FG Considers 50% Upgrade for Textile Sector

The Federal Government is considering modernising 50 per cent of Nigeria’s operational textile capacity with advanced machinery over the next five years as part of a broader sector revitalisation plan. The move comes amid rising textile imports, which reached N814.27bn in the first nine months of 2025, highlighting ongoing challenges in the local industry.

The proposed upgrade forms part of wider internal plans to revive the sector, including tax incentives, the establishment of a national textile training institute, and single-digit interest rate loans for textile manufacturers.

A December 2025 document from the Cotton, Textile and Garment Division of the Federal Ministry of Industry, Trade and Investment, titled “Annex I: Recommendations for the Revitalisation of the CTG Sector,” outlines actionable measures across five strategic areas: policy reform, infrastructure and energy solutions, investment incentives, skills development, and steps to curb smuggling while promoting local patronage.

Under a proposed Textile Modernisation Fund, the government plans to establish a N500bn facility administered by the Bank of Industry to provide long-term loans of seven to 10 years, with a minimum two-year moratorium, at single-digit interest rates. The loans are intended to support the acquisition of modern machinery and equipment, with a target to modernise half of Nigeria’s operational textile capacity within five years.

To address energy costs, the government is considering tax holidays or subsidies for mills that invest in renewable energy solutions such as solar, biomass, or waste-to-energy systems. The plan aims for 25 per cent of textile mills to transition to hybrid or renewable energy within three years.

Additional incentives include corporate tax holidays ranging from five to seven years for new textile investments above a defined capital threshold, such as $10 million, particularly for companies sourcing at least 70 per cent of raw materials locally. The plan projects a 30 per cent increase in foreign direct investment in the sector within three years.

The document also recommends a 100 per cent import duty and VAT waiver on industrial machinery, spare parts, and specialised chemicals not produced locally, which is expected to reduce start-up costs for new mills by 20 to 25 per cent.

On workforce development, the government proposes the establishment or revamping of a National Textile Training Institute to focus on modern skills such as digital technology, industrial sewing, dyeing chemistry, and equipment maintenance. The initiative targets the training of 2,000 certified skilled textile workers and technicians annually after the first two years.

Hamma Kwajaffa, Director-General of the Nigerian Textile Manufacturers Association, welcomed the proposals as a positive development. He noted that, if approved and implemented, the measures could significantly curb the rising trend of textile imports. He also highlighted the importance of continuous communication between the government and industry stakeholders to ensure timely execution.

Kwajaffa praised the proposed Textile Modernisation Fund, stating that a government-administered, revolving fund at single-digit interest rates would be more sustainable than previous interventions, such as the N100bn fund introduced in 2009 through the Debt Management Office. He also endorsed the national textile institute, describing it as a “bankable initiative” that would directly benefit the industry through staff training and skills development.

The government’s plan follows data showing Nigeria’s textile imports climbed to N814.27bn between January and September 2025. The surge reflected structural challenges including insecurity, weak cotton production, limited local polyester supply, poor access to affordable finance, and policy execution gaps.

Kwajaffa noted that earlier policy incoherence had slowed progress, citing disagreements over whether a board or council should be established to drive textile reforms. He also highlighted the complexity caused by multiple boards and parastatals, which had contributed to delays in establishing a central coordinating agency for the sector.