Central Bank of Nigeria (CBN), the apex bank of Africa’s most populous country, is currently making a seeming frantic effort to pump in oxygen into the dying textile industry of the country.
The industry which was once a vibrant sector of the country’s economy, has been grinding to a halt, and government has not been walking their promises to revitalise the sector.
CBN on Tuesday directed commercial banks and bureaux de change operators to stop sale of foreign exchange, for the importation of textiles and clothing materials in the country. The directive if faithfully carried through holds great potentials for the industry.
Between the late 1950s and the early 1990s, the textile industry played a pivotal role in stemming the tide of unemployment in the country. The country’s first modern textile industry is the Kaduna Textile Mill, which started production in 1956.
The main logic for setting up the mill was to process the cotton being produced at the time, in the North. By the 1970s and the1980s, the industry had grown to become the third largest in Africa.
For instance, a report by the United Nations University (UNU) stated in 1987 that there were 37 textile firms in the country, operating 716,000 spindles and 17,541 looms. This was the golden period of the industry. Between 1985 and 1991, it recorded an annual growth of 67%, and as at 1991, it employed about 25% of the workers in the manufacturing sector.
In a seeming bid to avert the collapse of the industry, the Bank of Industry in August 2010, released N30 billion as grant to the sector, as part of the Cotton, Textiles and Garment Industry Revival Scheme passed at the end of 2009. In total, N100 billion was expected to be injected into the dying industry.
At the ceremony that marked the re-opening of the Kaduna textile industry which received the lion’s share of N24 billion, former Vice President Namadi Sambo and the top shots of the Bank of Industry were present.
Then, they applauded the initiative, promising that more than 2000 Nigerians would be put back to work in Kaduna by the initiative. After the show, not much has been heard about the progress made at the factory.
In the mean time, the country’s unemployment profile is zooming daily. By the CBN order, it appears government is now aware of the opportunities inherent in the sector. To vigorously tackle the worrisome unemployment situation in the country, this sector should be given a priority attention by the government.
However, CBN Governor, Godwin Emefiele, whose continued stay in office is uncertain, announced the new measure at a meeting with stakeholders in the cotton sector in Abuja, during which he dismissed claims in some quarters that he had been asked to proceed on terminal leave.
He has been governor of the apex bank since June 3, 2014. His appointment is for a period of five years which is renewable if the President so wishes. According to him, there is no truth in such claims that he had proceeded on terminal leave, pointing out that his tenure expires in June.
While stressing that he will continue to perform his role in the interest of the economy, he said, ‘’at least you can see me and you have seen my work. My tenure expires in June and at least let’s continue. The intervention programmes of the CBN has been on since 1978 and it has moved from governor to another governor and I am very optimistic that even if another governor comes, no right-thinking person will abandon an initiative that is laudable and meant to create jobs for the good of our country.’’
On the forex restriction, Emefiele said the directive was borne out of the federal government’s plan to revive the textile sector and create employment for millions of Nigerians: ‘’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, 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.’’
He also explained how Nigeria gained from the booming textile industry that was characteristic of the 1970’s and early 1980’s, narrating the effect of ‘’rising operating cost and weak sales due to high energy cost, smuggling of textile goods, and poor access to finance’’, pointing out that the country currently spends above $4.00 billion annually on imported textiles and ready-made clothing with a potential market size well over $10 billion annually.
Emefiele said with the new restriction, sourcing of FX for textile importation and even smuggling will be next to impossible, adding that this will ‘’support the revival’’ of the sector, adding that the bank will support local growers of cotton, provide stable electricity and build textile production centers across the country which will meet the needs of the entire value chain.