nigeria has many of the prerequisites, needed for developing a successful textile and clothing industry. It has a huge growing domestic demand, availability of well priced raw material, huge population of young and relatively skilled labour force and a well established tradition in textiles.

The nagging question comes up, why is the textile industry not receiving enough patronage despite its huge potentials?According to Assael (1994),It is the customer who actually determines what a business is and his willingness to buy goods and services converts economic resources into wealth.