Central Bank of Nigeria (CBN) Set To Bail Out Nigeria’s Struggling Textile Industry

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The Central Bank of Nigeria (CBN) recently announced a planned bailout for the textile industry as a way of diversifying the economy and creating job opportunities for the teeming population.

CBN Governor, Mr. Godwin Emefiele, made the announcement at a meeting with key players in the industry.
He said the funds would be released in a single-digit interest rate and long tenured loans for stakeholders in the cotton, textile and garments segment.

 

“A subsector that once employed over one million hardworking Nigerians is now almost completely dominated by imports from Asia…the central bank under my leadership is prescribing to work with the industry to come up with holistic solutions for the long term sustainable development of the sector,” Emefiele said.

This move by the CBN is a decision in the right direction, especially when viewed from the fact that Nigeria’s over dependence on oil revenue will no longer sustain the economy.

During its days of glory, the textile industry in Nigeria was a money spinner for manufacturers, a source of livelihood for the citizens, and a reliable source of foreign earnings for the country.

In the 1970s and 80s, Nigeria had one of the leading textile industries in Africa. By 1991, the sector recorded an annual growth of 67 per cent and employed about 25 per cent workers in the nation’s manufacturing sector.

Sadly, most of these companies have either folded up or are performing far below their installed capacity. This is due to unfavourable business environment, inconsistency in implementing government policies and absence of major indices of production in the sector.

The Federal Government had in 2004 banned importation of finished textile materials but Nigeria has remained a dumping ground for all sorts of fabrics, including those that can be produced at home.

Finished textile products from China, India, Malaysia and other countries are common sight in Nigerian markets simply because our borders are porous, making it very easy for smugglers to have their way.

Arguably, the wisdom behind the ban was to reduce the influx of imported textiles, but this has been defeated, partly because the imported products are much cheaper than those produced at home.

Similarly, China, India and other countries have comparative advantage because their government had ensured that there is enabling environment, adequate infrastructure and unfettered access to funding.

A Coalition of Closed Unpaid Textiles Workers (CCUTW) in Kaduna recently said despite interventions by government, about 600, 000 people who hitherto worked in the industry are still jobless.

The CBN must therefore opt for a viable option in repositioning the industry by not only making funds available, but through disbursing it at zero percent interest rate and to be repaid after 15 years or more.

Cotton farmers must also be encouraged by providing them with improved seedlings and fertilizer so as to feed the textile industries. And when there is glut, buy back policy should be adopted by government so as to encourage farmers.

This will enable the textile industries to fully stabilize, expand their operations, recruit more workers and diversify their markets as obtained in other climes.

As a matter of policy, the federal government must also compel our security agencies, including army, navy, air force, police, and civil defence to patronize Nigerian garments for their personnel.

The order should also be extended to the NYSC as well as federal unity schools. State governments that offer free uniforms to their students and pupils should also be encourage patronizing Nigeria textile products.

With this, the market will not be saturated. Officials of the National Union of Textile Garment and Tailoring Workers of Nigeria, a whopping N300bn worth of textiles and garments are being imported annually.

If this huge sum is invested in Nigeria, textile industries would definitely thrive and would not require any bailout.

The Nigerian Customs and other relevant agencies must also rise up to the occasion by effectively manning our borders. At present, smuggled textiles have taken over 90 per cent of the Nigerian market, making the space extremely difficult for homemade goods to penetrate.

 

Source: dailytrust.com.ng

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