CBN bans forex sale for importation of textiles

06 Mar 2019
Financial Nigeria


The CBN Governor said Nigeria currently spends over $4 billion annually on imported textiles and ready-made clothing.

Godwin Emefiele, Governor, Central Bank of Nigeria

The Central Bank of Nigeria (CBN) has placed a ban on access to foreign exchange to importers of textile materials in the country. The Governor of the apex bank, Godwin Emefiele, disclosed this policy decision on Tuesday during a meeting with stakeholders in the textile industry in Abuja.

Emefiele said textiles will, effective immediately, be added to the 41 items that have remained ineligible for forex sale in the interbank market since June 2015. The CBN had imposed capital controls in 2015 when the country experienced severe dollar shortages following the fall in prices of crude oil.   

The CBN's foreign exchange reserves rose significantly from $23 billion in October 2016 to $43.1 billion as of December 31st, 2018. However, the reserves have since fallen by 1.7 percent to $42.4 billion as of March 4th.

The CBN Governor said Nigeria currently spends over $4 billion annually on imported textiles and ready-made clothing. He said the potential market size of the domestic textile industry is over $10 billion.

The apex bank chief said following several policy measures, including a tighter monetary policy regime; the establishment of the Investors and Exporters Window in April 2017; the restriction of access to forex for some imported items; and some agricultural intervention programmes, the country has made economic progress.

“A lot of progress has been made, but at the same time more needs to be done in order to ensure that we build an inclusive economy that supports domestic production of goods and services, while offering job opportunities to teeming Nigerians,” Emefiele said. “This is the only option that we have, if we are to insulate our economy from volatility in the crude oil market and in the global financial markets.”

He added that the CBN, together with other stakeholders, have identified key commodities and products such as textiles and palm oil that can support job creation. Consequently, Emefiele said the CBN will provide financial intervention to textile manufacturers at single-digit rate. He said the intervention will enable textile firms to refit, retool and upgrade their factories to enable them produce high quality textile materials for the local and export market.

He said part of the CBN's intervention will entail supporting local growers of cotton to enable them to meet the needs of the textile industries in the country. These efforts, he said, will boost jobs and help in restoring the lost glory of the textile industry.

“As you are aware, in the 1970’s and early 1980’s, 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 CBN governor said.

The erstwhile textile industry – which had companies such as United Textiles in Kaduna, Supertex Limited, Afprint, International Textile Industry (I.T.I), Texlon, Aba Textiles, Asaba Textile Mills Ltd, Enpee and Aswani Mills, amongst others – was the largest employer of labour in Nigeria after the public sector, contributing over 25 percent of the workforce in the manufacturing sector, according to Emefiele. The industry was supported by the production of cotton by 600,000 local farmers across the country.

He said various operational challenges led to the decline of the sector, leaving only the current 25 textile factories, which are operating below 20 percent of their production capacities with total workforce of less than 20,000 people.

The apex bank governor said a range of strategies would be put in place to check the activities of smugglers, stating the menace of smuggling is a threat to efforts towards achieving self-sufficiency in textiles manufacturing in the country.

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