Economy /
Soar in Second-Hand Trade in Kenya Despite Bleak Future
The trade of second-hand clothes in Kenya, East Africa’s largest economy, remains an emotive issue with government who are unable to follow through with a consensus hammered out in 2015 by regional states calling for a ban of the business by 2019.
An example was this December when the Cabinet Secretary for the East Africa Community (EAC) Adan Mohamed said no plans calling for an increase of duty on the exported hands-me-downs let alone banning of the trade altogether existed, instead saying the Kenyan government was going to support the local textile industry through a reduction of cost of production to make new clothes affordable.
“Second-hand clothes are free trade and we won’t interfere with that. We are making the production of textile manageable locally so that Kenyans can afford to buy new clothes at a lower cost. This way, the mitumba (hand-me-down) clothes will be phased out automatically as no one will buy them when the new ones are cheaper,” said Mohamed during an EAC council meeting held in Arusha, Tanzania, headquarters of the regional economic bloc with an estimated GDP of US $193 billion, equivalent to US‘ luxury goods market in 2019, thought to be one of the biggest in the world.
Verifiably, the second-hand clothing business is a multi-million dollar industry in Kenya.
In 2018 for instance, the trade of second-hand items surged significantly, with traders importing 177,160 tonnes of clothes valued at about Ksh17 billion (US $16,21,134) up from 135,868 tonnes in 2017 and 106,974 in 2014, according to data from Kenya National Bureau of Statistics (KNBS) – the principal agency of the government for collecting, analyzing and disseminating statistical data in the country.
And in the first six months of 2019, Kenyans spent Kshh 11.96 billion (US $117,638,918) to import second-hand clothes and footwear, data from the KNBS shows.
While the import bill for second-hand clothes, popularly called mitumba, rose by Sh1.04 billion (US $10,229,282) or 13.36 per cent in the January-June period to hit Ksh 8.86 billion (US$ 87,145,613) compared with Ksh7.82 billion (US $76,916,331) in the same period of 2018.
Higher quality and relatively lower prices of mitumba have continued to drive demand for the merchandise at expense of locally-made clothes amid higher margins enjoyed traders largely in informal markets.
While the clothing comes from across the globe, including Europe and China, most originates from the United States.
According to USAID, the industry employs more than 355,000 people in East Africa and supports the livelihoods of 1.4 million people, a big proportion of them being Kenyans.
“The secondhand items business in Kenya is soaring because of three things, first is stifled incomes, second it is offering thousands of jobs and third the items are of good quality fuelling demand,” said Dr Ernest Manuyo, an economics lecturer at the University of Nairobi.
“Most of the new clothes and shoes made in Kenya are exported because their prices are way above the common man’s reach,” says Munyao.
Beginning in 1991, the local textile industry unravelled when controversial Structural Adjustment Programmes (SAPs) implemented by the World Bank across sub-Saharan Africa set in leading to the liberalization of the sector.
Earlier the government had imposed a 100% levy on imported used apparel as a bulwark to protect the local textile industry.
The SAP’s ostensibly were supposed to make economies of developing countries more market-oriented following advice from the World Bank but instead mixed results were achieved.
“Prior to import liberalization, the textile and apparel industry had been very important in Kenya, representing 30 per cent of manufacturing employment, and additionally supporting hundreds of thousands of cotton farmers. Following liberalization, the Kenyan market was flooded with imports of used clothing from the US and Europe; by 2005 used clothing imports exceeded $23 million, and an estimated 80 per cent of Kenyans were wearing used clothing. Production in cotton, textile, and apparel firms decreased significantly,” reads a research paper titled: Kenya’s Trade Liberalization of the 1980s and 1990s: Policies, Impacts, and Implications, written by Dr Geoffrey Gertz, a researcher from the Brookings Institution based in New York City.
During the cotton boom in the late 1970s and 1980s, the government had supported the industry through the Cotton Board of Kenya, the sector’s regulator, which had an organized marketing system that saw farmers getting paid promptly. The board had gone ahead to invest heavily in factories that today lay fallow or have since foreclosed.
“Second-hand clothes were imported, providing a serious challenge to local cloths. Gradually firms closed down and cotton ginning factories lay idle. Previously widely considered as one of Kenya’s main exports the cotton crop suffered irreparably. As raw textiles were, instead, purchased from Taiwan and Singapore. It is a shame that Kenya’s great potential for a cotton industry continues to remain untapped,” reads a report titled, The Rise and Decline of Cotton Growing in Kenya, published by Old Africa magazine.
Some industry experts maintain that it was not used apparel that drove factories out of business, but inefficient production. But critics say local manufacturers never had a chance.
In 2016, Kenya, Tanzania, Uganda and Rwanda increased tariffs on imported used clothes in bid to boost their local textile industries and eventually phase out secondhand apparel.
But Kenya, Tanzania and Uganda abandoned the joint position after threats by the United States to review their African Growth and Opportunity Act (AGOA) status.
AGOA is a preferential trade deal intended to lift trade and economic growth across sub-Saharan Africa.
For Rwanda, which stood its ground, the US barred it from exporting apparel duty-free to its market under AGOA in July last year.
“We have to grow and establish our industries,” Mr Kagame said in June. “This is the choice we find that we have to make. We might suffer consequences. Even when confronted with difficult choices, there is always a way.”
Secondary Materials and Recycled Textiles Association (SMART); an association of textile companies in the United States of America (USA); members argues that the decision by the EAC to ban imports of used clothing and footwear impose significant economic hardship on the USA’s used clothing industry.
The organisation argues that the ban directly contradicts requirements that AGOA beneficiaries work towards eliminating “barriers to United States trade and investment” and promote “economic policies to reduce poverty”.
In March 2017, the Office of the United States Trade Representative threatened to remove four of the six East African countries included in the AGOA arrangement.
Under the deal, products like oil, coffee and tea are allowed access to American markets with low tariffs. But the White House has the right to terminate the agreement with a country if it feels that the relationship doesn’t benefit the United States.
The dispute has thrown into relief the perennial debate among countries, especially developing ones, over how to balance protectionism with the risk of damaging their relationship with an interconnected world.
The American response reflects a desire to both protect jobs and have open access to small but promising markets. The East African nations are trying to replicate the success stories in Asia and even the United States, where infant manufacturing industries were initially protected and nurtured before they were able to compete on the global market.
That is the conundrum that Kenya currently faces.
