‘N5tr textile industry needs trade, not monetary policy’
Citing the consequence of deploying a one-size fits all solution to issues, the Lagos Chamber of Commerce and Industry (LCCI) has said what the N5 trillion textile industry needed most was trade policy and not monetary for its effective delivery.
According to the chamber, the starting point is to strengthen the capacity of domestic industries and enhance their competitiveness, considering that the industry had been a beneficiary of several fiscal incentives and protectionist measures over the years, yet remained in stagnation.
The Central Bank Nigeria (CBN) had imposed restriction on forex access to importers of textiles.
“Effective immediately, the CBN hereby places the access to FX for all forms of textile materials on the FX restriction list. Accordingly, all FX dealers in Nigeria are to desist from granting any importer of textile materials access to FX in the Nigerian foreign exchange market,” its Governor, Godwin Emefiele, had ordered.
LCCI’s Director-General, Muda Yusuf, stated that the range of fabrics produced locally could not support the fashion industry in terms of quantity and quality, pleading that the sector should not be sacrificed on the altar of regeneration.
His words: “This submission is not to diminish the importance of textile industries in anyway or the significance of industrialisation. It is to underscore the importance of a strategic approach to industrialisation.
“The starting point is to strengthen the capacity of domestic industries, enhance their competitiveness and reduce their import dependence as espoused in the Nigeria Industrial Revolution Plan (NIRP).
“More importantly, the power issue needs to be addressed. It is almost impossible to achieve rapid industrialisation without resolving the issue of power and the deficit in key infrastructure. Textile production is energy intensive. This is a high energy cost environment and it is very difficult for any energy intensive sector to survive.”
To aid the growth of the industry, he urged the implementation of the presidential executive order mandating local sourcing of the uniforms of all military and paramilitary institutions.
The LCCI chief noted that the move was a low hanging fruit that could be explored while the issue of high production cost is being addressed.
He added: “Compelling the citizens to pay exorbitantly for systemic inefficiency is not an appropriate policy option. It is an economic management model that is repressive and not sustainable.
“There should be collaboration and coordination between the CBN, the Finance Ministry, Budget and Planning and Trade and Investment on trade policy issues. The boundaries of monetary policy need to be properly defined. Exclusion of sectors from the forex market is not a monetary policy issue. It is trade policy matter.”
Yusuf went on: “Monetary policy is about managing liquidity (or money supply) to influence the direction of credit, exchange rate and inflation. Trade policy formulation is not within the remit of the CBN. It is an inter-ministerial responsibility involving the Finance, Budget and Planning, Industry, Trade and Investment Ministries.”