Uganda, Tanzania and Rwanda plan to ban all imports of second-hand clothing in order to strengthen their textile industry. But with the US threatening consequences, EAC leaders have agreed to a small compromise.
26 Feb 2018 |Susanne Maria Krauß | DW
In 2015, the states of the East African Community (EAC) announced that from 2019, second-hand clothes and shoes would be banned from their markets. But the US has claimed this proposed ban goes too far and violates the Africa under the African Growth and Opportunity Act (AGOA), which aims to expand trade and investment on the continent.
At a summit last Friday in Uganda’s capital Kampala, leaders agreed on a compromise in response to the pressure from Washington: second-hand imports will not be directly banned, but import taxes will still need to be paid.
In addition, they want to invest more money in their own textile industry: “The members of the East African Community should promote their textile industry by using measures which do not jeopardize the benefits of AGOA membership,” they said in the meeting’s closing communique.
US threat unlikely to harm the EAC
It is still unclear whether the US intends to go along with this offer. But even if the EAC is excluded from the AGOA by the US, it probably won’t pose much of a risk, according to Rodgers Mukwaya from the UN Economic Commission for Africa (UNECA): ” Most countries in Eastern Africa benefited very little from AGOA — with the exception of Kenya.,” he says, ” AGOA has not had a strong benefit for countries in Eastern Africa. So any ban from the US will not have a big effect on the exports from Eastern Africa.”
The UN Commission has already carried out a simulation study in case of cases and estimates that the export business of the three countries Tanzania, Uganda and Rwanda will then only drop by 0.2 percent. Instead, the study predicts that countries could end up benefiting even in the event of AGOA exclusion.
Expanding East Africa’s textile industry crucial
The logic behind the plan seems to make sense at least: as second-hand clothes gradually disappear from the market, the demand for new garments will increase. “In the short run the deficit will be covered by new clothes from Asia,” explains Mukwaya.
By this he means imports from China, which are already flooding the market. “In the long term however, we believe that we can take over part of this market ourselves,” he says, “however, it is important for us to expand our textile industry.”
For Linda Calabrese from the Overseas Development Institute (ODI), a London-based think-tank, the expansion of the EAC’s textile industry is crucial to success: “The production capacity at the moment is quite limited,” she says, “So in order for that space to be filled, there needs to be a lot of support to the sector, a lot of complementary measures — and these have nothing to do with a phase out.” Calabrese says this often means adequate infrastructure is lacking, as well as power supply.
Import ban not a quick-fix
Other countries in Africa have already faced a similar experience. In Zimbabwe, for example, the sale of second-hand clothing was prohibited in 2015 — although the ban was relaxed two years later.
The local textile industry was not yet ready to deal with the rising demand. At the same time, Zimbabwe also faced the issue of a growing black market.
“It’s been very difficult to implement these bands, because there’s a lot of informal trade, a lot of cross-border trade,” says Calabrese, “There are a lot of traders who go into a country, buy a lot of clothes in the market and then just bring them back in their suitcases. This is very common in Africa, so it’s very difficult to stop these illegal imports.” South Africa and Nigeria also had similar experiences; “I am not aware of a country which has completely stopped the import of second-hand clothing,” says Calabrese.
Zimbabwe’s government now hopes to strengthen the local textile industry and reduce the amount of illegal garments found in markets around the country. They are using Ethiopia as a model, which now employs several thousand people in its own textile industry. Even European clothing giants such as S. Oliver and Tchibo are now producing clothing there.
Relief for low-income earners
But for many low-income earners in Tanzania, Rwanda and Uganda, news that the EAC would not completely ban second-hand clothing imports — at least for the time being — came as a relief.
Michael Uwangye from Kigali sells second-hand clothes on the market. Ever since the government raised taxes from $0.20 (€o.16) per kilogram to $2.50 (€2.03), daily business has become increasingly difficult. “Sales have gone down significantly,” he says, “Right now, used clothes are very expensive, costing two or three times more [than before]. If we had the clothes back [as before], it would be good for the traders and the locals.”
Nevertheless, there is still a lot of work to be done if the EAC want to build-up its textile industry. Rwanda had predicted that 25,655 new jobs could be created by 2019 if second-hand clothing imports were banned. So far, however, there are just eleven companies listed in the country which produce textiles, along with seven others which manufacture shoes. Most of these are small businesses — even the largest clothing producer, G & H Garments, only employs 1,500 people.