New Telegraph

Accelerating revival of Nigeria’s textile industry

Last week’s stakeholders’ meeting of Cotton, Textile and Garment (CTG) associations in Abuja, presented a good opportunity for the Central Bank of Nigeria (CBN) to give an update on the critical contributions it is making towards a quick revival of the nation’s struggling textile industry, writes Tony Chukwunyem

 

 

Given that prior to the mid– 80s, the Nigerian textile industry was clearly a key feature of the country’s economy, as it was, perhaps, the biggest employer of labour after the public sector and supported the livelihood of hundreds of thousands of local cotton farmers, the dramatic collapse of the industry in later year, especially after the introduction of Structural Adjustment Programme (SAP) reforms in mid-1986, is an issue that several previous governments have tried to address.

 

N100bn CTG revival scheme

 

For instance, in 2009, the Umaru Yar’Adua administration inaugurated the N100billion Cotton, Textile and Garment (CTG) Revival scheme, through which the Bank of Industry (BoI) was to extend loans to textile companies.

 

Although BoI said in a 2013 report that about N60 billion had been disbursed to various beneficiaries under the intervention scheme, which resulted in the reopening of some textile firms as well as preventing the loss of about 8,000 jobs, things did not stop going downhill in the industry.

 

Thus, during his first term as Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, in line with his stated commitment to ensuring that the apex bank steps up its development finance initiatives, held meetings with owners of textile mills in Nigeria on August 7, and September 29, 2015, to find out how the regulator could assist them.

 

Among the resolutions reached at those meetings were that the textile mills owners would articulate the status of their BOI CTG loans, stating their outstanding loan balances, tenure, interest rate and interest payment.

 

CBN’s N50bn intervention fund

 

The outcome of the engagement was that the CBN, in 2016, established a N50billion intervention fund as working capital, debt takeover (restructuring of existing facilities) and long-term loan, for companies in the Cotton, Textile and Garment value chain with a genuine need for intervention.

 

Forex restriction on textiles

 

In addition, the CBN in 2019 included textile products on its forex restriction list.

 

According to Emefiele, the banking watchdog took the action when in considering the amount spent on outfits for religious and social events such as weddings, naming and funeral ceremonies on a weekly basis in the country, it realised that the potential market size is well over $10billion annually.

 

Further defending the forex ban on textile products during a press conference, the CBN Governor said: “When we address these issues three weeks ago, I had said that at a time in this country, Nigeria had 180 textile mills, today they are dead.

 

 

 

Three weeks ago when we held a meeting, there were only 15 textiles companies out of the 180 in the 50s and 60s in the country. Jobs have been lost, and that is why we know that while there is unemployment in our country, we ignore an industry that is the largest employer of labour after the public sector.”

 

Executive Order 003

 

In the same vein, citing President Muhammadu Buhari’s 2017 Executive Order 003, which is targeted at boosting support for local content procurement by ministries, departments and agencies (MDAs) of government, Emefiele, a few weeks later, held a meeting with Service Chiefs and CEOs of many uniform producing companies, to discuss how the president’s order can be implemented to achieve its mandate of reviving Nigeria’s Cotton, Garment and Textile industry. Emefiele noted that the revival of the textile sector was critical to achieving the administration’s objective of economic diversification and creating jobs for millions of the unemployed.

 

According to him, a lot of priority was being given to the textile sector because it has the capacity to transform Nigeria’s rural economy and revive the textile and garment industries by creating over two million jobs, improve internal revenue of governments, and reduce $4.0billion import bill incurred annually on textile and apparel importation. He explained further that the sector also had potential to conserve and earn foreign exchange for the country, thereby accelerating the nation’s industrial development.

 

Emefiele said at the time that “this event symbolizes our commitment to attain self-sufficiency in cotton production with a view to serving the Textile and Garment segments of the value chain with quality inputs as we target zero importation by the year 2020.” He emphasised that governments’ efforts at resuscitating the textile industry would not be actualised if they were not supported through local patronage among other incentives.

