The planned intervention of the Central Bank of Nigeria (CBN) in the moribund cotton, textile and garment industry comes as a huge relief to operators and represents the right step in the right direction towards actualising the Economic Recovery and Growth Plan (ERGP) of the current administration although policy consistency remains crucial.
Once the pride of the nation in the early 1970s and 1980s and major foreign exchange earner, the cotton, textile and garment (CTG) subsector of the economy had been in shambles since the advent of crude oil and now unable to make any meaningful contribution to economic growth.
The sector was once the hub of Africa’s largest textile industry, with over 180 textile mills in operation and employing over 450,000 people and accounting for over 25 per cent of the workforce in the manufacturing sector.
However, today, the CTG segment is living in the shadows of itself as virtually all the companies had shut down and thousands of jobs lost, making the country a major importer of clothings and textile products.
Years of maladministration and policy inconsistency on the part of government especially the inability to provide infrastructure and conducive environment to retain as well as attract more investments into the sector had further strangulated the textile manufacturing economy.
It is further estimated that over $325 million was being lost in annual revenue to government through the importation of textile materials.
All past and recent efforts by successive administrations to revive the textile industry had only been more of paying lip service to a major economic matter, leaving the resuscitation of the sector in a state of dilemma.
The scenario partly explains why the policy pronouncement last week by the CBN to put an end to textile importation by adding all forms of textile materials to the list of items that are not eligible for foreign exchange from the official windows with immediate effect has come as a watershed in efforts at reviving the collapsed textile industry.
The CBN Governor, Mr. Godwin Emefiele, had at a meeting with stakeholders in the CTG sector in Abuja, reeled out far-reaching intervention programmes, aimed at restoring the sector to its former glory.
Emefiele announced plans for financial intervention to textile manufacturers with the provision of funds at single-digit rates, to refit, retool and upgrade their factories to enable them produce high quality textile materials for the local and export market.
He warned all FX dealers in the country to desist from granting any importer of textile material access to foreign currency in the Nigerian foreign exchange market.
Emefiele said going forward, the apex bank would adopt a range of other strategies that will make it difficult for recalcitrant smugglers to operate banking business in Nigeria, adding that details of the proposed strategies would be unfolded in due course.
“Effective immediately, the CBN hereby places the access to FX for all forms of textile materials on the FX restriction list,” Emefiele had announced.
He, however, noted that the apex bank would initially support the importation of cotton lint for use in textile factories, with a caveat that such importers will begin to source all their cotton needs locally beginning from 2020.
Emefiele’s declaration for the textile industry was highly commended by stakeholders, particularly the CTG Association President, Mr. Dani Dahiru, who predicted better days following the CBN’s intervention programme.