CBN kicks-off push to refloat Nigeria’s textile industry

CBN kicks-off push to refloat Nigeria’s textile industry

The Central Bank of Nigeria (CBN) has kicked the national programme to refloat Nigeria’s cotton, textiles and garment industry which once was the bulwark of manufacturing in the country and provided jobs for as many as one million Nigerians.

At a meeting with heavyweights from the sector in Lagos, CBN Governor, Godwin Emefiele, who is championing the initiative, spoke of the pain of the nation over how “an industry that literally touched the fabric of our entire country now pales in the shadow of its past success.”

He said a subsector that once employed over one million hard working Nigerians is now almost completely dominated by imports from Asia.

He added, “we are all aware of the challenges that have beset and continue to plague the industry and I am under no illusions that this meeting will immediately resolve these issues. I am, however, confident that with our collective efforts, we can finally change the sad narratives about the industry.”

Textiles manufacturing once flourished in Nigeria, with well over 150n vibrant mills operating at close to full capacity in locations like Kaduna then known as the textiles city, Lagos, Funtua, Gusau, Asaba, and Aba and the sector was second only to government as an employer of labour.

The impact of the industry was so pervasive that there was hardly one family in northern Nigeria, not touched in one way or the other.

Emefiele said as a young banker in Lagos you were deemed a failure if you did not have a textiles company in your loan portfolio.

“Unfortunately, these glory days are now distant memories”, said Emefiele, assuring the leaders that the “bank is ready to provide funding under our real sector support facility for the industry”; even if he also said the problem of the sector is beyond mere money.

In a note yesterday, analysts at FBN Capital said the governor sent a strong message of support to leaders of the beleaguered industry where about 35 percent of manufacturing costs are energy related.

This explains why the CBN has launched an N213bn electricity market stabilisation facility, NEMSF to help resolve the sector’s liquidity challenges.

The analysts said the argument is that Nigeria has the raw material, cotton and the labour to rebuild a profitable garment industry.

This can also be applied to the leather goods, rice, cassava-based derivatives such as starch, palm oil, steel and petrol and this seems to enjoy the full support of president Muhammadu Buhari, according to the analysts.

The output of the textiles, apparel and footwear segment amounted to N460bn in Q1 of 2015, representing around 2.2 percent of constant price GDP and 21.7 percent of manufacturing.

Figures from the US department of agriculture show a national cotton production in Nigeria estimated at 200,000 bales of 480lb in 2014, compared with 420,000 bales ten years ago.

Insecurity has been blamed for the massive decline since the north of Nigeria accounts for over 60 percent of total national output.

The CBN which does not have the powers to ban the importation of any item into the country has given its full support to the industry by including textiles, woven fabrics and cloths among the list of 41 items for which FX for imports will no longer be available from official sources.

Data show that imports of textiles products from India alone have been running at $140 million annually, while imports from China, Indonesia and Taiwan are much higher. It is believed that if the CBN circular is enforced and Nigeria’s borders are policed, the possibility of shortages in the short term exists until the domestic industry is rebuilt.

The US African Growth and Opportunity Act of 2000 enhances market access for certain goods from qualifying countries in sub-Saharan Africa including Nigeria. One of the main beneficiaries on the continent has been the Kenyan clothing industry. The act has recently been extended to September 2025.

Source: Business Day

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