 

On measures put in place by the apex bank to achieve the objectives of the Executive Order, the CBN Governor said: “We have put in place necessary mechanisms to ensure use of high yielding varieties that will produce top quality fabrics and those that can compete in the international market.

 

“We have also observed that our textile factories are carrying huge quantities of unsold stock while our garment factories are idle due to lack of local patronage. We are optimistic that with your support, this trend can be reversed. “We have the mandate of Mr President to ensure that all uniformed services and theatre wears in hospitals and medical facilities be sourced locally from the Nigerian CTG sector.”

 

Similarly, at the signing of the Memorandum of Understanding (MoU) between the National Cotton Association of Nigeria (NACOTAN) and Ginning Companies and Nigerian Textile Manufacturers Association and Armed Forces of Nigeria, Nigeria Police, paramilitary institutions and National Youth Service Corps in October 2019, Emefiele disclosed that the apex bank was considering injecting N100 billion to help support businesses in the cotton, textile and garment (CTG) value chain.

 

The CBN governor noted that the money is not the main concern but the desire to take control of the cotton, textile and garment industry by local player and reviving the sector with its attendant job creation benefits.

 

Non-interest guidelines for textile intervention

 

Significantly, to further issue that more Nigerians benefit from its intervention in the textile industry, the CBN in July this year unveiled noninterest guidelines for accessing the N50bn revival fund for the industry.

 

Over N120bn invested in sector

Also, at a stakeholders meeting of CTG associations in Abuja last Thursday, the CBN, again, gave an update of its total investment so far to support the industry. Speaking at the event, the Deputy Governor, Corporate Services, CBN, Edward Adamu, said the apex bank had invested over N120 billion on the cotton value chain and is projecting over 300, 000 metric tonnes of seed cotton by end of 2020. Adamu, who disclosed over 15 textile smugglers’ accounts have been   frozen across the country, stressed that the regulator’s intervention was aimed at eradicating smuggling and dumping of textile goods in Nigeria.

 

He said the CBN was also aiming to resuscitate and return the lost glory of the cotton textile and garment industry. He also recalled the booming days of the industry that sustained the economy with massive job creation, which in the 1970’s 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.

 

He said: “The bank’s intervention in the Cotton, Textile and Garments (CTG) industry is in full swing and since the inception of the CTG intervention, huge progress has been made, some of which include: Over N120 billion invested across CTG value chain; Over 320,000 farmers financed between 2018-2020; Expected output for seed cotton in 2020 is projected to be over 300,000 metric tons. “This is expected to enhance the production capacity of the ginneries in producing over 102,000 metric tons of cotton lint and this is expected to meet and surpass the cotton lint requirement of our textile industry.

 

“Currently our domestic demand for cotton is met through local production, thereby halting the importation of cotton for the textile industry, Increase in capacity utlisation of ginneries as the ginneries now operate throughout the year, compared to six months in recent past; 19 ginneries resuscitated across the country, and more are expected to join this year.”

 

Echoing Adamu’s remarks, the Director, Development Finance, CBN, Yusuf Yila, in a presentation at the meeting, stated that cotton seeds farming was now in full gear, adding that ginneries were working at over 90 per capacity even as textile industries have sufficient raw material (cotton lint), price of cotton lint was stable amid non-importation of the item.

 

Yila said that the CBN’s revival of the CTG sector has achieved a multiplier impact, noting that the capacity of ginneries increased in 2019 and there was zero importation of cotton in 2019. He said: “We are where we are working with the textiles through the Bank of Industry to see how we can retool them and take the ginneries to the textile. CBN is really in a collaboration with all the agencies and the Customs.

 

The biggest challenge is people smuggling textiles and garments. As you are aware a lot of them their accounts have been blocked. As restitution, we are telling them to go patronize the local textile factories. “

 

Conclusion

 

In fact, as analysts pointed out at the weekend, while the CBN’s efforts to help accelerate the revival of the country’s textile industry are clearly commendable, the apex bank will not be able to effectively address the danger posed by smuggling if it does not get adequate support from the fiscal authorities.

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