What Nigeria can learn from Bangladesh, Vietnam to crack high unemployment

From Bangladesh to Vietnam, low-wage manufacturing jobs are bridging income gaps, lifting many out of poverty, and ensuring a certain level of inclusive economic growth. These countries are taking advantage of the cotton, textile, and apparel industry, for instance, to create jobs. Additionally, low-wage manufacturing jobs have historically increased productivity and proven to be critical […]

What Nigeria can learn from Bangladesh, Vietnam to crack high unemployment
What Nigeria can learn from Bangladesh, Vietnam to crack high unemployment

From Bangladesh to Vietnam, low-wage manufacturing jobs are bridging income gaps, lifting many out of poverty, and ensuring a certain level of inclusive economic growth.

These countries are taking advantage of the cotton, textile, and apparel industry, for instance, to create jobs.

Additionally, low-wage manufacturing jobs have historically increased productivity and proven to be critical for human capital development, employment generation, foreign direct investment, and poverty reduction in several countries and Nigeria can benefit too.

Consequently, productivity and income have also historically appeared to slow once factors of production begin to shift from manufacturing to services.

This becomes worrisome when the evidence from emerging economies is studied. As employment shares shift from agriculture to services, they typically bypass the traditional industrial and manufacturing sectors.

While there remains no consensus on whether an expanding service sector necessarily weighs on economy-wide productivity growth, the question of whether declining manufacturing hinders overall growth remains open-ended.

The manufacturing sector in Nigeria, according to the National Bureau of Statistics, comprises oil refining, cement, food, beverages, and tobacco.

Others are textile, apparel, and footwear. Wood and wood products, pulp paper, and paper products are also included.

The sector also has chemical and pharmaceutical products, non-metallic products, plastic and rubber products; electrical and electronic, basic metal and iron and steel, motor vehicles, and assembly among other manufacturing.

Read Also: After N100bn, Nigeria’s textile, garment manufacturing industry yet to see impact

Why all the fuss about manufacturing jobs in general and low-waged ones in particular?

Basic economics shows that to raise living standards a society’s wealth and/or purchasing power have to increase too.

Countries do this by creating new value and increasing productivity. That would be much harder to achieve if Nigeria concentrated solely on a service economy.

A vibrant manufacturing base leads to more research and development, innovation, productivity, exports, and middle-class jobs. Manufacturing helps raise living standards more than any other sector.

According to Stephen Gold, president, and CEO of the Manufacturers Alliance for Productivity and Innovation(MAPI) in the United States of America, manufacturing generates more economic activity than other sectors.

There are pieces of evidence of how low-wage manufacturing jobs are spurring economic growth in Southeast Asian countries and Ethiopia.

Nigeria’s manufacturing industry

Nigeria can take a cue from these countries to grow its manufacturing sector. Industry watchers say this would create more jobs especially at a time when Africa’s biggest economy is battling a high unemployment rate of 33.30 percent and a youth unemployment rate of 42.50 percent.

A number of studies show that textile and garment industries using low-wage manufacturing labour has been a major driver of job creation especially for women in the rural areas of many developing countries.

Cheap labour, high population, and duty-free access to other markets are attractive to international investors and form the key components of a low-wage manufacturing economy.

Here are some of the countries where low-wage manufacturing jobs have helped provide employment opportunities.

Bangladesh

This South Asian country with a population of over 163 million has made strong headway in reducing poverty thanks to its Ready Made and Garment (RMG) industry under the light manufacturing sector.

The industry has over 5,000 RMG factories that employ over four million workers and close to 65 percent are women.

According to a World Bank document, the country has more than halved the percentage of people living under the $1.90 poverty line since 1991.

Its minimum wage of $95 per month has allowed global brands like H&M, Target, and Marks, and Spencer to set up garment factories.

The country is one of the world’s largest garment exporters, with the industry accounting for 84 percent of its exports. According to trade statistics, its exports have more than doubled to $33.1 billion in 2019 from $14.6 billion in 2011.

Ethiopia

Apart from Ethiopia being one of the fastest-growing economies in the world and Africa’s second-most populous country of over 115 million, the country is faced with youth unemployment estimated at more than 50 percent and with 150,000 graduates coming into the market every year.

This made the Ethiopian government shift its focus from agriculture to fashion and textile industry as a priority for poverty reduction and economic development.

The industry employs over 95,000 people, with women accounting for 70 percent. The Government has also set itself an ambitious goal to create 350,000 jobs in the textile industry by 2022.

With this, the country is on the road to be the next hub for manufacturing and exports in Africa.

The industry is also very important to other countries. As a result of fear of loss of jobs due to the COVID-19 pandemic, the United Kingdom and Germany have set up a landmark $6.5million fund aimed at saving thousands of jobs in the industry.

Workers’ monthly labour cost of $26 makes it competitive and vital to remaining hubs.

Vietnam

This Southeast Asia country’s garment and textile industry is a high-growth labour-intensive industry attracting more than 3.5 million workers where female workers account for over 80 percent.

Currently, there are about 6,000 textile and apparel enterprises in the country.

The textile industry is the second-largest export turnover in the country. According to the Vietnam General Statistics Office, in 2019, the industry’s export earnings increased year on year by over 8.3 percent to $39 billion.

Its monthly labour cost of $180 and a population of over 97 million attracted $1.55billion Foreign Investment capital to the industry for 184 projects in the first 11 months of 2019, according to the United Nations Conference on Trade and Development (UNCTAD).

Cambodia

Cambodia is another Southeast nation where its textile industry is the biggest employer of labour with over 600,000 people earning a minimum wage of $192 where the majority of them are women.

With a population of 16.5 million people, its exports are also dominated by apparel goods (clothing, footwear, and accessories)

In the early 1990s, the Cambodian government took various measures to boost the industry’s competitiveness in the international market, which prompted foreign investors to direct their attention to the country.

Two decades later, the garment industry continues to drive its economy through employment generation and Foreign Direct Investments.

According to the Ministry of Commerce of Cambodia and the International Labour Organisation, the number of workers employed in the garment sector grew by 4.9 percent to 548,000 in 2018 from 523,000 in the previous year. And it is estimated to reach 633,000 workers in 2021.

Also, the number of operational garment factories in Cambodia rose to 625 in 2018 from 556 in 2016 and it is expected to increase to 745 by the end of 2021, according to the Ministry of Labor and Vocational Training (MoLVT) report.

Can Nigeria roar back?

Nigeria’s textile and apparel industry is comatose but this has not always been the case.

In the 1970s and early 1980s, Nigeria was home to Africa’s largest textile industry, with more than 180 textile mills employing over 450,000 people.

The cotton, textile, and garment (CTG) subsector of the economy was then the largest employer after the public sector, comprising over 25 percent of the manufacturing workforce.

This industry was supported by the production of cotton by some 600,000 local farmers across the country.

Today, the CTG industry is living in the shadow of its former self as virtually all the companies have shut down, terminating thousands of jobs and requiring Nigeria to annually import some $4 billion worth of ready-made clothing and textiles.

Reviving the cotton, textile, and garment value chain in Nigeria promises to create both national and personal wealth as its increases productivity and bridges the income gap.