James Emejo writes on efforts by the Central Bank of Nigeria to intervene in the textile sector, in line with its support for the federal government economic diversification
Efforts by the federal government to revive Nigeria’s ailing textile sector received a boost last week through a partnership between the Central Bank of Nigeria (CBN) and seed farmers in Katsina State.
Once the pride of the nation in the early 1970s and 1980s and major foreign exchange earner, the cotton, textile and garment (CTG) sub-sector of the economy had been in shambles since the advent of crude oil and now unable to make any meaningful contribution to economic growth.
The sector was once the hub of Africa’s largest textile industry, with over 180 textile mills in operation and employing over 450,000 people and accounting for over 25 per cent of the workforce in the manufacturing sector.
However, during inauguration of the distribution of seeds and other inputs to cotton farmers in Katsina, the CBN Governor, Mr. Godwin Emefiele, spilled the beans that the apex bank was currently gathering data evidence and probing the accounts of individuals and corporates suspected to have been involved in smuggling and dumping of textile materials in Nigeria.
Emefiele added that the investigation was being extended to the 43 other items that are not qualified to access foreign exchange at the official window.
His latest announcement did not come as a surprise given his body language and open hatred towards smuggling activities since the bank commenced its intervention programmes in the agricultural sector.
He believes smuggling remained the greatest threat to the success of government’s efforts to diversify the economy from the perils of oil. Intact, it could be arguing that the positive outcome resulting from the ban on 43 items would have been more pronounced, but for the activities of smugglers who still bypass bottlenecks including law enforcement agents to bring items into the country.
Early in March, when he announced inclusion of all forms of textile materials to the list of items that are not eligible for foreign exchange from the official windows with immediate effect, Emefiele had expressed his frustration over the inability of law enforcement agencies to curtail smuggling, a situation which prompted the CBN to consider an economic option against the saboteurs.
During his engagement with stakeholders in the cotton and garment industry, the CBN governor issued an outright warning to all FX dealers in the country to desist from granting any importer of textile materials access to foreign currency in the foreign exchange market.
He had warned that going forward, the CBN would adopt a range of other strategies that will make it difficult for recalcitrant smugglers to operate banking business in Nigeria, adding that details of the proposed strategies would be unfolded in due course.
Emefiele, who had shown unparalleled passion for the diversification of the economy has at different occasions voiced his concerns over the threats, which smuggling and dumping continued to pose on federal government’s diversification initiatives particularly the Anchor Borrower Programme (ABP) through which the apex bank’s intervention has caused a revolution in rice production in the country, but whose success is now threatened by smugglers.
Similarly, while raising the alarm on the potential damage of smuggling on some of the lofty initiatives by government, particularly the ABP where the CBN had committed billions of naira, the Chairman of Rice Processors Association of Nigeria (RIPAN), Mr. Mohammed Abubakar, last month warned that the gains so far recorded in the rice production revolution in the country, particularly the intervention of the CBN through ABP, could be jeopardised by the activities of smugglers, if not confronted frontally by government.
According to him, over one million metric tonnes of rice (about 20 million bags) had been smuggled into the country within the last three months.
As a result, he said Nigeria currently loses huge revenues, foreign exchange and jobs to this menace as rice processing companies continue to shut down operations because of their inability to gain market access.
The RIPAN chairman said, “More painfully millions of smallholder farmers are stuck with their paddy (rice) because the millers can no longer afford to buy from them.”
Abubakar further admitted that the recent CBN interventions had impacted greatly on integrated processing capacity, which increased from 800,000 metric tonnes in 2014 to 1.6 million metric tonnes in 2018, in addition to about 3.9 million metric tonnes of finished rice milled by thousands of cottage millers scattered across the country.
He expressed worry that all these achievements may go down the drain, if the activities of smugglers go unchecked.
However, Emefiele, who is determined to subdue smugglers and ensure that policy interventions of the present administration sail through, had assured that the CBN will apply adequate measures to deal with the menace of smuggling, which had often threatened efforts towards self-sufficiency, particularly in agriculture. The governor emphatically stressed that the CBN will make life difficult for smugglers.
