Importation of used clothes and shoes is to be outlawed in East Africa once the region’s heads of state adopt the Industrialisation Policy that will also restrict importation of used motor vehicles.
If the policy that seeks to transform the manufacturing sector is adopted during the Heads of State Summit in Arusha, Tanzania, on Wednesday, individual countries are expected to domesticate it before it takes effect.
The summit has prioritised industrialisation on the agenda, with the five presidents expected to make a decision on the modalities for promotion of motor vehicle assembly in the region and reduction of the importation of used motor vehicles from outside the community, and the promotion of the textile and leather industries in the region, and stopping importation of used clothes, shoes and other leather products from outside the region.
“This means the region, like the other developing countries, is ready to transition itself into an industrial bloc through a higher level of production quality and manufacturing practices,” said Betty Maina, Kenya’s Principal Secretary in the Ministry of EAC. “It will benefit industry and increase access to locally manufactured products in the region while at the same time creating more employment opportunities.”
On the importation of motor vehicles, the presidents will agree on the proposed new rules on age limit, valuation methodologies for used motor vehicles and standardised depreciation rates.
There has been mounting concern that vehicle importers are taking advantage of the variations in the maximum age rule to circumvent it.
Kenya and Rwanda forbids importation of cars that are more than eight years old, while Tanzania has a maximum car age limit of 10 years and Uganda has no limits on car age.
The EAC Council of Ministers last year proposed a ban on second-hand clothes, bags and shoes to promote the region’s textile and leather industries.
The presidents then directed the council to study modalities for the promotion of motor vehicle assembly with a view of stopping or reducing the importation of used vehicles in East Africa.
“The ban will be done in a gradual phase-out mechanism for a period of time that will be endorsed by the presidents as proposed by the EAC ministers,” said Ms Maina.
Common external tariff
In 2009, the region imposed a common external tariff (CET) of 25 per cent on motor vehicles imported into the region as leaders sought to promote local vehicle assembly.
The EAC industrialisation policy approved by the EAC Summit in November 2011 provides a regional framework aimed at growing and expanding the manufacturing and small and medium enterprise (SME) business so as to create employment and income for the benefit of the region.
The policy aims to transform the region into modern industrial economies through high value addition industries an increase in manufactured exports, thereby promoting employment and purchasing power, product diversification and increased linkages with other economic sectors.
It proposes the establishment of regional industries to drive industrial growth and stresses strong linkages between industries and key sectors of the economy such as agriculture, infrastructure and energy.
EAC is a net importer of manufactured products, thus has opportunities for growth of the industrial sector through the manufacture and assembly of automotive, electronics that including motors, circuit breakers, electrical fittings, cookers, dry cells, solar panels, capacitors and machine parts and petroleum-related products such as plastics.
To help manufacturers to develop their capacity, EAC governments have provided a number of policy incentives. These include tax and Customs exemption, price control, preferential procurement and import classification.
According to Scolastica Odhiambo, an economics lecturer at Maseno University in Kenya, EAC countries should replicate what countries that have achieved industrialisation like China, Korea have done by putting in place policies that are carefully planned and executed.
“China pursued import substitution strategy that favoured high inflows of foreign investment and large state-owned corporations and start-ups in the public and private sector,” said Dr Odhiambo, adding that China has also enticed technology transfers from investors vying for the opportunity to sell their goods in its large market .