CBN bans sale of forex to textile importers

                          CBN

The Central Bank of Nigerian ( CBN ) has moved to revive Nigeria’s moribund textile and clothing industry with foreign exchange restrictions on importers of textiles and clothing materials.

Speaking at the at the Textile Industry stakeholders Meeting in Abuja on Tuesday, the CBN Governor, Mr. Godwin Emefiele announced that the apex bank has decided to implement a few steps that will support the revival of the textile sectors.

These steps he said 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 place the access to FX for all forms of textile materials on the FX restriction list. Accordingly, all FX dealers in Nigeria are to desist from granting any importer of textile material access to FX in the Nigerian Foreign exchange market.”

In addition, the CBN he said “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.”

Also the CBN “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 year 2020.”

As part of its Anchor Borrowers Program, the CBN he said will support local growers of cotton to enable them meet the needs of the textile industries in Nigeria. To this end, the CBN “shall also support efforts to source high yield cotton seedlings so as to ensure the yields from our cotton farmers meet global benchmarks.”

As regards provision of stable electricity, the CBN has also offered to support the creation textile production centers in certain designated areas in Nigeria where access to electricity shall be guaranteed.

Emefiele noted that in 2016, the CBN began discussions with the Kano and Kaduna State Governments to establish textile industrial areas in a bid to guarantee stable electricity in those industrial areas. “We would intensify efforts with these governments and others that may show keen interest to see to the quick actualization of such programmes.

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On the FX restrictions specifically which will take effect from today, Emefiele insisted that “banks or FX authorized dealers are prohibited from granting or selling Forex to anybody who wants to import textiles, clothing, textile materials whether through valid and non-valid, I would just advice that there is no need for anybody to talk about whether it is valid or non-valid format we need to close it.”

“Once we close it, it will make it difficult for them to import those garments into Nigeria so that all those garments that are sitting in the factories, the people will be forced to go and buy them whether the price is right or not they will be forced to buy them and the fact that they are forced to buy, they create opportunities for more people to go into that business and over time the price will stabilize that is the idea.”

He said talked about 2020 because “I felt that the cotton association talked about time from planting to harvesting cotton and whether it will be in the kind of quantity that you may need and the rest so that is why we are saying for now subject to speaking to these stakeholders behind closed doors, we may say ‘you can import your cotton that is needed by the industry to gin and then convert into their textiles on the condition that by 2020 this will stop in which case our farmers would have gotten into the rhythm to produce the cotton that we need for our textile production.”

These measures the CBN governor said “will discourage smuggling, resuscitate this critical industry, and support efforts at creating jobs for Nigerians.”

The CBN was moved to take these critical steps to save the textile industry because according to Emefiele, “today, Nigeria currently spends above $4 billion annually on imported textiles and ready-made clothing. With a projected population of over 180 million Nigerians, the needs of the domestic market are huge and varied, with immense prospects, not only for job creation, but also for growth of the domestic textile industries.”

One example that highlights the potential of this local market, he pointed out includes “the need to support provision of uniforms and clothing apparels for school students, military and paramilitary officers as well as workers in the industrial sector. In addition, when we consider the amount spent on outfits for religious and social events such as weddings, naming and funeral ceremonies on a weekly basis, the potential market size is well over $10 billion annually.”

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Emefiele told the textile industry stakeholders that the CBN is ready “to change this narrative today. I believe that if the CBN along with other critical stakeholders are able to address some of the challenges facing this key industry, given the high domestic demand for textiles, we will be able to create jobs for our economy, while increasing production of textiles in Nigeria.”

During the interactive session with journalists and textile industry stakeholders, the CBN governor assured the group from the mining sector of the industry as well as textile groups generally that “regarding the loans from the Bank of Industries (BoI), we will be engaging the BoI, a substantial portion of the loans that they have lent out to you are our own Central Bank interventions so we will be talking to see how these loans can be properly restructured so that you now have a new beginning.”

He said he was “optimistic that they will agree for the restructuring given the attempts we are now making to get this industry back to life. Once this is done I believe you shouldn’t have any problems about restructuring the facility.”

Emefiele also assured the cotton and textile stakeholders that “before the planting in May we would have gone round and made funds available because we have development finance officers in all CBN branches and we have an anchor borrowers template for recognizing genuine farmers to access the funds under the auspices of the association recognized cotton farmers not just anybody who will just come to take money and not pay we want people who genuinely are farmers who genuinely want to go into cotton farming business so that they can help to produce the badly needed raw materials for the textile mills to produce.”

With regards to textile factories that have stockpiles of inventories flooding their warehouses and storage facilities, the CBN helmsman said the CBN “will make things difficult for those things to come in, don’t worry, in our closed door session we will talk about dealing with smuggling and you know the Central Bank does not carry guns or arms we do not have lorries to be at the border post, but we know what we will do to make it difficult for those smugglers to bring those things into Nigeria and we will unfold those things to you so when we make life difficult for them to smuggle this items into the country what does that do, it opens the market for you so that those who would have gone to buy those smuggled or imported goods will be forced to come to the Nigerian. That is one immediate economic solution that I can see and since the president has signed an executive order that will now compel everybody flow in your direction.”

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In his address, President of National Cotton Association of Nigeria Mr. Anibe Achimugu expressed delight that the CBN’s latest offensive against textile smuggling and desire to revive the textile industry now signals “better days are ahead of us under the anchor borrowers’ project for members of Cotton and Textile Group (CTG).

He said members of the group were grateful “for the points the CBN governor highlighted in terms of the CBN interventions but want to appeal to the governor that in as much as we have started the journey of the anchor borrowers programme, time is of essence, what has been happening in the past is that we have been missing our planting seasons. We are urging (of course we have our own work as well) that at least within this month we will get the approval that we are seeking under the anchor borrower programme for cotton production to fast track the process of planting and training members.

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