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Textile Industry: NECA, Textile Union Back CBN on Forex Restriction

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  • Textile Industry: NECA, Textile Union Back CBN on Forex Restriction

The Nigeria Employers’ Consultative Association and the Senior Staff Association of Textile have expressed their support for the Central Bank of Nigeria’s recent restriction of forex to textile importers.

The CBN Governor, Mr Godwin Emefiele, had on Monday said the recent measures announced by the apex bank were to revive the Cotton, Garment and Textile sector. He said the measures were well thought out to reposition the sector for job creation and economic growth.

Emefiele was replying to the position of the Lagos Chamber of Commerce and Industry cautioning government over the restriction of foreign exchange for the importation of textile materials.

The LCCI Director-General, Muda Yusuf, had said that there was a need for a strategic approach before such policy pronouncement should have been made.

He had advised the Federal Government to reconsider the Central Bank of Nigeria’s ban of forex to textile importers.

He argued that given the position of Nigeria in Africa as a leader in fashion, the range of fabrics produced by the Nigerian textile industry could not support the industry in terms of the quantity and quality.

Yusuf, who noted that his submission was not to diminish the importance of the local textile industry in any way or the significance of the nation’s industrialisation, however, added that this was to underscore the importance of a strategic approach to industrialisation.

The LCCI DG said before such policy pronouncement, the government ought to have strengthened the capacity of domestic industries, enhanced their competitiveness and reduced their import dependence as espoused in the Nigeria Industrial Revolution Plan.

But reacting to the position of the chamber, the CBN governor said the strategic approach being referred to by Yusuf had never worked.

Speaking in support of the CBN governor on Tuesday, the Director-General, NECA, Mr Timothy Olawale, and the General Secretary, Senior Staff Association of Textile, Mr Foly Owolabi, in separate interviews with our correspondent, described the forex restriction on textile imports as the right step in the right direction.

They added that the revitalisation of the Nigerian textile industry, which used to be the largest employer of labour after the civil service, would stimulate local production and create employment opportunities for Nigerians, given the rate of unemployment in the country.

Olawale said NECA had been clamouring for the strengthening of the local industries, and the CBN had hit the bull’s eye by the action, arguing that the measures would lead to the resuscitation of the moribund textile industries scattered across Lagos, Kaduna, and Kano, among others.

He, however, called on the government to take a decisive action on the nation’s epileptic electricity, and other infrastructure that would aid industrialisation and take the textile industry out of the woods.

He said, “One has to understand the CBN’s position in order to appreciate the restriction it placed on forex for textile imports. At the Nigeria Employers’ Consultative Association, we have been clamouring for the strengthening of the local manufacturing.

“We are totally in support of the CBN for the restriction of forex for textile imports. Essentially, the CBN’s measures would lead to the resuscitation of the nation’s moribund textile industry, it would make them competitive and lead to the provision of employment for Nigerians.

“As employers, we have many employers involved in the textile importation. The government is not saying it has banned importation of textiles. What the government is saying is that it will no longer offer forex to the importers of textiles. So, they will have to source their forex through others sources.

“To really boost local production, the government must take a decisive action on the issue of electricity. It must ensure that the power generated are all distributed to the consumers. It must settle the acrimony between the Gencos and Discos and the regulators.”

On his own part, Owolabi said he was excited about the fact that the CBN had also announced that it would give loans to the operators at a single digit rate, to enable them to retool and remodel their machinery.

He noted that those textile companies that were still in existence currently operated below 20 per cent capacity, but with the CBN’s intervention, he hoped to see them moved up to between 70 and 80 per cent capacity.

He said, “The restriction of forex to textile importers by the CBN will boost the local textile industry, in terms of increase in production capacity. Currently, they are operating below 20 per cent; I am hopeful that after the CBN’s intervention in providing the loans, their production capacity will move up to between 70 and 80 per cent.”

Owolabi rued the LCCI which had complained about the issue of epileptic power sector, arguing that “electricity is a work in progress.”

The Ogun State Chairman, Trade Union Congress, Olubunmi Fajobi, however, expressed his fears about the issue of power and the inability of the local textile industry to meet the local demand in terms of quality and quantity.

He said, “Let us use the local Adire as an example, some of the fabrics being used for its production are imported from Republic of Niger and Mali, among others. Can we cope with the local demand? Do we have electricity? Are the production lines running at full capacity?

“We must address all these deficits, before taking measures that will have far reaching effects on Nigerians, an industry or a sector of the economy.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Intra-Regional Trade Potential a Key Focus in New Report

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A new focus report, produced by Oxford Business Group (OBG) in partnership with the African Economic Zones Organisation (AEZO), shines a spotlight on the continent’s rapidly developing industrial sector, which is poised to become a key driver of broader economic growth as regional integration increases.

Titled ”Economic Zones in Africa – Focus Report”, the report was launched at the AEZO’s 6th Annual Meeting II, which took place on November 25 at the African Continental Free Trade Area (AfCFTA) Secretariat office in Ghana, with participants also able to attend remotely. The meeting was held under the banner “Connecting African Special Economic Zones (SEZs) to Global Value Chains at the era of the AfCFTA” and explored a range of topical issues relating to SEZs, from their potential to boost trade to the impact of Covid-19 on the continent’s supply chains.

The focus report examines the wealth of benefits that the AfCFTA is expected to deliver to both Africa’s economic zones and the businesses located in them, which range from greater market access to a reduction in trade barriers and lower production costs.

The disruption that the pandemic brought to supply chains and the opportunities emerging from the health crisis for businesses to become part of nascent regional value chains across a more closely connected continent are a key focus.

The report also charts the digital transformation taking place in many of Africa’s economic zones, as businesses make the move away from traditional segments to high-tech processes and digital services, adding value to their offerings in the process.

