Nigeria’s apex bank on Tuesday said it has blocked access to foreign exchange for importers of all forms of textile materials and that the new policy takes effect immediately.
Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), said in Abuja that the restriction is aimed at rejuvenating the local textile industry and ensuring that the needed growth is actualized.
“Accordingly, all foreign exchange dealers in Nigeria are to desist from granting any importer of textile material access to forex in the Nigerian Foreign Exchange market,” Emefiele said after a meeting with textile stakeholders in the country.
Emefiele decried the moribund Nigerian textile industry, noting that in the 1970s and early 1980s, Nigeria was home to Africa’s largest textile industry, with over 180 textile mills in operation, which employed close to over 450,000 citizens.
Back then, the textile industry was supported by the production of cotton by 600,000 local farmers across 30 of Nigeria’s 36 states, according to official figures by the CBN.
The textile industry at that time was considered the largest employer of labor in Nigeria after the public sector, contributing more than 25 percent of the workforce in the manufacturing sector.
Emefiele said if the industry had been nurtured and encouraged, it would be employing millions by now.
In 2015, the CBN restricted the availability of foreign exchange to the importation of 41 items which could be competitively produced within the economy and the list has increased over time.
According to Emefiele, that is one economic solution. The government has signed an executive order compelling everyone to flow in the right direction.
The apex bank chief also warned against smuggling of imported textile materials into the country, saying the issue of smuggling would be dealt with seriously to discourage violators and force sellers of textile and garments to buy from Nigerian producers.
“When we make it difficult for them to smuggle those things into the country, it opens the market for you (the sellers) so that those who would have gone to buy those things will be forced to come to you,” he explained.
The CBN aims to support more local growers of cotton to enable them to meet the needs of the textile industry and support efforts to source high yield cotton seedlings to ensure the yields from Nigeria’s cotton farmers meet global standards.
Emefiele said the bank would 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 2020, among other intervention for the local textile industry by the apex bank.
The CBN also plans to provide financial support to textile manufacturers with the provision of funds at a single-digit rate to refit, retool and upgrade their factories so that they can produce high-quality textile materials for local and export markets. Enditem