Nigeria’s Central Bank Governor Godwin Emefiele has just issued a directive to the effect that traders in “all forms” of textile and clothing import business will no longer obtain access to foreign exchange for their transactions. In a meeting with cotton sector lobbyists (Nigeria Cotton Association), Emefiele also vowed to go a step further to give hell to “recalcitrant smugglers”.

Why it matters

Growing the textile industry is the Nigerian central banker’s explanation for the latest restriction. While it has been interesting to watch Emefiele’s obsession with trade policy – ranging from Agriculture to manufacturing – one thing is clear that this latest move is an early warning sign of a foreign exchange crisis.

Nigeria’s FX reserves are under serious pressure, CBN increased FX interventions by 87% in 2018, splashing $39billion in order to stabilize the Naira. This move is reminiscent of a June 2015 CBN directive labeling about 41 items ineligible for FX in order to ease the pressure on the Naira. The ban was only lifted two years later in 2017.

Emefiele is advancing his usual protectionist narrative with an unverified claim that Nigeria spends about $4 billion yearly on imported textiles. A cotton lobbyist at the meeting praised his decision: “Better days are ahead for us,” he said. This position, however, is in sharp contrast to the implications of this decision to Nigerians in general.

Inflation, Inflation, Inflation: In the short or medium term, Nigeria is simply unable to produce enough textile to meet current demand. A 2016 report by the International Cotton Advisory Committee estimates Nigeria’s cotton production as a meager 51,000 metric tonnes.

The underlying issue remains poor electricity supply, poor infrastructure, agricultural inputs – which are things that an FX ban is unable to immediately rectify. The 2010 Nigerian policy on cotton, textile, and garments, a part of an industrial revolution plan has been unsuccessful likewise in spite of the investments made in supporting producers.

The implication simply is, that the prices of imported goods, which remains the only viable option would skyrocket and trigger inflation. For the bulk of Nigeria’s over 80 million extremely poor people, the impact on clothing cost – an essential commodity could be quite significant.

More incentive for smugglers: As much as $1.4bn worth of textiles is smuggled already into the country, according to a 2018 claim by Nigerian Textile Manufacturers Association. Mr. Emefiele’s directive would even incentivize smuggling, the same issue with his similar policy on Rice which has seen our tiny neighbors Benin Republic become the world’s highest importers of Rice. The World Bank estimates that $2.2bn dollars of textile is being smuggled into Nigeria from Benin. Such moves would ultimately hurt the economy, also denying the Nigerian customs of critical revenue.

There is no real upside: Bottom line is that Nigeria stands no chance to compete in the international textile trade. Nigeria does not produce enough cotton, Nigeria’s cotton is ranked low grade internationally, energy costs are up, and logistics costs are up. This means that there is no upside to this policy. However, Nigeria’s sudden interest in restricting textile import following a $2billion textile investment deal signed with China at the 2018 FOCAC stokes curiosity. A number of analysts are thinking that such moves might have been influenced by expansionist China which is strategically leveraging Africa in its trade wars with the United States. China’s Rui Group says the investment will enable it to provide textile products to about 20% of the West African market. Effectively advancing restrictions in the most important regional market effectively help it lock out Western competitors. Right?

Source:
http://www.thescoopng.com/2019/03/06/why-you-should-worry-again-about-the-central-banks-new-forex-ban/

The import ban wont address the power issue which has been bane of productivity. The other textile initiatives failed for similar reasons. The smugglers are rampant on west and north ready to bring it it. People can still import goods they'll just have to source forex themselves. Expect clothes to cost a little more in the mean time.

However, Nigeria’s sudden interest in restricting textile import following a $2billion textile investment deal signed with China at the 2018 FOCAC stokes curiosity. 

The conspiracy theory leveled here is interesting but that would be dumb of Nigeria. They could was after the plants are built before adding it to forex ban. I do believe these new free trade zone projects will help since they have good incentives and they'll tackle power issues.

Before you place ban on importation, we should have enough locally produced products first

And so

While revival of our textile industry is a good move, I have no doubt Buhari is pursuing it above other alternatives because it favours the north far more than it does the south.
He tried to hit full throttle with the northern dream in his first tern and there was a uproar, now there is nothing to lose and I am sure bubu will gladly ignore contrary advises.

Buhari and his usual strange economic policies.


Hope we get it right this time...

Good one.

 Bottom line is that Nigeria stands no chance to compete in the international textile trade. Nigeria does not produce enough cotton, Nigeria’s cotton is ranked low grade internationally, energy costs are up, and logistics costs are up

We will definitely start somewhere.
All these develop countries started from somewhere.
Our country was taken back many many years in lack of development by some evil, criminal politicians.
We are on the track to a New Nigeria.

RIP ON ARRIVAL

Hmmmm

#NextLevel

Might be good for us Sha. The future will tell

Oloye get what right? We're in it for real for another 4 hectic years.

Omo iya mi G Masun

InaNla:
Buhari and his usual strange economic policies.


Hope we get it right this time...

let me rush and buy clothes now before the price goes up!!!
omo see business....