According to him, we will deal with smuggling this time. We know what we will do to make it difficult for them to import textile. We will try economic solution to smuggling.
Also, in March, when the apex bank announced its intervention in the oil palm value chain, Emefiele also read the riot act to smugglers and their financiers, warning of severe consequences.
He also reiterated the resolve of the bank to deal with unrepentant smugglers who are bent on frustrating its efforts to revive key sectors of the economy as well as create jobs for Nigerians.
He said: “Let me stress that we are not unmindful that our current focus to make life difficult for smugglers of the products being targeted under our intervention, will be resisted by unpatriotic and recalcitrant beneficiaries of the status quo.
“We will not be deterred by their criticisms but will appeal to Nigerians to support these initiatives. No doubt, there will be initial pain caused by this new focus, but the medium and long-run benefits remain unassailable and glorious for our dear country.”
He added: “Soon every region of our beloved country will feel the positive impact of our intervention in the agricultural sector.
“These efforts we hope will not only enable us to conserve our foreign exchange, but also create jobs on a mass scale. As these measures begin to bear fruits, we are very optimistic that our states will become more economically viable, given the massive economic activities that will occur from catalysing activities in our agricultural and manufacturing sectors.
“Although the economy has recorded some investments in the oil palm value chain over the last three years, these investments fall short of our expectations, and our expected target of self-sufficiency in oil palm production is far from being achieved.
“Prospective investors, both local and foreign, have at different fora identified the factors preventing investments in the sector to include, among others, difficulty in acquiring farmlands and the dearth of long-term funding sources at affordable costs.”
According to aggregate opinion by stakeholders, smuggling constituted the biggest headache in the current determination to revive key sectors of the economy including the oil palm sector.
Nonetheless, the apex bank’s effort to stop the importation of tomato products by 2021 and attain self-sufficiency could be endangered if the issue of smuggling is not tackled.
Emefiele had insisted that the country will soon achieve self-sufficiency in tomatoes production, enough to even export and earn foreign exchange.
“Whether we like it or not, as long as we are producing this for our consumption and possibly for export, there is no choice other than to ban this,” he said.
“We want to ask other people who are interested, to please join. Join and let us earn foreign exchange from exporting tomatoes rather than spending foreign exchange importing tomatoes into Nigeria,” he appealed.
Also, the Minister of Agriculture and Rural Development, Chief Audu Ogbeh, also sounded a note of warning to economic saboteurs.
He said: “In a short while, I assure you, we will stop anybody importing tomato paste into this country.
“It is going to happen faster than people think. So, let the smugglers beware; production not smuggling; production not importation – definitely not importation of what we can produce.”
“Our children have to have jobs; our farmers have to have jobs. Farmers are entitled to happiness, good living and we have abandoned them in the bush for too long. Now that people are joining hands to give them life, we are most grateful.
“And we believe the future we have been dreaming of is here. And go tell Nigerians that tomatoes are being grown here on a scale, which in a short while, will make us exporters not importers of tomato products.”
After repeated warnings by the authorities against individuals and institutions working to undermine the current efforts to salvage the economy from the doldrums by introducing reforms, some of which have begun to yield fruits, any action deemed to be taken against culprits could as well be justified.
Emefiele’s efforts have been criticised largely by a section of people who are averse to positive change in the country.
Some have even moved against the renewal of his tenure when it elapses in June. But, his achievements appeared to speak for him as President Muhammadu Buhari, apparently impressed by the passionate and selfless effort of the CBN to make key sectors of the economy work again, has nominated him for a fresh tenure in office to enable him accomplish his vision for the country.
The will be a great feat for the governor as no CBN boss in 20 years has been lucky to be rewarded with a second term in office.
And with the latest crackdown on economic saboteurs by the CBN, there is no doubt that the stage is set for the materialisation of the current policy initiatives, especially in agriculture.