An economic and financial analyst, David Ibidapo, has thrown his weight behind the Central Bank of Nigeria (CBN) decision to ban further allocation of scarce foreign exchange on importation of textiles and garments into the country.
Mr Ibidapo told the News Agency of Nigeria (NAN) on Sunday in Abuja that the amount of foreign exchange spent on funding the importation of textiles and garments was more than half of the amount need to finance the nation’s budget deficit.
He commendable the CBN for its policy to add all forms of textile materials on the list of items restricted from accessing foreign exchange from the CBN at official exchange rate.
CBN Governor, Godwin Emefiele, on Tuesday said Nigeria currently spends above $4 billion annually on imported textiles and ready-made clothing.
Also, Mr Ibidapo said the restriction would reduce pressure on FOREX and inspire local production of textiles for both local and international consumption.
“This is a good initiative by the CBN, because if you look at what we spend on importation it is about 50 per cent of our budget deficit. And imagine if that amount is being generated internally, it will automatically impact on our Gross Domestic Product (GDP).
“This will also inspire local production of textiles with the single digit rate the CBN is promising local textile industries that are interested in getting loans.
“It will also lessen pressure on FOREX as demand for it to import these textiles into the country pressures down the value of the naira against the dollar,” said the expert.
According to him, it is high time the nation controlled the levels of goods imported, saying too much dependence on importation wakilling local industries due to unhealthy competition with foreign goods.
Mr Ibidapo said considering Nigeria’s rising population, it will serve as a very good investment hub for foreign investors and companies because of the very ready market it had waiting to buy these goods.
However, he said once the country begins to ban some items the country has the capacity to produce, then this same rising population will purchase what we are producing locally and the sectors will begin to contribute significantly to the GDP.
The economist said the only way Nigeria can alleviate poverty was to grow the economy at an average of 10 per cent every year, from the two percent the country is currently struggling with.
He said the country needs to continue in the direction the CBN has toed, in addition to giving loans to the textile industry value chain at a single digit interest rate.
Mr Ibidapo said in the long run it would boost the country’s GDP and create employment.
When these factories begin to boom, he said there would be more employment, which would translate into income that would be circulated in the economy to achieve the needed growth.
He, however, said achieving growth through such initiatives was solely dependent on the government willingness to be committed to the policy to clampdown on smugglers.
“I think we can achieve the desired result only if the government can really reduce the activities of smugglers and make the process of getting loans for the textile industry not too complex.
“Professionalism and specialization will also improve, the government should be committed to the policies and in making it work; it is very achievable.
“If they can replicate this in other sectors and try to boost production of the items we import in our country, we will produce for the country and also export as demand for these products will increase and with that the value for our currency will begin to appreciate,” Mr Ibidapo explained.
In 2015, the CBN restricted the availability of foreign exchange to the importation of 41 items which could be competitively produced within the economy and the list has increased overtime.
Since then, the CBN has raised the number of items affected on the list to 43, with the inclusion of fertilizer and textile products.