The Central Bank of Nigeria (CBN) on Tuesday announced a ban on Foreign Exchange (FX) access for the importation of all manner of textiles, as part of some important measures it would take to revive the ailing sector.
The inclusion of textile brings to 43, the number of items which the apex bank has banned from FX access since 2015 when that policy was first announced.
“Effective immediately, the CBN hereby place the access to FX for all forms of textile materials on the FX restriction list. Accordingly, all FX dealers in Nigeria are to desist from granting any importer of textile material access to FX in the Nigerian Foreign exchange market,” CBN Governor, Godwin Emefiele announced at a meeting with textile industry stakeholders in Abuja.
“In addition, we shall adopt a range of other Strategies that will make it difficult for recalcitrant smugglers to operate banking business in Nigeria. The details of those strategies will be unfolded in due course,” the governor said.
Apart from the FX ban, the apex bank would also provide some financial support to Textile manufacturers, specifically funds at single digits rate, to refit, retool and upgrade their factories in order to produce high quality textile materials for the local and export market.
Addressing the stakeholders, Emefiele said the CBN intervention had become necessary due to immense challenges of this sector and especially considering that Nigeria currently spends over $4 billion annually on imported textiles and ready-made clothing.
The governor emphasized that with a projected population of over 180 million, the needs of the domestic market are huge and varied, with immense prospects, not only for job creation, but also for growth of the domestic textile industries.
But the industry, sadly faces severe operational difficulty in the past two decades due to high energy cost, smuggling of textile goods, and poor access to finance. The death of the industries also jerked up unemployment, insecurity and other negative social vices.
The governor explained that the potential of this local market includes the need to support provision of uniforms and clothing apparels for school students, military and paramilitary officers as well as workers in the industrial sector.
“In addition, when we consider the amount spent on outfits for religious and social events such as weddings, naming and funeral ceremonies on a weekly basis, the potential market size is well over $10bn annually.
Emefiele announced that the CBN would initially support the importation of cotton lint for use in textile factories, with a caveat that such importers shall begin sourcing all their cotton needs
locally beginning from year 2020.
As part of its Anchor Borrowers Program, the CBN would also support local cotton growers to enable them meet the needs of the textile industries in Nigeria, as well as also support efforts to source high yield cotton seedlings to meet global standards.
Emefiele further announced CBN plans to provide stable electricity, and help create textile production centers in certain designated areas in the country Nigeria where access to electricity shall be guaranteed.
It would be recalled that the CBN had commenced discussions with the Kano and Kaduna State Governments to establish textile industrial areas in a bid to guarantee stable electricity in those industrial areas. Emefiele assured the CBN would intensify efforts with these governments and others that may show keen interest to see to the quick actualization of such programs.
He said despite a series of steps embarked upon by the CBN which has delivered considerable progress to the Nigerian economy, more needs to be done to drive an inclusive economy that supports domestic production of goods and services, while offering job opportunities to
teeming Nigerians.
Assuring that the CBN would help deal with smuggling of textile, he also pledged that working loans granted to industrial players would be restructured into long term loans.
“We believe that these measures will discourage smuggling, resuscitate this critical industry, and support your efforts at creating jobs for Nigerians,” he assured.
“This is the only option that we have, if we are to insulate our economy from volatility in the crude oil market and in the global financial markets.”
Onyinye Nwachukwu, Abuja
