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Textile industry: CBN taming smugglers with sanctions

Effort to revamp and resuscitate the comatose local textile factories is a daunting one, with CBN dominantly leading from front row with the regulator having cause to wield its big stick lately on some deviant smugglers. ABDULWAHAB ISA reports

 

 

 

The dire position of the country’s economy not only makes it expedient on Central Bank of Nigeria to wear a double cap, it warrants it performing some orthodox policies, hitherto on exclusive list of the fiscal list.

Largely a mono-economic nation, with about 80 per cent of her income derive from oil, the instability associated with crude oil production quantity and price fluctuation, has, over the years, eroded the position of crude oil.

 

Given these vagaries associated with oil and its burden on thr economy, the apex bank, three years ago, mapped out intervention policies. CBN Governor, Mr. Godwin Emefiele, reeled out plans to revamp some abandoned agro commodities. Suffice to say Nigeria earned her fame as agriculture produce nation. Her prosperity as a nation was in the agriculture exploit in 50s and 60s before oil discovery.

 

Specifically, CBN’s intervention and support to select agriculture commodities such as cotton was informed by decision to revamp textile industry, which used to be largest employer of labour next to federal civil service. Other areas of intervention include palm oil and rice, which is being largely promoted through Anchor Borrowers’ Programme, as well as cassava, maize etc.

 

Giving life to cotton/textile sector

 

The apex bank is keen and determined to revamp and resuscitate the collapsed textile industry. Its involvement by way of intervention and funding across all facets of textile value chain – from the supply of high-yielding cotton seeds and other farming inputs for planting season, to arranging off- takers, providing facility to textile industry stakeholders are all, geared towards resuscitation of textile industry.

 

Recall that, in the 1970’s and early 1980’s, Nigeria was home to Africa’s largest textile industry, with over 180 textile mills in operation and employed close to over 450,000 people.

 

The bank’s intervention,   which began in 2019 till 2020, has recorded modest progress. At a meeting of stakeholders of cotton and garment value chain, which held last week in Abuja, CBN Deputy Governor (Corporate Services Directorate), Mr. Edward Lamekek Adamu, succinctly recapped CBN’s interventions thus far. He said the bank committed over N120 billion into Cotton, Textile and Garments (CTG) industry across value chain, while over 320,000 farmers had been financed by the bank between 2018-2020. Edward put expected output for seed cotton in 2020 at 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 Industries.

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 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. This sector supported the clothing needs of the Nigerian populace, as our markets were filed with locally produced textiles from 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 several others. The banks interventions in Cotton Textile and Garment sector is designed to resuscitate and return the textile Industries back to its glorious days, creating jobs, diversification of Nigeria’s economy and achieving sell-sufficiency in cotton production”, he said.

 

Wielding the big stick

 

The essence of CBN’s interventions by way of funding the cotton and textile sector is to revamp and resuscitate the sector to save job losses. The second important reason, is to preserve foreign exchange which would have been fritter on textile materials import. Reclaiming lost jobs won’t happen in absence of patronage to indigenous textile.

This is the whole essence of Federal Government’s Executive Order 003. It aims at supporting local content in public procurement. It expressly states that, all ministries, departments and agencies (MDAs) shall grant preference to local manufacturers of goods and service providers, in their procurement of goods and services.

 

Enforcement of Executive Order 003 is fittingly desirable in textile sector if end results: job creation and conserving of forex exchange as motives of CBN must be realised. Regrettably, some textile smuggling merchants are unrelenting.

 

The CBN was jolted into taking drastic action, including freezing bank accounts of caught culprits. Th revelation last week by Adamu at textile stakeholders meeting that bank accounts of 15 textile smugglers had been frozen goes further to demonstrate CBN’s resolve to revamp textile industry.

The bank warned that, for the accounts to be de-freeze, the only restitution is for the textile importers to shift their patronage to local textile firms.

Textile stakeholder’s response Problems associated with the cotton, textile and garment sector are multi-faceted and dimensional. The good thing, however, is the problems are solutions tied. They are surmountable if current push by apex bank is given maximum support by stakeholders.

 

Anibe Achimugu is the President of National Cotton Association of Nigeria. He lauded various intervention by CBN. He detailed what needed to be done by the bank to clear areas of challenges. “As we speak, we have excess cottons in warehouses because the current capacity of the textile companies are not able to utilize the cotton for now.

 

But of course, since the CBN is intervening in the textile companies, they should be able to improve their capacities going forward,” he said. Hassima Ali Kwajaffa is Director General, Nigeria Textile Manufacturers Association.

 

He listed marketing as one of challenges local textile firms still contend with, and appealed to CBN authority to intensify effort in that direction. “There is policy of patronising made in Nigeria textiles.

 

The CBN facilitated meetings between textile industry stakeholders and heads of various institutions such as the police, army, navy, NYSC; the prisons etc. Regrettably, these instructions have not given maximum patronage to local textile firms. Most of them still patronize imported textile materials.

This remains our biggest challenge,” Kwajaffa, DG NTMA said. CBN’s Director, Development Finance department, Mr. Yusuf Yila, responded to various questions agitating the minds of local textile owners.

On ginners, Yila said: “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”. On enforcing patronage to local textile firms, he said strict measures are being put in place by CBN. “CBN is really collaborating with all the agencies and the Customs.

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

On the uniform men, we are working with them. We have taken them to all the textile companies to see that the quality meets their standard,” said CBN Director, DFIs.

Last line

Undoubtedly, CBN’s steps thus far to revamp textile industry if stakeholders key-in their support is all that is required for textile industry to reclaim its past glory. For this to happen, CBN mustn’t look back in wielding the big stick on deviant textile smugglers.

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