A government plan to waive Customs duty on imported fabric could spell doom for Rwanda’s sole textile factory, L’usine Textile du Rwanda (Utexrwa).

The 34-year-old company is currently operating at a loss, and sources believe that the removal of tax on imported fabric could be the final blow, and could also discourage investors eyeing the sector.

“If taxes are waived, every tailor and fashion designer will go to China to import the fabric and guess who benefits? It is not Rwandan textiles but those in China, Thailand, Bangladesh, India ...,” a textile expert told The EastAfrican.

The Ministry of Trade and Industry confirmed that there is a plan to waive the 25 per cent Customs duty on imported fabric, a move that is meant to boost the production of locally-made garments.

The number of garment makers and co-operatives is increasing in Rwanda in anticipation of a wider East African market after the Industrialisation Policy, adopted recently at an EAC Heads of State Summit is implemented.

READ: Fresh plan seeks to revive East Africa’s troubled textiles sector

The policy seeks to, among other things, stimulate local industries by banning the importation of second-hand clothes.

Industry analysts argue that, on the one hand, Rwanda’s fashion and tailoring sectors would experience a boon once the Industrialisation Policy comes to effect; but on the other hand, they could shrink and potentially disappear due to stiff competition from cheaper imports from Asia.

Cheaper Asian fabric

Many co-operatives prefer to buy cheaper fabric from Asia, mainly China, India, Taiwan and Indonesia, rather than from Utexrwa. They say that they are not satisfied with the quality and quantity that Utexrwa produces.

READ: Competition stifling Rwanda’s only textile factory

“It is true that we mostly buy fabric from China and India, but that does not mean that we don’t want to buy from Utexrwa. But their fabric is expensive and even then, they are unable to provide the required quantity and quality that we expect,” Alvera Mukantwari, chairperson of the Rwanda Tailoring Association.

The association boasts 227 registered tailors in Kigali and plans to expand across the country.

According to Ritesh Patel, the general manager of Utexrwa, cheap imported fabric remains a challenge.

“The 25 per cent Customs duty is low, and there are no signs that this tax will be increased in order to support our growth,” said Mr Patel, adding that Utexrwa has the capacity to produce 15 million metres of fabric per year, which is sufficient for Rwanda’s textile market, but was only producing 10 million due to stiff competition from cheap imports.

Minister of Trade and Commerce Francois Kanimba, however, said that “it is up to Utexrwa to compete,” noting that the government had no plans of increasing duty on imported fabric to encourage tailors to use locally-made clothes.