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A Holistic Approach To Reviving The Textile Sector

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I am pleased to be speaking to you today at the official flag off for the distribution of seeds and inputs to cotton farmers in Katsina State for the 2019 planting season, under the auspices of the National Cotton Association of Nigeria. This launch today represents a milestone event being part of the measures the CBN along with other stakeholders such as the Federal Ministry of Agriculture and Rural Development (FMARD), have embarked upon in order to revive Nigeria’s Cotton, Textiles and Garments Sector.  In this regard, please permit me to thank the Honourable Minister of Agriculture and Rural Development, Chief Audu Ogbeh for his tireless effort in supporting the continued growth and development of Nigeria’s Agricultural Sector. I will also like to thank the Governor of Katsina State, Hon. Aminu Masari, for his continued partnership with the CBN in order to harness the immense potentials of the cotton and textiles Industry in Katsina State. This event is taking place here today given the immense potential of Katsina State as the leading cotton producing State in Nigeria. The cotton and textiles industry, given its immense potential, is indeed vital to our growth objectives as a nation, and to our efforts at creating jobs for a large number of Nigerians.

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 build a people focused Central Bank. In addition to a focus on key macroeconomic concerns such as lower inflation and exchange rate stability, I believed that the Central Bank ought to play a more important role in supporting Nigeria’s economic development, given the constraints faced by rural farmers, SMES and Manufacturing companies. More importantly, we believe that CBN’s intervention which is aimed at import substitution will help in conserving scarce foreign exchange for Nigeria. As a result, under the leadership and support of President Muhammadu Buhari (GCFR), we have placed considerable emphasis on addressing impediments to the growth of Nigeria’s agricultural and manufacturing sectors, as both sectors represent over 52 per cent of Nigeria’s GDP. If we are able to drive productivity gains in these sectors, it will undoubtedly translate to higher growth rate for the broader economy, result in increased rural incomes, and improvements in living standards for a majority of Nigerians

The over 60 percent drop in crude oil prices between 2015 – 2017 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 reliance on proceeds from the sale of crude oil.

In the 70’s and early 80’s, Nigeria was home to Africa’s largest textile industry, with over 180 textile mills in operation, this industry employed over 450,000 people. The textile industry then, represented close to 25 per cent of the workforce in the manufacturing sector. Beyond the jobs created in the factories, this industry was supported by the production of cotton by 600,000 local farmers across 30 of Nigeria’s 36 states, thousands of ginnery workers who processed the cotton from farmers, and a large number of distributors that sold the finished cloths to consumers. The sector supported the clothing needs of the Nigerian populace, as our markets were filled with locally produced textiles from companies such as Kaduna Textiles Mill, United Textiles, Supertex Limited, International Textile Industry (I.T.I), Texlon, Enpee and Aswani Mills amongst several others. The cloths produced in these factories were highly sought after not only in Nigeria, but in West Africa and indeed in Great Britain. At one point, our industries produced close to half of the cotton cloth in all of West Africa.

It is no secret that the past 20 years have been very difficult for the cotton, textiles and garment sector. Farmers and Processors have had to deal with low quality seeds, rising operating cost and weak sales due to high energy cost of running factories, smuggling of textile goods, and poor access to finance. Smuggling of textiles goods alone is also estimated to cost the nation over $2.2bn annually.

Today, due to the unfortunate activities of smugglers and dumpers, most of the factories mentioned above have all stopped operations, as only 25 textile factories are operating today, and the workforce in Nigeria’s textile industry presently stands at less than 20,000 people. In addition, a large proportion of our clothing materials are now being imported from China and countries in Europe.

