Barely 24 hours after the meeting and announcement by the Governor of the Central Bank, Godwin Emefiele, warning commercial banks and Bureau the Change operators to desist from giving importers of textile material access to foreign exchange, reactions have started to trail the policy decision of the apex bank.
On Business Morning, a flagship breakfast programme on Channels TV, business analyst and Associate and Team Lead FI, Afrinvest, Jolomi Odongharo expressed his concerns about the policy, which he believes, will make Nigeria’s local cotton and textile industries, less competitive.
He noted that the move should be more about growing the sector organically and allow the local industry to compete with the imported products.
“What we need is to boost competitiveness and these policies breed inefficiency in the system. You can have local producers build capacity towards a level where they might meet a good amount of local demands, but the inefficiency that this sort of policies breed in the system makes our industries less competitive.”
“In relation to imported products coming in, they will come at a higher cost, so the producers are more comfortable with taking things slowly and not build capacity to the point where they are actually exporting. So, we still have to import, and the higher prices will still have to be passed on to the consumers, he added.”
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Jolomi urged the government to remove policies that would breed inefficiencies in the system, so that the capacity of the local producers will be fully maximized.
“At the end of the day, to really boost the economy and get us back on the part of strong growth, we need to remove tariff and non-tariff barriers to trade and investment and allow the sector to organically grow and build up capacity to meet up with demands; That is the way to go. So, it is about investments in the sector, not so much about setting up of barriers that will breed inefficiencies.”
“When you have these sorts of barriers in place, the capacity of the local producers is never fully maximized because of that security they have. Our industries need to be more competitive and these barriers makes us less competitive.”
“The textile industries were booming at a point in the late 80’s and we had some barriers that allowed the boom. But they could not sustain these performances because of those barriers. Where you have big investors come into the market and meet up the demand to start exporting, there has to be a certain amount of investments or incentives to bring in investments into the sector that are not exactly tariff related.”
Meanwhile, CBN Governor, Godwin Emefiele noted that textile companies in the country operate below 20 per cent of their production capacities and its workforce now at 20,000.