In addition, it provides in-depth analysis of the drive evident among many SEZs to put environmental, social and governance principles and sustainable business practices at the heart of their strategies, at a time when ethical investment and alignment with the UN Sustainable Development Goals are high on the global agenda.

The report includes in-depth case studies and viewpoints by representatives from key industry players namely: Tanger Med; Polaris Parks; Lagos Free Zones; Ghana Free Zones Authority; Misurata Free Zone; and Sebore Farms.

It also includes a contribution from Ahmed Bennis, Secretary General, AEZO, in which he highlights the role that SEZs are playing in the continent’s industrial transformation and the importance of supporting their development.

“Economic zones can play a game-changing role in Africa’s diversification and inclusion by providing end-to-end solutions and services that support industrial upgrades and increase countries’ attractiveness for investment,” he said. “With the implementation of AfCFTA and the post-Covid-19 recovery that the world is beginning to experience, we believe that real investment opportunities exist in Africa at this moment, which can translate into job creation and social and economic development. Africa has resources that need to be developed and economic zones can play a key role in this.”

Bernardo Bruzzone, OBG’s Regional Editor for Africa, added that while African economic zones had experienced production problems during the pandemic due to global supply chain disruptions, ongoing remedial action, including new infrastructure and human capital development, would help provide resilience against future external shocks.

“Africa’s real GDP growth is forecast to reach 3.4% in 2021, with an increase in intra-regional trade and improved connectivity among the facilitators of economic recovery,” Bruzzone said. “Looking ahead, we see economic zones as having a key role to play in helping the AfCFTA achieve its potential through the development of new strategies that will lead to a more diverse, higher-value range of exports.”

The study forms part of a series of tailored reports that OBG is currently producing with its partners, alongside other highly relevant, go-to research tools, including a range of country-specific Growth and Recovery Outlook articles and interviews.

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Lagos Budget N1.4 Trillion for 2022, Budget Surpasses Five Other Southwest States Combined

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Lagos state government has proposed N1.388 trillion budget for the year 2022. The proposed budget was presented to the House of Assembly on Wednesday.

While presenting the proposed budget, Governor Babajide Sanwo-Olu said the State would be spending N325 billion on vital infrastructure projects in key sectors to energise and expand the growth of the State’s economy.

The key areas of growth identified by the Governor include Works and Infrastructure, Waterfront Infrastructure Development, Agriculture, Transportation, Energy and Mineral Resources, Tourism, Entertainment and Creative Industry, Commerce and Industry, Wealth Creation and Employment.

The proposed budget, christened “Budget of Consolidation”, will be the last full-year fiscal plan of the State before the next general election.

About N823.4 billion, representing 59 per cent of the 2022 budget, is earmarked for capital expenditure. Recurrent expenditure, representing 41 per cent, is N565 billion, which includes personnel cost, overhead and debt services.

Of the total proposed expenditure, N1.135 trillion would accrue from Internally Generated Revenues (IGRs) and federal transfers, while deficit financing of N253 billion would be sourced from external and domestic loans, and bonds projected to be within the State’s fiscal sustainability parameters.

The State would be earmarking an aggregate of N137.64 billion, representing 9.92 per cent of the 2022 budget, for the funding of green investment in Environment, Social Protection, Housing and Community Amenities.

This financial proposal is presented with a sense of duty and absolute commitment to the transformation of Lagos to a preferred global destination for residence, commerce, and investment. The budget projects to see a continuing but gradual recovery to growth in economic activity as the global economy cautiously recovers from the impact of the Coronavirus pandemic,” the governor said while presenting the budget to the house.

Meanwhile, the 1.388 trillion budgeted for 2022 is higher than the budget of the five other southwest states combined. For 2022, Ekiti State’s budget is 100.7 billion, Osun 129.7 billion, Ondo 191billion, Oyo 294 billion. Ogun’s budget for 2022 is not yet finalised, but going by their 2021 budget of 339 billion, the combined budget of the five South-West states then amount to 1.053 trillion. With this, Lagos state budget is higher than the five states budget with a difference of 335 billion.

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Nigeria’s Export Trade to Surpass $100 Billion by 2030 – Report

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New research conducted by the Standard Chartered Bank has predicted that Nigeria’s export trade will reach an amount of $112 billion in 2030, and will then be recording a Year-on-Year increase of 9.7 percent.

The research also led to the projection that India, Indonesia and Mainland China will be the major avenues leading to an increase in the country’s involvement in global trade.

The research is titled “Future of Trade 2030: Trends and Markets to Watch,” and also projected that the global exports trade will grow from $17.4 trillion and reach $29.7 trillion between 2021 and 2030. It was also projected that the trade will be largely moved by 13 markets, some of which are Bangladesh, India, Hong Kong, Malaysia, Mainland China and Kenya. Others that will drive the trade are Nigeria, South Korea, United Arab Emirates, Vietnam, Nigeria, Saudi Arabia and Singapore.

The report added that the Asia Pacific, the Middle East and Africa will have the biggest share of fast-growing markets in the future. It also said that these three regions will see an increase in investment flows, with about 82 percent of respondents in the research confirming their desire to bring up new production locations in these regions within the next five to ten years. This act would support the trend towards rebalancing to upcoming markets and greater risk diversification of supply chains.

The research also said that global trade will be revamped by five vital trends, which are the wider adoption of sustainable, fair-trade practices, demand for more inclusive participation, greater risk diversification, increased digitization and a rebalancing towards high-growth upcoming markets.

Close to 90 percent of the corporate leaders contacted for the study agreed that these five trends will shape the future of trade and form part of their five to ten-year expansion strategies across borders.

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