EAC blows hot and cold in war against trade in used clothing
Saturday September 02 2023
Bales of used clothing stacked in a storehouse. PHOTO | SHUTTERSTOCK
East African countries are toying, again, with the idea of banning second-hand clothes, buoyed by a feeling that the move could protect nascent textile industries. But the reality of the high cost of garment production may yet give opportunity to cheaper exporters like China, which has been increasing its textile exports.
And that has piled on the divided opinion around the importation and sale of second-hand clothes commonly known as mitumba in region.
This week, Uganda became the second country after Rwanda in the East African Community to ban mitumba, with President Yoweri Museveni saying he was promoting the “Buy Uganda Build Uganda” national policy.
Read: East Africa wrestles with proposals to ban imports of used clothes
Museveni while commissioning 16 factories at Sino Uganda-Mbale Industrial Park in Mbale City, said the continual importation of used clothing stifles the development of local textile industries.
Banning mitumba may sound politically attractive to the local textiles. But it never usually succeeds.
President Museveni’s move risks attracting the wrath of the US government, who in 2018 made good their threat to ban Rwanda from benefiting from the African Growth and Opportunity Act (Agoa) in response to President Paul Kagame’ s policy to restrict second hand clothing to also boost the local textile industry.
Agoa is a 25-year-old trade pact between the US and developing countries in Africa to provide certain duty-free exports into the US. Most of the exports under Agoa have been new clothing.
“I have declared a war on second-hand clothes to promote African wear. We are going to stop the importation of second-hand clothes to create jobs from textile factories,” Museveni said.
According to the Ugandan leader, the tentative date of the blockade was September 1.
But the announcement is generating a storm. Local manufacturers had complained that second-hand apparel was swamping the market, undermining the country’s cotton and textile industry. However, traders and dealers in second-hand clothes in turn blame local manufacturers of producing substandard products.
Read: Manufacturers propose higher taxes on imports
On Wednesday, during a special sitting by the leadership of the Kampala City Traders Association (Kacita), the traders resolved to engage the government to either lift the ban or gradually phase-out importation of used clothes.
“We think the government didn’t do enough research on this matter. First of all, they have to ask themselves the pertinent question of why Ugandans are importing used clothes. It revolves around two things – affordability and durability,” Thadeus Musoke, Kacita secretary general, said.
The association says it imports, on average, 250 containers of used-clothes – with each container taxed about Ush100 million ($26,781). That revenue will now be unavailable to the government, they argue.
China factor
But the elephant in the room is who actually benefits from the local production. In Uganda, dealers of used clothes say the government has given leeway to Chinese producers to source material from abroad, and that the quality is poor.
“The Chinese are also selfish. They want to be the suppliers of raw materials, transport and logistics, the manufacturers, the wholesalers and they are even vending the clothes. You cannot compete with them,” Musoke said.
A ban on used clothes was in the EAC books since 2016, to be effected by 2019.
But when Rwanda went ahead with the plan, it was punished by the US, which removed it from beneficiaries of Agoa.
A report commissioned by the Mitumba Consortium Association of Kenya says there is little evidence that the ban policy would benefit development of either the domestic textile industry or the living standards of ordinary workers.
Read: East Africa’s textile industry falters on low investments
“Protectionism more often stifles productivity growth and sectoral innovation,” the report published in July says.
“We argue that weakening the used clothing sector in the EAC would merely benefit the cheap garments trade in China.”
China has become a prominent player in the regional textile industry in the past five years, sending clothes to countries such as Kenya, Angola and Ghana.
Last year, the leading used garments exporters to Africa were the European Union, the US and China. They all muzzled the local industry, which struggles with an irregular business environment.
New tax proposal
Recently, Kenya’s Trade Cabinet Secretary Moses Kuria proposed the introduction of new taxes on imported clothes to help grow the local textile industry.
“In the next Finance Bill or even earlier, I will propose a new 25 percent levy on imported clothes because the time has come for us to grow our textile sector for the benefit of Kenyans,” Kuria said.
But his sentiments have not gone down well with players in the sector.
Read: Kenya’s donated clothes ‘plastic waste in disguise’
“It is very unfortunate that the government is toying with the idea of a ban. On average, every tonne of mitumba imported into EAC countries creates around 7.58 jobs,” Teresia Njenga, chairperson of the Mitumba Consortium Association of Kenya, told The EastAfrican.
The consortium argues that the sector is a major source of goods and a driver of business for micro, small and medium-sized enterprises (MSMEs). Kenya is estimated to have over 7.4 million MSMEs, employing approximately 14.9 million Kenyans and constituting 98 per cent of all businesses in Kenya.
What is clear is that it will not be easy for the EAC states to do away with mitumba.
Currently in the EA, less than five percent of fabrics are produced locally.
Also, East African countries that do not have a long history of garment manufacturing will need to upgrade their equipment and personnel.
Rwanda is more reliant than any other EAC economy on importing raw material. Some 91 percent of employment in Rwanda is in the informal sector, while wages in the textile industry are generally low, the consortium report shows.
And the EAC is an important $147 million used clothing and footwear market for the US that helps to employ 40,000 low-waged Americans, alongside an additional 150,000 jobs indirectly in the charity sector.
Read: Kenya’s mitumba dealers push for setting up of re-export facilities
Banking on World Trade Organisation (WTO) protocols, the US has often cited bans on used clothing as part of the ‘restrictive trade measures’ the WTO preaches against, and which undermine international trade.
A UN study on second-hand clothing trade and disposal in Chile reveals that the world trade in second-hand clothing is growing rapidly. It reached $9.3 billion in 2021.
“The volume of this trade grew by 10 percent per year over the last three decades, from 541,000 tons in 1992 to almost 3.6 million tonnes in 2021,” the UN report titled ‘The Role of International Trade in Circular Fashion: Challenges and Opportunities’ and released in May 2023 says.
The EAC accounts for nearly 13 per cent of the global imports of used clothing worth about $274 million, according to a 2017 study by USAid.
Suzan Muhwezi, Uganda’s senior presidential adviser on Agoa, said at a meeting with Ministry of Trade officials, that there were suggestions for a phased ban starting with easy-to-make clothes like undergarments, bed sheets and stockings as production capacity is amped.
Read: Cheap and best: Anthem for good old mitumba
“It is good to support the local textile industry, but we should also consider whether our local manufacturers can meet the demand of over 40 million people in the country in case of a total ban,” Muhwezi said.
Ready consumers
The Cotton Development Organisation – a body that monitors the production, processing and marketing of cotton in Uganda – says new investments in the country’s textile industry could have easy access to ready consumers in Uganda and in neighbouring countries.
Uganda is a significant producer of cotton but much of it is exported in semi-processed form, with the average value of Kampala’s cotton exports ranging between $26 million-$76 million a year in the decade to 2022, according to the Bank of Uganda.
In 2021, Uganda exported $13.5 million in raw cotton. Ministry of Trade reports Uganda has recorded an annual cotton production of about 254,000 bales in the past five years and has the potential of producing 1,000,000 bales at full employment level within the same period.