With a population of over 190 million people, Nigeria clearly stands out as a virgin market that must be tapped. If we are serious or determined in our drive to create jobs on a mass scale and reduce youth restiveness in Nigeria, the cotton, textiles and garments industry cannot be ignored. Consequently, the current trend where all our textile materials are imported from abroad must stop. It also means that, we must all join hands to fight and destroy all attempts by unscrupulous persons and companies to continue to smuggle and dump textile and garments into Nigeria. In considering the role which this sector plays in our economic development, we must not just consider the fact of productivity but also, we must view the sector from the standpoint that their existence helps in sustaining the vitality of the neighbourhoods in which they operate. With the death of these industries, came a rise in unemployment, insecurity and other negative social vices. We must reverse this trend. In doing this, the CBN is currently gathering data about, and investigating the accounts of individuals and corporates currently involved in smuggling and dumping textile materials into Nigeria. This investigation is also being extended to the 42 other items restricted from FOREX in Nigeria. After our investigations, the names of these individuals and companies will be publicized and let me assure everyone that these individuals and companies will be blacklisted and all the banks in Nigeria shall be barred from conducting any banking business with the companies, their owners and top management .

Today, Nigeria currently spends about $4billion annually on imported textiles and ready-made clothing. With a projected population of over 190 million Nigerians, the needs of the domestic market are huge and varied, with immense prospects for growth of the domestic textile industries. One quick example that highlights the potential of this local market, includes the need to support provision of uniforms and clothing apparels for students, military and paramilitary officers as well as workers in the industrial sector. In addition, when we consider the amount spent on outfits for religious and social events such as weddings, naming and funeral ceremonies on a weekly basis, the potential market size is well over $4bn.

The intervention we seek to undertake in the Cotton, Textile and Garment (CTG) sector beginning from today, is holistic and it encompasses every node of the value chain. A national committee on revamping the Cotton, Textile and Garment sector which includes the CBN, Federal Ministries of Agriculture and Rural Development; Water Resources; Industry, Trade and Investment; and the governments of Kano, Kaduna, Katsina, Gombe and Zamfara state, has been constituted to drive the initiative to achieve self-sufficiency in cotton production and textile material within a span of three years.

With the launch of the distribution of high yielding cotton seeds to farmers today, we intend to change the narrative on the cotton and textile industry in Nigeria. In the past, insufficient cotton seeds had been identified as one of the biggest challenges facing cotton farmers. With the provision of these seedlings to over 100,000 farmers cultivating over 200,000 hectares of farmland, along with extensive training on proper farming techniques, we expect to see production of high grade cotton lint at much improved yields of up to 4 Tonnes per hectare, relative to current cultivation rates of less than 1 tonne per hectare. Also included in the package are fertilizer, pesticides and knapsack sprayers. The National Cotton Association of Nigeria is expected to ensure compliance of its members with the stipulated terms for the support that will be provided to farmers. These measures will help to improve cotton production from 80,000 tonnes produced in 2018 to over 300,000 tonnes by 2020.

In addition, under the Anchor Borrowers Programme, we intend to improve the linkage between cotton farmers and ginneries, by ensuring that ginneries are able to offtake the high-quality cotton produced by these farmers. So far 23 Ginneries, Spinners and several Textile producing firms have been identified and we intend to support them in retooling their processing plants, while providing them with improved access to finance at single digit interest rate, in order to help sustain their operations and improve their production capacity. The same support will be extended to the Yarn spinners and textile weavers and producers.

We have held consultative meetings with state governments on ways to reduce the operational cost of running textile factories within their respective states. As a result, some state governments have indicated their interest in providing Captive power plants in industrial areas where textile manufacturers operate, in order to enhance their productivity and reduce the operational cost of running their factories.

With regard to the smuggling of textile goods into the country, let me restate that the FOREX restriction on finished textiles and other 42 items remain in force. I am therefore pleased to announce that these measures are not only yielding fruit, it has also helped in driving interest by potential investors who are seeking to make investments to support improved production of textiles in Nigeria. Indeed, we have begun seeing signs on the part of some of the existing textile factories retooling and getting ready for the revitalization of this important sector in Nigeria.

We believe that these steps which we are embarking on today, will not only resuscitate this vital sector, it will also help support our efforts at creating jobs for a large number of Nigerians.

–Being remarks by Mr Godwin Emefiele, Governor, Central Bank of Nigeria on the official flag off of the distribution of seeds and other inputs to cotton farmers in Katsina, recently

 

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