Nigeria Yet To Meet $2bn Textile Targets 4yrs After Policy
Four years after the Federal Government approved a national policy on Cotton, Textile and Garment (CTG), Nigeria is yet to meet any of the targets set in the policy.
In 2015, government through the Ministry of Industry, Trade and Investment, launched the National Cotton, Textile and Garment Enterprise Policy to stimulate the textile industry.
Despite not meeting any of the targets, the Central Bank of Nigeria (CBN) recently announced forex ban for textile importers to help bolster the local textile industry.
The policy initially aimed at developing the local textile industry, launched under Olusegun Olutoyin Aganga as the then Trade Minister four years ago, aimed to create an environment to encourage textile production in the country and limit importation.
The policy document projected savings of $2 billion in foreign exchange through import substitution, increase in the level of direct employment in the sector from the then 24,000 workers to 50,000 workers by the end of 2015 and to 100,000 workers by 2017.These targets have not been achieved even by 2019.
The policy also targeted an increase in seed cotton production in the short-term from 200,000 metric tonnes to 500,000 metric tonnes by the end of 2015 and indirect employment expected to increase from the current level of 650,000 people to 1 million people by 2015, and 1.3 million people by 2017.
“Export earnings are also expected to increase to at least $3bn annually or 0.5 per cent of the global share of international trade in textiles and garments in five years. FDI into the Nigerian textiles and garment sector will increase to as high as N255bn cumulatively over the next five years,” the policy stated.
Details of the implementation of the policy under Dr. Okechukwu Enelamah have remained sketchy as it appears the trade ministry under him has abandoned the policy.
Earlier in 2010, the Federal Government had introduced the N100 billion Cotton, Textile and Garment Revival Fund managed by the Bank of Industry (BOI) to turn around the fortunes of the textile industry, but just like the national policy, it has also failed to revive the textile sector.
Explaining why Federal Government’s N100 billion Cotton, Textile and Garment Revival Fund could not achieve the desired goal, CLS Stockbrokers Limited, a member of the FCMB Group, said most players in the textile industry “did not avail themselves of the loan as repayment became a major challenge to those who did, since it was difficult to contest with imports from Asian countries which have taken over the market.”
The company, which is a member of the Nigerian Stock Exchange, explained that the ‘National Cotton, Textile and Garment Policy’ approved in 2015 targeted cumulative investments of over N255bn (US$0.71bn) in the textile industry over five years.
The policy provides that all military, para-military agencies and government schools purchase only made-in-Nigeria textiles and garments.
“In our view, the Nigerian textile industry can still be a major revenue earner for Nigeria and a major employer of labour considering the local availability of the major raw material (cotton) and the chemicals needed for production (mainly by-products of petroleum).
“However, we believe that the success of the industry depends more on the ability of the government to address the fundamental challenge of poor infrastructure, mainly power,” the company said on the new forex restriction on textile imports.
Speaking on the development, an economist, and Former Director General, Abuja Chamber of Commerce and Industry (ACCI), Dr Chijioke Ekechukwu, told Daily Trust that latest CBN’s forex restriction for textile import will not have so much effect as importers will continue to import textile by sourcing for forex through the secondary forex markets of Bureau de Change and through privately arranged international money transfers.
Dr. Ekechukwu said the restriction will rather increase the price of the imported textile materials and the price burden will be borne by the ultimate consumers.
“There is however going to be a marginal reduction in burden on our foreign reserve and reduction in forex demand through CBN. That is the only major benefit to the country as consumers will pay higher prices for products they hitherto paid less for,” he said.
The expert further explained that the forex restriction is not a ban on textile materials, but “a not-valid-for-export regime,” which is not likely to protect the local textile manufacturers.