The Senate recently urged the Federal Government to ban the importation of textile materials into the country for at least five years in order to support local manufacturers. The lawmakers arrived at the decision following their consideration of a motion, “Urgent need to revamp the nation’s comatose textile industry,” moved by Senator Abdullahi Barkiya of All Progressives Congress (APC) representing Katsina Central. The move is expected to save the industry from imminent collapse and restore it to its former position as the second highest employer of labour and foreign revenue earner for the country.
In spite of the envisaged benefits of the ban, we urge the government to handle it with caution. The government should in the first place provide necessary incentives to revive textile factories across the country. We say this because 60 per cent of local textile industries, according to the Manufacturers Association of Nigeria (MAN), have been shut down, while about 80 per cent of the factories still operate under harsh economic environment. About 140 textile companies located in Aba, Asaba, Kano, Kaduna, had collapsed and should be rehabilitated.
There is no doubt that the nation’s textile industry played an important role in the nation’s economic growth before and after independence. Now that government is being urged to ban textile materials, the local producers must live up to the billing of the forces of competitive market, especially at this time that the African Continental Free Trade Agreement, which the Federal Government has entered into, is about to begin.
Indeed, the problem of the textile sector is not the market, as it has a huge market. The challenge is largely financial support and power supply. The local manufacturers need these two enablers, among other incentives, like the anti-smuggling policy, to be truly competitive in both local and global markets.
We note that the Central Bank of Nigeria (CBN) has initiated some policy measures to bring back the past glory of the textile industry. A few months ago, the CBN announced foreign exchange (fx) restriction on textile importation and other clothing materials. According to the apex bank, over $4billion (N1.4trillion) is spent annually on imported and other foreign made fabric. Nigeria has a potential market in excess of $10billion (N3.5trillion) a year.
Therefore, we support any policy that will make Nigerians patronise locally made textile materials. Considering our huge population, there is no doubt that a huge market exists for the textile industry. But the fabric must be available and must be of excellent quality to start with. That is one sure step to discourage smuggling of imported textile materials into the country. The CBN should support local growers of cotton to ensure their yields meet global standards. The CBN had early in the year unveiled plans to blacklist companies and individuals smuggling textile materials and ready-made clothing into the country. Banks found to be providing forex to such firms and individuals would be barred from the forex market.
Therefore, the Federal Government and the CBN should increase their financial interventions to the sector so that clothing materials will be available and affordable.
The ongoing effort to provide financial support to local textile manufacturers to enable them refit and upgrade their factories to produce high quality materials for both local and external markets should continue. Rather than the five-year ban on importation of textile materials that the Senate wants, the government should revamp the textile sector.
It should give soft loans to the manufacturers at very low interest rate of not higher than five per cent. The anti-smuggling effort of the government should go hand-in-hand with the forex sale restriction order as well as other measures.
This puts the burden of enforcement on the Nigeria Customs Service (NCS) and the Nigeria Immigration Service (NIS) at the nation’s ports and borders. We believe that a vibrant local textile industry with an enabling environment will boost the ongoing efforts to diversify the economy and broaden the revenue base of the country.