Cotton stands out as the most important fibre material for Nigeria’s textile industry. The production of the cash crop in Nigeria, however, suffered a lull plunging the industry into near extinction. No thanks to the import substitution policy of past administrations in the country.
Many of the textile factories have stopped operation altogether resulting in retrenchment of staff and the swelling of the unemployment market. However, a paltry 25 textile factories are hanging in there and operating at below 20 percent of their installed capacities with a joint work force of less than 20,000 people.
The cotton growing sector was not faring any better. Actually, it was moribund until recently when the Central Bank of Nigeria intervened as part of the Anchor Borrowers’ Programme. The situation in the sector, without doubt denied many small holder farmers the opportunity to earn a living. Furthermore, a large proportion of clothing materials, until the intervention by the CBN, were imported from China and other countries in Europe and Asia.
The stories as told in the farms are the same also in ginneries across the cotton producing belt of Nigeria, an indication that the challenges are all the same.
As if this was not bad enough, it was also observable that the active companies, which work seasonally, operate at below 40 per cent of their installed capacity, with many producing less than 200,000 metric tons per season
It is this anomaly that gave rise to a downturn in cotton production and its negative implications for the Nigerian economy that inspired the Governor of CBN, Mr. Godwin Emefiele, to initiate policies to reverse the narrative of the past two decades.
“It’s no secret that the past 20 years have been very difficult for many textile firms. They have faced rising operating cost and weak sales due to high energy cost, smuggling of textile goods, and poor access to finance”, he pointed out.
The apex bank governor, based on his determination to rectify the situation, came to the conclusion that there was an urgent need to provide financial support to textile manufacturers at single digits rate, to refit, retool and upgrade their factories in order to produce high quality textile materials for the local and export market and generate employment opportunities.
Emefiele followed this up with another policy measure which is the restriction of access to foreign exchange from the Nigerian foreign exchange market for the importation of all forms of textile materials and at the same time supporting the importation of cotton lint for the use in textile factories, with a caveat that such importers shall begin sourcing all their cotton needs locally beginning from year 2020.
As a first step in fixing the cotton value chain, which begins with planting, the CBN, collaborating with some state governments, embarked on input distribution to 100,000 cotton farmers, cultivating 100,000 hectares in 23 States of the Federation.
Determined to get it right, the CBN again convened a meeting of stakeholders in the Cotton, Textile and Garments (CTG) sub-sector, where the Governor inaugurated the steering committee to drive the process of perfecting timelines aimed at addressing part of the chain
Ginning is a critical part of the cotton value chain. It is simply a process of separating the cotton lint from the seed before spinning should the factory plan to spin or pack into bales for either export or for sale to local factories for spinning.
However, the number of active ginneries in Nigeria has reduced drastically as a result of reduction in production. Indeed, some ginning companies have been inactive for upwards of 10 years because many are unable to sell their produce due to the inability of the textile companies to off-take the stock. In some other cases, there is not enough feedstock to process and make available to the active textile mills. Since the ginning part of the value chain plays a vital role in churning out quality cotton products for both export and local production, the CBN turned its attention to it in order to enhance quality.
With the CBN support, which appears to be a magic formula, the ginneries, are once again, springing back to life. The CBN is also working on other parts of the value chain to ensure sustainability of the revamp process, just as it did with the rice revolution.
With all points of the value chain, farming, ginning, spinning and textile made stronger, the country can truly look forward to meeting the apparel needs of schools, the military and paramilitary officers as well as those required for social functions.
Indeed, with the strategy to increase cotton production and link it to an enormous market, hope is very high that the target yield of 1.5 metric tons per hectare and 300,000 metric tons of seed cotton to be produced by ginneries in Nigeria will be met.
Beyond these, the move will save and earn foreign exchange for Nigeria. More profound, however, is the projected number of jobs that will be created in the sector in the years to come.
The President of National Cotton Association of Nigeria (NACOTAN), Mr Anibe Achimugu, in a recent interaction with the media was exultant in his assessment of the collaboration between the Central Bank of Nigeria and his association. “We are collaborating 150 per cent with the CBN. It is their programme and we are very happy to be part of it. Emefiele’s policy in the sector is a breath of fresh air.”
He observed that before the CBN intervention through the Anchor Borrowers Programme (ABP), farmers were recording very low yield per hectare as low as 40-60 metric tons per year or 400-500 kilograms per hectare.
He said that the beauty of the collaboration with CBN is that the policy is based on input financing. No cash component. He brought in input suppliers such as mechanization agents, fertilizer merchants and of course improved seedlings were made available to farmers. Each got a minimum of 40 kilograms which were more than enough for the planting season to the point that early farmers who lost their farms to bad weather had excess to replenish their farms.
With all these, there was improved yield per hectare, ginneries, the textile and garment sector were empowered through a guaranteed price that will enable them to pay back their loans and earn a reasonable profit margin. “It has been a win-win situation. CBN recognized a major challenge in the quantity and quality of seedlings and addressed it effectively and efficiently.”
The NACOTAN president said that the CBN approach is holistic as every single sub-sector in the cotton value chain has been considered and carried along just as he added that the CBN has an open door policy whereby any challenge is identified and addressed with the sole intention of ensuring the success of the policy which is restoring the sector to its pristine levels.
“The CBN Governor is flexible and proactive in his approach. He speaks to us, explains to us and encourages us in our tasks.”
He disclosed that the apex bank has directed the association to look for 300,000 farmers. Before this directive, the association had identified and registered 151,000 interested farmers. The target then was 200,000.
“But because of delays in documentation, we could achieve neither the 200,000 target set by CBN nor the 151,000 we set for ourselves. Eventually, we have 90,000 in our record books. We are working on the new target of 300,000.”
Hassan is a public affairs analyst