Follow Us on Google
The decision of the Central Bank of Nigeria (CBN) to place immediate restriction on the sale of foreign exchange (FX) to importers of textile and other clothing materials in the country is laudable. The initiative is capable of restoring the sector to its preeminent position as the second employer of labour and foreign revenue earner for the country. We applaud the CBN for this noble step that will revive the ailing textile industry. There is no doubt that the nation’s economy can no longer afford the huge amount of FX currently spent on importing textile materials. Available CBN statistics show that over $4billion is spent annually on imported and other ready-made clothing.
Also, the money spent on imported outfits for religious and social events such as weddings, naming and funeral ceremonies is in excess of $10billion a year. Nigerians should patronise locally manufactured textile materials instead of imported ones. Doing this will boost government’s diversification drive.
The CBN governor who disclosed this during a textile industry stakeholders’ meeting in Abuja, said that henceforth, all FX dealers in Nigeria are prohibited from granting any importer of textile materials access to foreign exchange in the Nigeria FX market. In addition, the CBN boss hinted that it will soon adopt some strategies that will make it extremely difficult for recalcitrant smugglers to operate banking business in the country. Emefiele also disclosed that details of the long-term plans are expected to be unveiled in due course.
However, the CBN Governor said that in the short-term, it will allow 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 2020. It is believed that the one year grace period is enough to make the importers patronise local cotton lint producers.
Considering Nigeria’s large population, there is no doubt that a huge market exists for the textile industry in the country if the challenges facing the sector are readily addressed. Government must provide financial support to textile manufacturers at a single digit interest rate of about 5 percent. This will enable them refit, retool and upgrade their factories and produce high quality textile materials for local and foreign market.
We urge the CBN to keep its promise to support local growers of cotton to enable them meet the needs of the textile industries. Government should create textile production centres in designated areas of the country. If these steps are implemented with sincerity of purpose, they will inexorably lead to the revival of the textile industry.
However, it is sad that no fewer than 145 textile mills across the country have collapsed since independence. According to the Manufacturers Association of Nigeria (MAN), only about 35 out of the 180 mills are still functional. In 2010, the Federal Government set up an intervention fund of N100billion for the revival of the sector, but only a few of the firms benefited from the initiative.
In reviving the sector, government must holistically address the constraints that hinder its growth. The battle against smuggling and indiscriminate dumping of foreign fabrics in the country should be tackled. Therefore, officials of the Nigeria Customs Service (NCS) should ensure that foreign fabrics do not enter the country through the ports and land borders.
We recall that the N300billion Real Sector Support Facility (RSSF) that the CBN floated for the sector in 2015 at 9 per cent interest rate, payable on a quarterly basis, did not achieve the desired result because the interest was considered too high by many textile factory owners. Given the domestic demand for textiles, the intervention of the apex bank will have multiplier effects on the economy, provided government creates an enabling environment. This includes the provision of stable electricity and access to finance, among other enablers.
With the oil revenue on the decline, it has become imperative that a revived textile sector could be a source of revenue to the government. The sector may even surpass its former 25 per cent contribution to the nation’s Gross Domestic Product (GDP).
Current statistics from MAN reveal that over 60 per cent of local industries had shutdown, while about 80 per cent of the industries still operate under severe economic conditions like high energy cost and poor infrastructural facilities and multiple taxation. These are some of the factors that led to the collapse of many textile industries in the county. Let government vigorously implement policies that will revive the nation’s ailing textile industry.
