Kagame: We choose to grow our economies, industries

Sunday June 25 2017

Rwanda's President Paul Kagame. PHOTO | FILE

Rwanda's President Paul Kagame. PHOTO | FILE 

By TEA Special Correspondent

Rwanda President Paul Kagame remained firm on his country’s decision to phase out importation of secondhand clothes, in the face of a possible suspension from enjoying the trade benefits of the African Growth and Opportunity Act (Agoa).

The US has called for an out-of-cycle review of the Agoa eligibility for Rwanda, Uganda and Tanzania, following a petition by a lobby group opposed to plans to ban trade in secondhand clothes.

Reacting to the announcement of the review, President Kagame said Rwanda and African countries should focus on industrialising.

“Do you choose to be a recipient of secondhand clothes under threat of Agoa, or to grow the textile industry Rwandans deserve? Rwanda and other nations under Agoa, we have to do other things; we have to grow our economies, our industries,” he said, adding that Rwanda would  continue to push the “Made in Rwanda” initiative.

Rwanda and Uganda have raised taxes for secondhand clothes in a bid to make them  more costly, thus offer manufactures the incentive to invest in the local textile sector.

The US lobby, Secondary Materials and Recycled Textiles Association (Smart), cited the raise in taxes, which it termed as a way of banning imports of secondhand clothes, as one of the grounds for its petition, calling for a review of the countries’ Agoa eligibility and duty-free access to US markets.

President Kagame said Rwanda and African countries should focus on industrialising.

If the petition is approved, a decision will be made to either withdraw, suspend, or limit the application of duty-free treatment with respect to articles from the three countries. The three countries are now expected to participate in a public hearing slated for July 13, in Washington, where they will be able to explain their positions.

President Kagame, a key proponent of Africa’s industrialisation and champion of a ban on imports of secondhand clothes, said of the petition: “This is the choice we find that we have to make. As far as I am concerned, making the choice is simple. We might suffer consequences. Even when confronted with difficult choices, there is always a way,” he said in response to a question at press conference in Kigali, after delivering his papers to the electoral commission. 

Not going back

Rwanda’s Minister for Trade, Industry and East African Affairs Francois Kanimba said the country would not go back on the decision to grow its local textile industries.

“I don’t know what final decision is going to be taken by the US government, but we are not changing anything and we are very sure our textile industry will grow. They (US) might decide to remove the free market access. If they do this some of our companies that looked at that market will be affected, but there is absolutely nothing that is changing on our side,” Mr Kanimba said.

In Tanzania, the government did not make an official reaction to the news of the review.

Prof Humphrey Moshi, an economist, said ejection of Tanzania from Agoa would be generally harmless because the country had not benefitted much from the agreement, having lacked capacity to capture the US market.

“Tanzania has a right to develop its own industries for the export market. It is the right time now to ban used clothes to attract industrial investments to stimulate employment and export markets,” he said.

President John Magufuli’s administration has promised to revive the country’s textile mills to boost cotton production and create employment.

The peak export of garments by Tanzania to the US under Agoa was in 2015, when two companies, Mazava Fabrics and Tooku Garments Ltd, exported garments worth $25 million only.

In Uganda, Julius Onen, Uganda’s permanent secretary in the Ministry of Trade and Industry told The EastAfrican that his team was still studying the matter and would issue a formal statement soon.

However, observers of Uganda’s trade with the US, especially under the Agoa chapter, argue that the review will not affect Kampala one way or the other. 

Trade experts hinted at the low volumes of products that Uganda had exported to the US since Agoa was introduced. For instance, they point at the country’s struggling textile industry as an example of why Uganda failed to benefit from this market access window under the Agoa trade regime.