CBN Blocks forex for all Textile Materials

In a bid to revive the textile industry in the country, the Central Bank of Nigeria (CBN) has imposed restriction on access to foreign exchange on importation of all textile materials into Nigeria.
CBN Governor Mr. Godwin Emefiele revealed this at the textile industry stakeholders meeting in Abuja. He said: “Effective immediately, the CBN hereby place the access to foreign exchange for all forms of textile materials on the foreign exchange restriction list. Accordingly, all foreign exchange dealers in Nigeria are to desist from granting any importer of textile material access to foreign exchange 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” he said.
“The details of those strategies will be unfolded in due course. We shall, initially support the importation of cotton lint for use in textile factories, with a caveat that such importers shall begin sourcing all their cotton needs locally beginning from year 2020. As part of its Anchor Borrowers Program, the CBN will support local growers of cotton to enable them meet the needs of the textile industries in Nigeria. The CBN shall also support efforts to source high yield cotton seedlings so as to ensure the yields from our cotton farmers meet global benchmarks.
“As regards provision of stable electricity, the CBN shall support the creation of textile production centres in certain designated areas in Nigeria where access to electricity shall be guaranteed. In 2016, the CBN began discussions with the Kano and Kaduna State Governments to establish textile industrial areas in a bid to guarantee stable electricity in those industrial areas. We would intensify efforts with these governments and others that may show keen interest to see to the quick actualisation of such programs. We believe that these measures will discourage smuggling, resuscitate this critical industry, and support your efforts at creating jobs for Nigerians”.
Emefiele noted that “Noticeable declines have been recorded in our monthly food import bill which declined from $665.4 million in January 2015 to $160.4 million as at October 2018; a cumulative fall of 75.9 per cent and an implied savings of over $21 billion on food imports alone over that period. 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. “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. In order to achieve this goal, the CBN together with other critical stakeholders recently identified key commodities and products such as textiles and palm oil that have the ability to support the creation of hundreds of thousands of jobs in our economy”.
He said “On assumption of office in June 2014, I indicated in my inaugural speech that one of my key objectives as Governor of the Central Bank of Nigeria is to focus our energies in building a Central Bank that will devote its energies, on building a resilient financial system that will serve the growth and development needs of our beloved country, Nigeria. In addition to a focus on key macroeconomic concerns such as moderating inflation and maintaining exchange rate stability, we also feel that the Central Bank of Nigeria must play a more constructive role in supporting Nigeria’s economic development particularly in the Agric and Manufacturing sectors, given the constraints faced by rural farmers, SMES and Manufacturing companies. Our reason for adopting this posture rest on the believe that, addressing impediments to their growth, will not only strengthen economic growth, but will also enable the creation of more jobs and foster a more inclusive society. The over 60 percent drop in crude oil prices we witnessed between 2015 – 2016 and its attendant effects on economic growth, inflation and our external reserves, provided further impetus on the need for the CBN to support measures that will drive productivity in critical sectors of the economy, while also weaning our economy from its dependence on imported goods.
“Following a series of steps embarked upon by the CBN which include, a tighter monetary policy regime beginning in 2016; the establishment of the Investors and Exporters Window in April 2017; restriction of access to forex for 41 items that could be produced in Nigeria; and the deployment of our agricultural intervention programs to support improved cultivation of particular agricultural items such as rice, tomatoes and fish, the Nigerian economy has made considerable progress. After five quarters of uninterrupted GDP contraction (beginning from 1stQuarter of 2016), the economy exited from the recession during the second quarter of 2017. The recovery has been sustained for seven consecutive quarters. The pace of quarterly GDP growth has improved from .5 percent in the second quarter of 2017 to 2.38 percent in the fourth quarter of 2018. Our FX reserves today stand at above $43billion, up from $23 billion in October 2016 and inflation has dropped from its peak of 18.17% in January 2017 to 11.3 percent in February 2019.
“Following a successful general elections, our Foreign Investor friends have began to show interest in Nigeria again, given their confidence of a stable business environment. 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% of the workforce in the manufacturing sector. This industry was supported by the production of cotton by 600,000 local farmers across 30 of Nigeria’s 36 states.