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Cablegate: Nigeria: Textile and Apparel Production 2006 Data

VZCZCXRO2132
PP RUEHMA RUEHPA
DE RUEHUJA #2059/01 2670656
ZNR UUUUU ZZH
P 240656Z SEP 07
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 1022
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 7944
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 ABUJA 002059

SIPDIS

SIPDIS

DEPARTMENT PASS TO USTR (AGAMA)

E.O. 12598: N/A
TAGS: ETRD ECON KTEX ELAB ENRG EPET NI
SUBJECT: NIGERIA: TEXTILE AND APPAREL PRODUCTION 2006 DATA

REF: STATE 114799

ABUJA 00002059 001.2 OF 002


1. The following are statistical data for 2006 on textile and
apparel production in Nigeria. At this time, 2007 data are
unavailable:

-- Total industrial production - $59.5 billion, comprising crude
petroleum ($55 billion), mining and quarrying ($181 million), and
manufacturing ($4.3 billion).

-- Total textile and apparel production - not available.

-- Textile and apparel share of host country imports - $129 million,
representing 0.6 percent of imports.

-- Textile and apparel share of host country exports - $19.2
million, representing nearly zero percent of exports.

-- Export in textiles and apparel to the United States - $94,000.

-- Total manufacturing employment - 1.9 million.

-- Total textile and total apparel employment - 35,500.
.
Textile Industry Not Competitive
--------------------------------
.
2. Nigerian textile companies cannot compete favorably with Asian
textiles due to the high cost of production in Nigeria, from poor
infrastructure and unreliable electricity supply. Textile companies
complain about the loss of orders as a result of competition from
Chinese textile manufacturers and that some textile factories owned
by both Nigerians and Asians have shut down as a result. According
to press reports, 33 Nigerian textile firms have closed in the past
three years, causing the lost of 500,000 jobs.

3. Textile manufacturing is produced locally with an emphasis on
African prints, which are sold locally and also exported to other
West African countries. The manufacturers are not aware of U.S. or
E.U restrictions on certain exports of textiles and apparel from
China affecting export prospects for Nigerian manufacturers.

4. In a bid to remain competitive, employers have reduced wages and
in some cases reduced their work force. Minimum wage regulations
are usually not complied with, and apply mostly to federal
government workers only. Workers at the lower tiers of government
negotiate their wages with their respective governments, while wages
in the private sector are set through negotiations with the unions.
We are not aware of any GON policy or program that is in place to
deal with dislocated workers in the sector resulting from increased
competition.
.
Government Taking Action to Assist Industry
-------------------------------------------
.
5. The Government of Nigeria (GON) placed a ban on certain textile
imports including African prints to protect the Nigerian textile
industry. Despite the ban, textiles are regularly smuggled into
Nigeria. The GON established a textile intervention fund to
resuscitate the ailing sector. Textile companies are investing in
new machinery, while working to take advantage of Category 9
certification to export to the U.S.

6. The GON has committed billions of dollars to constructing
eighteen new power plants to improve electricity supply. At this
time, the domestic gas supply and infrastructure to support the
power plants are not in place. Industry experts have told us that
there is not enough natural gas to supply the domestic market and
continue exportation. The new government is aware of the problem
and discussions are ongoing to solve it. The GON has announced
plans to build railways, roads and other infrastructure to cut costs
for manufacturers and increase competitiveness.

7. The GON tried unsuccessfully to raise funds with which to aid
the industry through Eurobonds, but failed to meet the requirements.
Subsequently, United Bank of Africa has announced that it plans to
raise 70 billion on behalf of the GON. The bank will provide the
funds raised to the GON which will lend to textile manufacturers at
low interest rates.
.
Future Prospects
----------------
.
8. Textile experts comment that if infrastructure is improved,
interest rates low, and property rights streamlined, Nigeria's
textile industry will be competitive. One issue that hinders the
industry is the lack of an apparel base, because of the focus on
customized clothes. As a result, tailors are not organized, trained
or encouraged to produce mass apparel. If these tailors received

ABUJA 00002059 002.2 OF 002


training, it is possible that Nigeria could became a significant
apparel exporter. In late 2006, the Nigerian Export Promotion
Council (NEPC) established a human capital development center in
Lagos to train apparel makers. The graduates from the center have
been employed by apparel exporters who have received orders from the
U.S. There are also plans by several state governors to replicate
such centers in their states in collaboration with the NEPC.

GRIBBIN

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