In a bid to revive the cotton and textile sector, the Central Bank of Nigeria (CBN) has approved a loan of N19.18 billion to 9 cotton-producing firms.

The CBN governor, Godwin Emefiele said this while signing two memoranda of understanding in Abuja. The first agreement was between the National Cotton Association of Nigeria and Ginning Companies to guarantee steady off-take and processing of cotton lint and cotton seeds.

The other was between the Nigerian Textile Manufacturers Association and the Armed Forces of Nigeria, Nigeria Police, paramilitary institutions and the National Youth Service Corps.

[READ MORE: CBN seeks economic diversification as it plans to support textile and creative industries]

According to Emefielethe CBN’s aim is to help in enabling the firms retool their processing plants. He said that the loan, which would be disbursed at a single-digit interest rate, would assist in sustaining their operations and improving their production capacity.

Nigerian textile industry may benefit from Afreximbank’s cotton initiative 

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The CBN Governor went on to disclose that the same support would be extended to the textile and garment firms.

“We are improving the linkage between cotton farmers and ginneries, by ensuring that ginneries are able to off-take the high-quality cotton produced by these farmers.

 “In this regard, approval to a tune of N19.18bn has been granted to finance nine ginneries with a view to retooling their processing plants, while providing them with improved access to finance at single digit interest rate,” he said.

Deal book 300 x 250

Emefiele explained that the MoU was a step in the right direction towards the implementation of Executive Order 003, in which President Muhammadu Buhari directed all the FG’s Ministries, Departments and Agencies to give preference to local content in their procurement of goods and services.

Plans going forward: Emefiele said the intervention into the cotton sector had previously taken about N50 billion and that if the apex bank wanted to effectively revive the sector, that sum would run into N100 billion eventually.

He said that the bank had set up a committee of the CBN, Federal Ministries of Agriculture and Rural Development; Water Resources; Industry, Trade and Investment, and the governments of Kano, Kaduna, Katsina, Gombe and Zamfara States called the Textile Revival Implementation Committee to ensure the success of the sector.

[READ ALSO: CBN advocates for Made-in-Nigeria goods]

Why this matters: In the 1980s and 1990s, Nigeria was recognised as Africa’s largest textile industry with over 180 textile mills in operations, employing close to over 450,000 people, and contributing over 25% of the workforce in the manufacturing sector. According to Emefiele, the textile industry is now different entirely from what it used to be, as most of the factories have all stopped operations with only 25 textile factories in operation now.

Therefore, this revival initiative by the CBN will help the cotton and textile industry bounce back in operations and work on their production capacity to create job opportunities and as such boost the economy.

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