CBN prohibits forex sale to importers of textiles

The CBN said the measures were taken to reposition the textile, cotton and garment industry for job creation and the development of the economy. The CBN Governor, Mr Godwin Emefiele, announced the measures on Tuesday in Abuja during a textile industry stakeholders meeting. The meeting, which was held at the apex bank headquarters, had in attendance top executives of companies operating in that sector of the economy The governor said the apex bank took the tough measures to restore the sector back to its enviable place where it created jobs, boosted the economy and created wealth for the people. Emefiele said to achieve the objective, the apex bank had decided to place a restriction on the sale of foreign exchange to importers of textiles and other clothing materials. He said the restriction, which took immediate effect, was to encourage the growth of the textile and cotton industry. He said, henceforth, banks and dealers in the foreign exchange market were prohibited from selling forex to those seeking to import textiles and clothing into the country. In addition to the forex restriction, Emefiele said the apex bank would be providing financial support to textile manufacturers at a single digit interest rate. This, he stated, would enable them to refit, retool and upgrade their factories in order to produce high quality textile materials for the local and export market. As part of its Anchor Borrowers Programme, the CBN governor said the bank would support local growers of cotton to enable them to meet the needs of the textile industries in Nigeria. He added that the CBN would also support efforts to source high-yield cotton seedlings so as to ensure the yields from cotton farmers met global standards. As regards the provision of stable electricity, he said the CBN would support the creation of textile production centres in certain designated areas. The apex bank, according to him, has begun discussions with the Kano and Kaduna state governments to establish textile industrial areas in a bid to guarantee stable electricity in those industrial areas. Emefiele said the bank would intensify efforts with the state governments and others that might show a keen interest in the quick actualisation of such programmes. He said, “We have decided to implement a few steps, which we believe will support the revival of the textile sectors. “These steps include financial support to textile manufacturers with the provision of funds at single digits rate, to refit, retool and upgrade their factories in order to produce high quality textile materials for the local and export market “Effective immediately, the CBN hereby places the access to forex on all forms of textile materials on the forex restriction list. Accordingly, all FX dealers in Nigeria are to desist from granting any importer of textile material access to forex in the Nigerian foreign exchange market. “In addition, we shall adopt a range of other strategies that will make it difficult for recalcitrant smugglers to operate banking business in Nigeria. The details of those strategies will be unfolded in due course. “We shall initially 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 from the year 2020.” The governor expressed optimism that with the introduction of the measures, the over $4bn spent annually by Nigeria on imported textiles and ready-made clothing would be a thing of the past. He added, “In the 1970s and early 1980s, Nigeria was home to Africa’s largest textile industry, with over 180 textile mills in operations, which employed close to over 450,000 people. “By today, if we had nurtured and encouraged the textile industry, that sector will be employing millions. “The textile industry, at that time, was the largest employer of labour in Nigeria after the public sector, contributing over 25 per cent of the workforce in the manufacturing sector. “It’s no secret that the past 20 years have been very difficult for many textile firms. They have faced rising operating cost and weak sales due to high energy cost, smuggling of textile goods and poor access to finance. “Many of them have had to lay off employees. Today, most of the factories mentioned have all stopped operations, as only 25 textile factories are operating today at below 20 per cent of their production capacities, and the workforce in Nigeria’s textile industry stands at less than 20,000 people.” Given the high domestic demand for textiles, he said the intervention of the apex bank would be able to create jobs for the economy while increasing the production of textiles in Nigeria. He said when the amount spent on outfits for religious and social events on a weekly basis was considered, the potential market size would be well over $10bn annually. Some of the stakeholders who spoke at the event commended the governor for announcing the measures to revive the industry. For instance, the National President of the Cotton Association of Nigeria, Mr Anibe Achimugu, said better days were ahead for operators in the sector as a result of the CBN initiatives.]]>