The Rwandan government plans to impose a 100 per cent duty on imported clothing in order to protect the domestic textile industry.

Import duty is set to rise this month from the current 35 per cent on clothes imported from outside the EAC to 70 per cent, and to 100 per cent in July.

The increased duty will make imported clothes more expensive and encourage the purchase of fabrics from the only textile mill in the country, L’Usine Textile du Rwanda (Utexrwa).

Utexrwa has been pushing for protectionism in order to save its 30-year-old factory, valued at $75 million; production has fallen steadily against the backdrop of increasing imports.

Two years ago the factory was producing at 40 per cent, but now it is at just 20 per cent as imports from neighbouring countries, Europe and Asia flood the market. By 2012, the turnover of the factory, according to government officials, was between $2 million and $3 million.

The low production means the factory cannot provide enough cloth for Rwanda’s 12 million people, requiring 72 million metres per annum — Utexrwa produces 12,000 metres per year.

Without government intervention, it is feared that the factory could collapse.

“The proposal to increase the tax will be tabled before Cabinet, and is set to be announced during the budget review,” said Francois Kanimba, Rwanda’s minister of trade and industry.

The budget review process takes place in March.

Data from the Rwanda Development Board shows that the country spends a total of $57 million annually on importing both used and old textile products.

“Every year, we spend over $15 million to import second-hand clothes. Wearing such clothes is not worth our value,” said Claver Gatete, Rwanda’s Minister of Finance and Economic Planning, at a recently concluded national dialogue.

Mr Kanimba said the government is encouraging local garment makers to source their material from Utexrwa, which will help reduce pressure on foreign exchange and lower the import bill.

It is hoped that Utexrwa will supply local garment makers like C&H Garment, a Chinese textile company with a franchise in Kigali that produces for the export market.

Fabric from China

C&H Garment invested in automatic computerised sewing machines, but sources say the fabric they use is from China.

Welcoming the government’s move to make Utexrwa competitive, Ritesh Patel, the chief finance officer of Utexrwa called for subsidies on water and electricity.
At its lowest production capacity, Utexrwa says they spend an average of $3,000 monthly on electricity and water.

Mr Patel said that despite the high cost, electricity supply is unreliable.

Last year the Rwanda Utility Regulatory Authority maintained the old tariff of electricity that industrialists claim is too high, and also increased the unit price of water by 19 per cent.

“Utility tariffs in Rwanda are higher compared with the other East Africa Community countries,” said Mr Patel.

“We need stable and quality power. We have been pushing for this through the Rwanda Manufacturers Association,” he added.

Rwanda’s electricity outages are largely due to the old power infrastructure and the dry seasons that reduce water levels thus affecting production.

Mr Patel suggested that in order to make the textile manufacturing industry more vibrant, the government should ring-fence the tenders for supplying textile products to only industrialists.

Rwanda does not grow cotton. Utexrwa imports cotton from Tanzania, Uganda and Burundi.