CBN BANS FOREX FOR TEXTILE IMPORTERS NIGERIA

Statistics from CBN Nigeria shows that in the early 70s and 80s the country had almost 180 textile mills. Textile mills provided jobs for over 450,000 people back in the days. Unfortunately, most of the textile mills have closed down. Therefore, many workers in the textile and cotton industry have lost their jobs. Also, the workforce has now dropped to 20,000.Thus, textile companies in Nigeria today operate below 20 per cent of their production capacities. Consequently, the nation now depends on importation of textiles to meet its growing need for clothing. The question therefore is; who will rescue the textile industry from collapse? Will the apex bank-Central Bank of Nigeria be able to save this sector as it has done with rice production? This article will discuss what the CBN has done, and what still needs to be done to save textile industry in Nigeria.

Read Also: CBN 41 ITEMS NOT VALID-FOR-FOREX: HOW TO IMPORT

CBN BANS FOREX FOR TEXTILE IMPORTERS

The Governor of the Central Bank of Nigeria, Godwin Emefiele, has taken up the challenge to see that textile industry in Nigeria survives and thrives again. The first step taken by Mr. Emefiele is that of seeking financial support from the Apex bank for cotton producers at a single digit rate. In addition, the governor has warned commercial banks and Bureau the Change operators to desist from giving importers of textile material access to foreign exchange.

CBN: TEXTILE AND COTTON NOT VALID FOR FOREIGN EXCHANGE IN NIGERIA

The directive given by the apex bank Governor means that textile and cotton are no longer valid for foreign exchange in Nigeria. What does this imply in actual sense? Does it mean for example that importation of textile or cotton is no longer allowed in Nigeria? No not at all. To say that a commodity is not valid for foreign exchange does not mean that such a commodity is contraband. What it means is that importers of the marked commodity would have to source for foreign currency elsewhere other than the interbank trade or market. Hence, to import items not valid for foreign exchange, importers would have to buy dollars from the open market or black market with more cost implications.

CBN NOT-VALID-FOR-FOREX DIRECTIVE: BENEFITS

Some of the benefits of placing a not-valid-for-forex barrier on imported goods are as follow:

• Less access to foreign currency means less importation and more productive thinking
• Reduction in importation means less stress on local currency
• Local producers begins to grow organically as importation reduces
• More local production means more job
• Increase in job arising from local production means economic growth
• Less access to forex also translates to incentive to producers, and means more investments.

TEXTILE INDUSTRY WHAT MORE CAN THE CBN DO?

The CBN should do more than simply create trade barriers. In fact, some analysts believe that barriers create a negative sense of security for local producers. Instead of seeking for ways to maximise capacity and become more globally competitive, barriers make producers secure and dull. So, in addition to barriers created, CBN and the Federal Government should take the following steps to maximise growth of textile industry.

• Improve technical capacity of local producers
• Provide necessary infrastructures of production
• Improve border security to eliminate smuggling
• Intentionally create market through social marketing platforms and branding
• Seek to improve capacity and efficiency
• Create a more competitive environment for local producers that make them meet global standards. Improve packaging, sanitation and production for example.

HOW TO IMPORT TEXTILE

The importers of textile and cotton must first of all buy foreign currency from the parallel market. Second, importers must obtain permission from the Central Bank of Nigeria through its bank before commencement of Form M and importation. Contact us at +2349075526276 to handle all things for you.

Read Also: FORM M NIGERIA: HOW TO PROCESS AND OBTAIN IT

CONCLUSION

CBN strategy of placing some commodities like textile in not valid for forex barrier has already started yielding good results in rice production. Recent statistics has shown that Nigeria is the largest producer of rice in Africa. Similarly, it is expected that textile and cotton production will grow in a short time after inclusion as not valid for forex. However, CBN is expected to help local producers through infrastructure investments to achieve more growth. Contact us for any importation or export hassle.

Please follow and like us: