ACCI seeks stronger Nigeria, India ties to deepen bilater...

Nigeria's textile sector is experiencing a structural collapse that demands immediate attention from European investors eyeing African manufacturing opportunities. New data from the National Bureau of Statistics reveals a alarming 55.3% plunge in textile exports to just N16.55 billion ($10.4 million USD) in 2025, down from N36.98 billion in 2024. Simultaneously, textile imports have skyrocketed to N1.06 trillion, representing a staggering 2,763% increase year-over-year. This divergence signals a fundamental breakdown in Nigeria's domestic manufacturing competitiveness and points to deeper structural challenges in Africa's largest economy.

The scale of this reversal cannot be overstated. Nigeria, which positioned itself as a regional textile hub, is now hemorrhaging market share to imported goods while failing to export meaningfully. For context, the country's total textile sector was valued at approximately $4.8 billion pre-pandemic. The current export figure of N16.55 billion represents less than 0.3% of total imports, indicating the domestic industry has lost almost complete control of its home market.

Multiple factors are driving this collapse. Currency depreciation—the naira has lost over 60% of its value against the dollar since 2021—has made Nigerian textile exports uncompetitive internationally while simultaneously making imports cheaper domestically for consumers. Power costs remain prohibitively high; manufacturers face electricity bills that consume 15-25% of production costs, compared to 3-5% in competing Asian economies. Additionally, input costs for raw materials have surged due to import dependency, while access to credit remains restricted for manufacturers. The informal economy and smuggling also drain legitimate export channels.

From a European investor perspective, this represents both a cautionary tale and a potential entry opportunity. The collapse demonstrates the difficulty of establishing competitive manufacturing in Nigeria without addressing fundamental infrastructure and policy constraints. However, the surge in imports also signals strong domestic demand—the N1.06 trillion import bill shows Nigerians are consuming textile products at scale. European companies with established supply chains and capital reserves could potentially fill this demand gap by establishing manufacturing or assembly operations locally, provided they can navigate tariff protections and secure long-term policy commitments.

The concurrent push by the Abuja Chamber of Commerce and Industry (ACCI) to deepen Nigeria-India trade ties adds another layer of complexity. India is the world's second-largest textile exporter, producing high-quality goods at competitive prices. Stronger bilateral trade agreements between Nigeria and India could further suppress local manufacturing unless Nigeria implements targeted industrial policy—something currently absent from the government's strategy.

For European investors, the key takeaway is clear: Nigeria's textile sector requires significant structural intervention before it becomes investment-grade. The current trajectory suggests a "hollowing out" of manufacturing capacity rather than modernization. Companies considering entry should focus on import-substitution strategies backed by strong government incentives, technical partnerships, and long-term contracts with major domestic consumers (retailers, wholesalers, government procurement). Without these safeguards, the risk of being undercut by cheaper Asian imports remains acute.