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CBN bans forex sale to textile importers

The Central Bank of Nigeria (CBN) yesterday placed immediate ban on Foreign Exchange (FX) sale to importers of all forms of textile materials as part…

The Central Bank of Nigeria (CBN) yesterday placed immediate ban on Foreign Exchange (FX) sale to importers of all forms of textile materials as part of initiatives to boost local textile industrial capability.

The apex bank also approved financial support to textile manufacturers with the provision of funds at single digits rate, to refit, retool and upgrade textile factories for both local and export market.

“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, Mr. Godwin Emefiele, told textile industry stakeholders at a meeting in Abuja.

He said the CBN would also adopt strategies that will make it difficult for smugglers to operate banking business in Nigeria.

Mr. Emefiele said Nigeria’s textile industry is worth over $10bn with a potential of being one of the largest employers of labour, thus cannot be allowed to be killed by foreign textile products.

Other measures introduced by the CBN to save Nigeria’s collapsing textile include “initial support to 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.”

He said the Anchor Borrowers Program of the CBN will support local growers of cotton to enable them meet the needs of the textile industries in Nigeria.

“As regards provision of stable electricity, the CBN shall support the creation textile production centres in certain designated areas in Nigeria where access to electricity shall be guaranteed,” the CBN governor added.

According to him, in 2016, the CBN began discussions with the Kano and Kaduna state governments to establish textile industrial areas in a bid to guarantee stable electricity in those industrial areas.

“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,” he said, adding that Nigeria currently spends above $4 billion annually on imported textiles and ready-made clothing.

Ban not new to us, textile dealers

Speaking on the new measures by the CBN, textile dealers in Kano’s popular market Kantin Kwari said the ban isn’t new because textile was already among the 41 commodities restricted from access to forex.

The CEO of El-Samad Textile Alhaji Sammani Adamu said textile importers have been sourcing their dollars in the open market for long. “The ban is not new, because ever since the inclusion of textile in the list of 41 commodities banned from forex, we resorted to sourcing our foreign exchange from the open market. Therefore, as far as we are concerned this is not a new policy,” he said.

Another textile dealer in the Kwari market Alhaji Baballe Shugaban stated that for long the textile industry has been neglected hence the closure of indigenous textile companies. He added that operators of the industry moved to importation of the materials on their own and still got delisted from commodities that enjoy forex.

“Do we enjoy any dollar intervention from government? Of course we don’t, therefore the ban has nothing to do us, unless if they have been giving to some people in the name of textile,” he said.

A fabric seller at Balogun market in Lagos, Alhaji AbdulGhaniyu Abdul Qaadir said though he was yet to get information on the new CBN policy, he would welcome it as long as it is for overall good of the country.

‘Policy won’t make products expensive’

The National President, Cotton Association of Nigeria (NACOTAN) Mr. Anibe Achimugu, told one of our correspondents on phone yesterday that any policy that would assist the textile sector would be accepted by the association.  He said his association would mobilise over 100,000 cotton farmers across the country to join in the farming cotton from June this year.

“It is important as a country we put all hands on deck to ensure the vibrant textile industry that it was before, be revived fully.

“The truth of it is that if I have access to FX to bring in mostly second hand clothing, I don’t see how that will help our local textile industry. The policy announcement by the CBN is a good development. It also speaks to the seriousness of the FG’s commitment to revive textile in Nigeria,” he said.

As to whether the policy will make textile products expensive Mr. Achimugu said, “I don’t think that will be the case. If you remember the USSR, they were locked away from the world with sanctions and they began to develop internal capacities to produce what they need. If you look at Iran now with several sanctions, you will be amazed at what they are doing with their textile industry and other areas. This policy will kick us to get up, find solutions and meet the demands”.

He said Nigeria had “installed processing capacity of 650,000 metric tons of seed cotton but today we are not producing up to 100,000 metric tonnes.”

“We had 52 ginneries in the past. The industries are still there but we don’t have enough cotton to feed them that’s why they are shut down” he said adding that if Nigeria is producing the 650,000 metric tonnes annual in-country capacity, a lot of farmers will be engaged and more ginneries will come up.”

The Deputy General Secretary of the National Union of Textile Garment and Tailoring Workers of Nigeria (NUTGTWN), Comrade Ismail Bello, also described the action as a positive development coming at a time the textile union is advocating for patronage of Made in Nigeria goods and products by the Federal Government.

FG should rejuvenate cotton industry – LCCI

The president of Lagos Chamber of Commerce and Industry (LCCI), Mr Babatunde Ruwase, said the policy by the CBN would help to grow local cotton market and strengthen local textile industry.

He however stressed that for the policy to be effective the federal government would need to double its efforts and rejuvenate the nation’s textile industry, emphasising that those likely to be affected by the policy are those in informal market.

The LCCI Director General Muda Yusuf, however, said the policy would have negative impact on the fashion design subsector which depends greatly on imported textile materials for their jobs. He said it might create unemployment in that subsector.

Yusuf noted that CBN would need to offer clarification on whether the FOREX restriction is extended to open market. He added that the policy if well implemented will protect the local industry.

On his part, the Director General of the Nigerian Textile Manufacturers Association (NTMA), Hamma Kwajaffa, said: “This will take the textiles a long way in sourcing FX directly rather than the secondary source which is always costlier and scarce.

“Our purchases are often bulky and if this is done it shall assist us to break even.”

‘It will spur economic, GDP growth’

Also commenting, an economist and capital market expert, Prof. Uche Uwaleke, said the impact in the short run will lead to high cost of textile but, in the medium term, it will be in the overall interest of the country.

Prof. Uwaleke, who is also the Head of Department, Banking and Finance, Nasarawa State University Keffi, also noted that in the long term, the prices will moderate as Nigeria achieved more economic scale in textile production.

“It will discourage dumping. Else our textile won’t grow” he said.

He also noted that the previous FX restriction is paying off hence the extension.

“I think this is because of the success rate of the FX ban on the 41 items. Look at the experience of rice. Even tooth picks are now produced here.  If the CBN has been unsuccessful with the FX ban on other items, they wouldn’t include more items. So it’s a testimony that the ban is working.

“With time we will achieve self-sufficiency in textile and create more job opportunities. This will spur economic and the GDP growth,” he said.

Massive cotton cultivation to start in June

Daily Trust reports that cotton cultivation had witness sharp decline in recent times.

Farmers and other stakeholders in the sector believe that the gradual collapse of textile industries in the country had discouraged farmers from growing the crops. Other factors include absence of improved seeds and pest infestations.

The DG of Raw Material Research Council (RMRDC), Dr. Hussaini D Ibrahim, said while the production of cotton in Nigeria is dominated by small scale farmers, in most parts of the world, it is regarded as a high yielding investment activity. This, he said, affected the entire value change in the cotton sector.

But the cotton farmers’ leader believes that even though less than 7,000 farmers are currently into cotton in the country, the farmers have the capacity to provide the necessary raw materials needed for the nation’s textile industry.

He said by June this year, about 100,000 farmers would begin cotton cultivation with assurance of necessary inputs from the Central Bank of Nigeria.

He said by harvest time, beginning from October, the farmers would be producing about 250 to 300/metric tonnes of cotton for the industry.

A cotton farmer in Katsina State, Babangida Balarabe, had earlier told Daily Trust that besides the new improved seeds, government needed to intervene in the provision of viable market for farmers, especially with the closure of local textile firms and overdependence on foreign textile materials.

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