Central Bank of Nigeria (CBN) Governor Godwin Emefiele yesterday announced restriction of foreign exchange to importers of textiles and clothing materials.
The move, said the CBN chief, is to revive the moribund textile and clothing industry.
Besides, it will save the country the more than $4 billion being spent annually on importation of textiles and ready-made clothing materials.
Speaking at the at Textile Industry Stakeholders’ Meeting in Abuja yesterday, Emefiele said that the apex bank had decided to support the revival of the textile sector.
“These steps,” he said, “include, financial support to textile manufacturers with the provision of funds at single digits rate, to refit, retool and upgrade their factories in order to produce high quality textile materials for local and export markets.
“Effective immediately, CBN hereby places 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.
“In addition, CBN shall adopt a range of other strategies that will make it difficult for recalcitrant smugglers to operate banking business in Nigeria. Details of those strategies will be unfolded in due course.
“CBN shall, 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 Programme (ABP), Mr Emefiele said CBN will support local growers of cotton to enable them meet the needs of the textile industries in Nigeria.
The CBN chief explained: “To this end, CBN shall also support efforts to source high-yield cotton seedlings so as to ensure the yields from our cotton farmers meet global benchmarks.
“As regards provision of stable electricity, CBN has also offered to support the creation of textile production centers in certain designated areas in Nigeria where access to electricity shall be guaranteed.”
Emefiele noted that in 2016, CBN began discussions with Kano and Kaduna state governments to establish textile industrial areas in a bid to guarantee stable electricity in those industrial areas.
“We would intensify efforts with these states and others that may show keen interest to see to the quick actualisation of such programmes,” Emefiele said.
On the FX restrictions, specifically which will take effect from Monday (yesterday), Emefiele insisted that “banks or FX authorised dealers are prohibited from granting or selling Forex to anybody who wants to import textiles, clothing, textile materials whether through valid or non-valid, I would just advice that there is no need for anybody to talk about whether it is valid or non-valid format we need to close it.
“Once we close it, it will make it difficult for them to import those garments into Nigeria so that all those garments that are sitting in the factories, the people will be forced to go and buy them whether the price is right or not they will be forced to buy them and the fact that they are forced to buy, they create opportunities for more people to go into that business and over time the price will stabilise that is the idea.
“I felt that the cotton association talked about time from planting to harvesting cotton and whether it will be in the kind of quantity that you may need and the rest so that is why we are saying for now subject to speaking to these stakeholders behind closed doors, we may say ‘you can import your cotton that is needed by the industry to gin and then convert into their textiles on the condition that by 2020 this will stop in which case our farmers would have gotten into the rhythm to produce the cotton that we need for our textile production.”
These measures, CBN governor explained, “will discourage smuggling, resuscitate this critical industry, and support efforts at creating jobs for Nigerians.”
He said the apex bank took the critical measures to save the textile industry.
Emefiele said: “Today, Nigeria currently spends above $4 billion annually on imported textiles and ready-made clothing. With a projected population of over 180 million Nigerians, 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.”
Highlighting the potential of the local market, Emefiele said: “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 $10 billion annually.”
Emefiele told stakeholders about CBN’s readiness to change the narrative.
He noted: “I believe that if CBN, along with other critical stakeholders, are able to address some of the challenges facing this key industry, given the high domestic demand for textiles, we will be able to create jobs for our economy, while increasing production of textiles in Nigeria.
“Regarding the loans from the Bank of Industry (BoI), we will be engaging the bank, a substantial portion of the loans that they have lent out to you are our own Central Bank interventions so we will be talking to see how these loans can be properly restructured so that you now have a new beginning.”
Emefiele said he was “optimistic that they will agree to the restructuring given the attempts we are now making to get this industry back to life. Once this is done I believe you shouldn’t have any problems about restructuring the facility.”
On the textile factories that have stockpiles of inventories flooding their warehouses and storage facilities, he said: “CBN will make things difficult for those things to come in, don’t worry, in our closed door session we will talk about dealing with smuggling and you know Central Bank does not carry guns or arms we do not have lorries to be at the border post, but we know what we will do to make it difficult for those smugglers to bring those things into Nigeria.
“When we make life difficult for them to smuggle this items into the country, what does that do, it opens the market for you so that those who would have gone to buy those smuggled or imported goods will be forced to come to the Nigerian. That is one immediate economic solution that I can see and since the president has signed an executive order that will now compel everybody flow in your direction.”
President of National Cotton Association of Nigeria, Mr. Anibe Achimugu, expressed delight that CBN’s latest offensive against textile smuggling and desire to revive the textile industry now signals “better days are ahead of us under ABP for members of Cotton and Textile Group (CTG).
He expressed the groups’ gratitude for the plans unfolded for the local market by CBN governor.