Nigeria has banned forex for textile importers. The aim is to help bolster the local textile industry. The ban may lead to a reduction in burden on foreign reserves and a reduction in forex demand. That is the major benefit to the country as consumers will pay higher prices for products they had hitherto paid less for.
The Nigerian textile industry is a potential major revenue earner and a major employer of labor considering the local availability of the major raw material, cotton, and the chemicals needed for production, mainly by-products of petroleum.
However, there are challenges in the form of poor infrastructure, mainly power. Also, imports from Asian countries have taken over the market. The feeling is forex restriction for textile imports will not have much effect as importers will continue to import textiles by sourcing for forex through secondary forex markets and through privately arranged international money transfers. The restriction may rather increase the price of imported textile materials and the price burden has to be borne by ultimate consumers. Further forex restriction is not seen as a ban on textile materials but a not-valid-for-export regime, which is not likely to protect local textile manufacturers.