Nigeria’s cotton market sees rebound after textile forex ban

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The volume of production and consumption of cotton in the country rose by at least 7.5 per cent in 2020 after the figures dipped in 2019, according to data analysed by PREMIUM TIMES.

Nigeria’s cotton market has witnessed a marginal rebound almost two years after the Central Bank of Nigeria blocked traders from having official access to forex for the importation of textiles into the country.

The volume of production and consumption of cotton in the country rose by at least 7.5 per cent in 2020 after the figures dipped in 2019, according to data from the United States Department Of Agriculture (USDA), analysed by PREMIUM TIMES.

The rise was a far cry from figures recorded between 2006 and 2011.

In 2006, cotton production reached 1.8 million tonnes while consumption stood at 1.7 million tonnes, the data show. Both fell to 920,000 metric tonnes and 690,000 metric tonnes respectively by 2014.

By 2019, when the CBN restricted foreign exchange for textile products imports in a bid to revive the local fabric production industry, Nigeria’s cotton production stood at 920,000 metric tonnes while consumption stood at 805,000 metric tonnes.

In 2020, a year after, production surged to 1.6 million metric tonnes while consumption jumped to 989,000 metric tonnes.

Farmers say the restriction has helped their businesses in many ways.

Those who spoke to PREMIUM TIMES said the decision has paid off and has resulted in the creation of ginnery across the country, job creation, and the overall growth of the textile industry.

Anibe Achimugu, the president of the National Cotton Farmers Association of Nigeria, said the restriction of forex on textile imports was a game-changer to the industry.

“It’s a welcome development for the industry players and not a happy development for those smuggling textile material into the country,” he said.

He said the ban increased the demand for Nigeria’s cotton, which meant that farmers now have a market for their produce.

“When you ban, you create a gap. What this means is that the local industries now have to now fill that gap,” he said.

A cotton farmer in Ekiti State, Olorunfemi Michael, said the restriction of forex to textile importers saved the industry from total collapse.

“The main reason our textile industries have folded up was because of foreign exchange sale for importation of textile and garment materials. Thank God for the government that banned forex on textiles. This would encourage local production of cotton and textile materials,” he said.

For Zakariya Adamu, also a cotton farmer in Kwara State, the forex ban on textile imports would encourage local textile industries to grow and compete with local produce.

He said: “If there is no inflow of forex, you will find out that our local industries will grow locally and compete,” he said.

A cotton farmer in Gombe State, Yahaya Musa, also said the ban has impacted all processing aspects of cotton, including ginning, spinning, and weaving.

“By implication, it means the end product of cotton will create employment, generate labour, it has a multiplier effect,” he said.

Cotton is produced mostly in Zamfara, Katsina, Borno, Kano, Adamawa, and Bauchi States.

Mr Michael said the CBN has also intervened in the cotton industry through the provision of soft loans which has been helpful to cotton farmers.

“Since 2019, through the Anchor Borrowers Program, the federal government has really supported us through the CBN. They have released some funds for the procurement of inputs, land preparation and even aggregation, and the full chain of cotton, textile, and garment. We the farmers have been financed, the ginners have been financed also. So, the federal government has been helpful in that area,” he said.

Mr Musa also corroborated Mr Michael’s claim.

“The CBN has been supporting the sector, from production till processing aspect. This year alone, almost 130,000 cotton farmers have benefited from the intervention of the CBN through the anchor borrowers program. Approximately, this translates to nothing less than 130,000 tonnes.

“It has also impacted positively on the processing, that is why at the moment, our ginneries are springing up, by so doing opportunities are rising,” he said.

Mr Adamu also hailed the CBN for the intervention.

“To be candid the CBN has helped a lot, right from the grassroots level, as the farmers are the major stakeholders in this industry because without the farmers there won’t be cotton production. They (CBN) provide input to the poor farmers, although there are rooms for improvement. The CBN has resuscitated most of our ginneries, and our textiles are becoming active,” he said.

Mr Achimugu added that the CBN intervention has increased the production capacity of Nigeria’s cotton farmers.

“The CBN has intervened and supported in cotton production, using the anchor borrowers program and that has enabled significant production of cotton. As we speak, the quantities of seed Cotton’s that has been produced by Nigeria’s cotton farmer exceeds the capacity of the existing textile,” he said.

Mr Micheal said there are lots of opportunities in cotton, as it is one of the largest employers of labour throughout the whole world.

“A farmer cannot single-handedly handle one hectare of cotton. Every process in production needs a helping hand. Every process from land preparation, processing, spinning, there’s no way a farmer will be empowered and will not also empower another person.

“For processing, ginnery provides employment, to our youths, not to talk of the textiles and garment,” he said.

Mr Musa said cotton is a gold mine for farmers.

“Cotton is the most miraculous fibre. Several industries can be gotten from it, up till this very moment, there has never been a fibre that has been as important as cotton. it has a lot of chains starting from production, i.e the cultivation, to ginning, spinning, to weaving, feeding, in fact, there emerge about 23 industries in cotton. Therefore, it’s the largest employer of labour,” he said.

However, Hamman Ali Kwajaffa, the director-general of the Nigeria Textile Manufacturers Association, lamented how counterfeiting affects the industry.

He said: “Counterfeiters take our design, go to China and produce substandard that washes away within three days, and they bring it and sell five yards for N1000, instead of N4000 we are selling, so they tactically check us out of the market,” he said.

Mr Kwajaffa said the only way to check the activity of counterfeiters is only if the Customs would man the borders properly and disallow substandard goods from coming in.

He said the textile development levy which is called import adjustment tax, should be released to the textiles so that they can take care of their overhead cost, and competitively sell their products.

“Because it is collated as grant to the industry as import adjustment tax, so that producers locally will be able to compete with others, but nobody is getting the money,” he said.

For Amodu Achema, Deputy General Manager, Arewa Cotton & Allied Products Ltd, explained that the primary cause of the high cost of Nigeria’s textile is the cost of production, which he said has a direct impact on the produce.

“The raw material prices, by-products of the refinery like paraffin wax, wherever they’re sourcing it now, the price will be high, the cost of diesel and prices are also up.



Source: Premium Times

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