Economy

CBN says Nigeria annually spends $4bn on importation of textile materials, ready-made clothing

Written by Maritime First

…As FG offers 2, 3-year savings bonds at 11.74%, 12.74% for May***

The Central Bank of Nigeria (CBN) on Monday offered a tactful explanation on why a blanket ban was being placed on foreign exchange for textile materials or fabrics importation saying the country currently spends about $4 billion on importation of textiles and ready-made clothing annually.

The CBN Governor, Godwin Emefiele gave the explanation in Katsina in a keynote address, during the flag -off of the distribution of high yielding cotton seeds and other farm input to cotton farmers, just as the Federal Government offered for subscription, two-year savings bond, at 11.74 per cent and three-year savings bond at 12.74 per cent per annum.

‘’Nigeria with projected population of over 190 million, the needs of domestic market are huge and varied with immense prospects for growth of the domestic textile industries,’’ he said.

He, however, said that cotton, textiles and garment sectors had been in difficulty in the past 20 years.

Also Read: No fewer than 130 textile industries in Nigeria have died — Emefiele

‘’Farmers and processors have had to deal with low quality seeds and rising operation cost, weak sales due to high energy costs of running factories and poor access to finance,’’ he said.

He noted that smuggling of textiles goods alone was also estimated to cost the nation over $2.2 billion annually.

‘’We must reverse these trends, and in doing so, the CBN is currently gathering data about, and investigating the accounts of individuals and corporate organisations involved in smuggling and dumping textile materials into the country.

“This investigation is also being extended to the 42 other items restricted from FOREX in Nigeria.

“After our investigations, the names of these individuals will be publicised and will be barred from conducting any banking business with companies or their operators,’’ he said.

According to him, with the provision of seedlings to over 100,000 farmers cultivating over 200,000 hectares of farmlands, we expect production of cotton to be high.

‘’These measures will help to improve cotton production from 80,000 tons produced in 2018 to over 300,000 tones by 2020.

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

In his goodwill address, Gov. Abdullahi Ganduje of Kano State, commended President Muhammadu  Buhari for taking the agricultural sector to the next level.

He said that since the country now had committed leadership, there was also the need to have commitments from the Nigeria Customs Service and strong monitoring from the central government to achieve the desired goal.

‘’We need to be serious in all the steps that we have taken in order to succeed, because the importation of textile materials is at the expense of textile industries in the country,’’ he said.

In the meantime, the Federal Government has offered for subscription of two-year savings bond at 11.74 per cent and three-year savings bond at 12.74 per cent per annum, the Debt Management Office (DMO) has confirmed.

According to the offer circular obtained from the DMO website on Monday, the two-year bond will be due in May 2021, while the three-year bond will be due in May 2022.

It, however, did not state how much was offered, but added that the maximum subscription was N50 million at N1, 000 per unit, subject to minimum subscription of N5, 000 and in multiples of N1, 000.

The website said that the bond was fully backed by the full faith and credit of the Federal Government, with quarterly coupon payments to bondholders.

The savings bond issuance was expected to help finance the nation’s budget deficit.

It is also part of the Federal Government’s programme targeted at the lower income earners to encourage savings and also earn more income (interest), compared to their savings accounts with banks.

The circular also disclosed that the offer would close on Friday.

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Maritime First