I think the guy either lack wisdom, knowledge of his job or wicked ( benefiting from the hardship)
Naira was N150 /$ when he became the CBN governor under his watch and programs its now N360/$.

post=76576597:



Bottom line is that Nigeria stands no chance to compete in the international textile trade. Nigeria does not produce enough cotton, Nigeria’s cotton is ranked low grade internationally, energy costs are up, and logistics costs are up

Stop that. We have been down this military road before. Remember how OBJ kept preventing imports of certain products with the hope that it will spur local manufacturers. So what is Buhari doing different here. Nothing significant.
He is only going for textile because he knows it will favour the north as usual. All his first term moves where directed that way and it took a timely uproar among others for him to soften the pedal on it. He is back at this destructive north-first mago-mago diversification drive and you know it.

Lol

Growing the textile industry is the Nigerian central banker’s explanation for the latest restriction.

He is only going for textile because he knows it will favour the north as usual.

Same ol' story!
Rule 4 in life : Ignore this kind of person in life............he will get happy while you get dirty!

They have started again


We dont have enough locally to go round, you didnt even check the effect and you rushing to place a ban like its the messiah

Jestin:
Before you place ban on importation, we should have enough locally produced products first

Nigerian government doesn't reason like that. That's how they banned rice importation, due to similar issue the price of locally produced rice also went up just as foreign ones.

It's only later they'll start rethinking if what they did was wrong or right. Back and forth government

Let Nigerians start investing in textile industries rather than Davido spending $100k weekly on frivolities.


Imagine if he invests his $400k monthly on his failed clothing line and wizkid also did same in his own clothing line won’t we have better textile industry.


This is a very good development to encourage investors knowing that there is little or no competitor.

This Is the kind of policy we need to grow our economy, everything will gradually fall into place, power supply will increase ( necessity is the mother of invention), domestic Cotton production will increase since the demand will increase. Job opportunities in cotton farming and textile industry will also increase, more revenue for the FG from taxes. The ban on foreign rice increased local production and created a lot of opportunities despite sabotage from daredevil smugglers. ( farming the rice, processing i.e de-stoneing and polishing the rice, domestic production of bags for the rice etc). Let us learn from other more successful countries like north Korea. Let us be optimistic and hope that this policy will do us good in the long run. I look forward to the day Nigeria will stop importing PMS and other allied products. A journey of a thousand miles begins with a single step, we must endure whatever hardship this ban will cause for us to create a better Nigeria. Nigeria will be great again.
LONG LIVE THE FEDERAL REPUBLIC OF NIGERIA!!!!

RALPHOW:
I think the guy either lack wisdom, knowledge of his job or wicked ( benefiting from the hardship)
Nsira was N150 /$ when he became the CBN governor under his watch and program its nowN360/$.

Exchange rate doesn't really equate to strong economy.

post=76576672:
Growing the textile industry is the Nigerian central banker’s explanation for the latest restriction.

Rule 4 in life : Ignore ............

Please what is rule 1-3 ?

CodeTemplar:

Please what is rule 1-3 ?

Why are you dying and craving so much for our attention on a daily basis?!
Is everything okay boy?!
Make your comment and disappear to wherever you crawled out from!

post=76576597:

We will definitely start somewhere.
All these develop country started somewhere.
Our country was taken back many many years in lack of development by some evil, criminal politicians.
We are on the track to a New Nigeria.

Still blaming people? Na wah oh...

How you want to grow a whole textile industry without power baffles me. Government needs to stop thinking they will always be funded enough to intervene in sectors that should be private investment driven. How long can the CBN sustain Nigeria Forex with global unforeseen circumstances? In Nigeria, we only think of today without calculating the probability of the future risks. China may decide to pull out and we will be left with a dwindling economy

RALPHOW:
I think the guy either lack wisdom, knowledge of his job or wicked ( benefiting from the hardship)
Nsira was N150 /$ when he became the CBN governor under his watch and program its nowN360/$.

When he became CBN governor....we were selling oil for over 100 us dollars...and sice then it has fallen to as low as 29 USD and is now below 60 usd

Naturally, our forex earnings have fallen....so the value of the naira falls since the amount of dollars available to buffer the naira has fallen

eddiebruk:
How you want to grow a whole textile industry without power baffles me. Government needs to stop thinking they will always be funded enough to intervene in sectors that should be private investment driven. How long can the CBN sustain Nigeria Forex with global unforeseen circumstances? In Nigeria, we only think of today without calculating the probability of the future risks. China may decide to pull out and we will be left with a dwindling economy

At the same time Nigeria is shortchanging the power industry.

1.DISCOS are being forced by law to charge for power below the cost of production. That is why DISCOS cannot accept all the power GENCOS send...they can't afford it.

2.DISCOS are owed N1trillion by government agencies, and also are owed same amount by consumers. And as a recent BBC programme put it, about 1/3rd of consumers pay for power.

3.Fixing power requires billions of dollars...and since Nigerians and their government are not paying up...how do we fix power?

post=76576826:

Why are you dying and craving so much for our attention on a daily basis?!
Is everything okay boy?!
Make your comment and disappear pls!

You sound like the boy here. Always quick to jump in and support a failing govt without properly relating to pressing issues.
This move failed woefully in OBJ's time and I like to know what Buhari is doing differently to make it work. Is it the halfhearted corruption war?

You can’t say someone should eat and at that the same time you are hiding or not wanting to give the foood.