Exclusive: CBN could invest N20billion in Nigeria’s cotton production

New details have emerged on the investment from the Central Bank of Nigeria (CBN) that seeks to boost cotton output by as much as 300,000 tons from the current 80,000 tons produced yearly, Per Second News has learnt exclusively.

It will be recalled that the CBN launched a new partnership with more than 100,000 cotton farmers last Monday, having nearly two months ago placed a restriction on the sale of foreign exchange to textile and other clothing materials importers in the country, citing rising import bill issues, and plans to encourage the growth of the textile and cotton industry.

The restriction is seen helping West African country curtail more than N114.78 billion  ($277.8 million) spending on textile imports, according to the CBN. Cotton lint, a raw material for textile manufacturing as well as other textile materials are now Nigeria’s major import item, costing the African economy as much as N114.78 billion in import spending last year alone, according to the National Bureau of Statistics, the country’s data body.

Nigeria’s textile industry in the past sourced 60 percent of its raw materials locally and exported about 25 to 30 percent of its production, according to the CBN’s 1995 annual report; and was Nigeria’s second highest employer in 1970, providing about 350,000 direct jobs and 1.2 million indirect job at its peak between 1970–1990, according to the Nigerian Textiles Manufacturing Association.

Today, the country produces only 60,000 tons of cotton for textile, down from the previous 2.6 million tons produced in the 60s and 70s, but the country is seeking to up production this year by partnering with farmers from 26 states in the state, covering the north east, north central and the south wise, who are aiming to increase output by 1.5 to 2 ton per hectare, from the current 500 kilograms per hectare produced, according Anibe Achimugu, president of the National Cotton Association of Nigeria (NACOTAN) said by phone from Abuja, the nation’s capital.

“We are confident that we will be produce 240,000 tonnes at minimum and 300,000 tonnes at maximum through the Central Bank of Nigeria investment through the Anchor Borrowers’ Program,” Achimugu said.

Each farmer involved in the new partnership is expected to produce two hectares each, meaning that this year, Nigeria will cultivate 200,000 hectares, up from about 50,000 hectares previously cultivated, according to Achimugu.

“We are looking at a minimum of 1.2 tonnes per hectare yield which is 240 and the best in case the scenario will be 1.5 tonnes which will be 300 tonnes per hectare,” he added.

A CBN official who didn’t want to be named for lack of authorization to speak with the press said the investment is coming from a N40 billion new round of the anchor borrowers program and the bank would likely invest about half of the amount in cotton production.

The CBN is investing as much as N10.7 billion for the first batch of the program, which covers insurance, land preparations, seeds and other inputs, according to Achimugu, who sees the investment as “holistic.”

According to him, the Nigerian central bank will be dealing directly with the offtakers, ginneries and every stakeholder in the value chain directly and will “before the close of the month” finalize agreements that will help farmers put their products on the market.

Nigeria’s installed capacity of ginnery stands at 600,000 tons, and Achimugu sees these expanding in coming years, as the program continues.

The program can potentially double the country’s farming population to 200,000 next year, producing nearly 600,000 tons of cotton by 2020, and prompting more ginneries to pop up across the country.

He sees more investors and existing ginning companies who had been “suffering” because of lack of cottons expanding their capacities as outputs expands by 275 percent.

The Nigerian central bank will directly oversea the disbursement and other logistics involved in this new cotton revolution program, Per Second News also gathered in Abuja.