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Stakeholders say CBN forex ban on 42 items impacting economy positively

The Central Bank of Nigeria (CBN) introduced a policy restricting forex access to importers of certain items like textiles, toothpicks, rice and so on. Stakeholders…

The Central Bank of Nigeria (CBN) introduced a policy restricting forex access to importers of certain items like textiles, toothpicks, rice and so on. Stakeholders have said the policy has impacted positively on the Nigerian economy.

On assumption of office in June 2014, CBN Governor Godwin Emefiele indicated in his inaugural speech that one of his key objectives as Governor of the Central Bank of Nigeria is to focus energies in building a Central Bank that will devote its energies, on building a resilient financial system that will serve the growth and development needs of our beloved country, Nigeria.

In addition to focus on key macroeconomic concerns such as moderating inflation and maintaining exchange rate stability, Mr. Emefiele ensured that the CBN played a more constructive role in supporting Nigeria’s economic development particularly in the Agric and Manufacturing sectors, given the constraints faced by rural farmers, SMES and Manufacturing companies.

He had said about five years ago that the main reason for adopting this posture rests on the belief that, addressing impediments to growth, will not only strengthen economic growth, but also enable the creation of more jobs and foster a more inclusive society.

Following a series of steps embarked upon by the CBN which include, a tighter monetary policy regime beginning in 2016; the establishment of the Investors and Exporters Window in April 2017; restriction of access to forex for 42 items that could be produced in Nigeria; and the deployment of our agricultural intervention programmes to support improved cultivation of particular agricultural items such as rice, tomatoes and fish, the Nigerian economy has made considerable progress,” Mr. Emefiele said at a stakeholders meeting with Textile stakeholders in Abuja recently.

Giving some data he said “noticeable declines have been recorded in CBN monthly food import bill which declined from $665.4 million in January 2015 to $160.4 million as at October 2018; a cumulative fall of 75.9 percent and an implied savings of over $21 billion on food imports alone over that period.”

A lot of progress has been made, but at the same time more needs to be done in order to ensure that we build an inclusive economy that supports domestic production of goods and services, while offering job opportunities to teeming Nigerians,” he said.

According to the CBN governor, this is the only option we have, if we are to insulate our economy from volatility in the crude oil market and in the global financial markets.

In order to achieve this goal, the CBN along with other critical stakeholders recently identified key commodities and products such as textiles and palm oil that have the ability to support the creation of hundreds of thousands of jobs in our economy.

Reacting to this policy, the Executive Secretary, Nigerian Shippers Council, Bar. Hassan Bello, said the Council strongly supports the CBN policy.

We can’t continue to be an import dependent economy. While containers come here laden, they leave here empty and this affects even the transportation cost. The policy of the CBN has provided rise in non-oil export for the first time. It is a testimony of the diversification of the economy and the confidence we have in our own economy,” he said.

Forex restriction on textile and others is not protectionism. It gives equal opportunities with our producers here as most of our textiles for instance, are smuggled into Nigeria. We had about 15 textile industries employing hundreds and thousands of workers. It’s just like steel in Pittsburg or automobile companies in America. Because of the American policies of looking inwards, there are a lot of restrictions of steel into America,” Bello said.

He noted that the dearth of textile companies in Nigeria has affected the country hugely. “Textile industry is a chain and all the chain has been destroyed. We now wear foreign fabrics. The policy isn’t limiting competition but giving our indigenous manufacturers a chance. The CBN must be commended for this thinking.”

Also commenting, an economist and capital market expert, Prof. Uche Uwaleke, who is also Head of Department, Banking and Finance, Nasarawa State University Keffi, noted that in the long term, the prices of some of the banned items, especially textiles will moderate as Nigeria achieves more economies of scale in textile production.

“It will discourage dumping. Else our textile industry won’t grow,” he said. He also noted that the previous forex restriction on the 42 items is paying off hence the extension.

“I think this is because of the success rate of the forex ban on the 41 items. Look at the experience of rice. Even tooth picks are now produced here,” he noted.

“If the CBN has been unsuccessful with the forex ban on other items, they wouldn’t include more items. So it’s a testimony that the ban is working,” he said.

“With time we will achieve self-sufficiency in textiles and create more job opportunities. This will also spur economic development and GDP growth,” he noted.

Commenting specifically on the restriction of forex on textile imports, Mr. Anibe Achimugu, National President, Cotton Association of Nigeria (NACOTAN) told our correspondent on phone that anything that will assist the textile sector is important, adding that as a country we must put all hands on deck to ensure the vibrant textile industry that was before is revived fully.

The truth of it is that if I have access to forex 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 welcome action. It also speaks to the seriousness of the Federal Government’s commitment to revive the textile industry in Nigeria,” he explained.

As to whether the policy will make textile products very 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 by 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 noted.

He said the Nigerian textile industries have installed capacities to meet local needs, adding that Nigerians should be patriotic and use made in Nigeria textile products to create more jobs.

There are a lot of issues around used clothes. You don’t even know the source or the hygiene but if you buy new clothes, you are sure of the source, he said, adding that cost shouldn’t be a factor as the benefits will trickle down in the long run.

On installed capacity of cotton, Mr. Achimugu said Nigeria has “installed processing capacity of 650,000 metric tons of seed cotton but and today we are not producing up to 100,000 metric tons.”

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 tons annually in-country capacity, a lot of farmers will be engaged and more ginneries will come up.

We have the capacity but we need to go back to the grassroots. The bedrock of the textile industry is cotton production. We need our farmers back into cotton and we need to support them to produce the quality of cotton that will be suitable for all kinds of products for which the Nigerian textiles and garments companies have the machineries. But where they can’t, it’s easy to bring in the machineries and produce here,” he concluded.

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