Secondhand cloth imports hit Sh5b after tariff cuts : The Standard

Imports of secondhand clothes, popularly known as mitumba, almost doubled between July and September 2018 after Treasury reduced the duty on the products. In what could be a blow to the revival of textile manufacturing, one of President Uhuru Kenyatta’s Big Four agenda, Kenya imported 52,648 tonnes of second-hand clothes valued at Sh5 billion. This was an increase of 60 per cent from 32,849 tonnes of used clothing valued at Sh3.2 billion that were brought into the country in the same period in 2017.  Earlier last year, Kenya broke ranks with its East African Community (EAC) peers to reduce tariffs on imported second-hand clothes in what was seen as a strategic decision by President Kenyatta’s administration to maintain cordial relations with the United States.

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In the Budget Statement, Treasury Cabinet Secretary Henry Rotich hinted at slapping both used textiles and footwear as a means to encourage local production. “Mr Speaker, our textile and footwear sector are closing down due to increased unfair competition from cheap imported textiles and footwear as well as second-hand clothing and footwear. In order to encourage local production and create jobs for our youth in the sector,  I have introduced a specific rate of import duty of Sh500 ($5) per unit or 35 per cent whichever is higher. This should guard against undervaluation,” said Rotich. However, an EAC Gazette of June 30 showed that Kenyan importers would bring into the country second-hand clothes at a reduced tariff of $0.20 (Sh20) per kilogramme for the next 12 months, starting July 1. This is after a reduction of 50 per cent from an applied tariff of $0.40 (Sh40) per kilogramme. “Kenya to stay application of the EAC Common External Tariff rate and apply a duty rate of 35 per cent or $ 0.20 per Kg whichever is higher instead of 35 per cent or $ 0.40 per Kg whichever is higher for one year,” read the notice signed by EAC Council of Ministers Chairperson Al Haji Ali Kirunda Kivejinja. Instead, the Sh500 that CS Rotich talked about in his budget speech will only apply to new cheap fabrics, apparels, and garments. The decision brings into question Uhuru’s plan to protect local textile manufacturers and revamp the sub-sector to create tens of thousands of jobs. 

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Textile and apparel sub-sectors are President Kenyatta’s legacy projects that Government plans to bet on to push the manufacturing sector to 15 per cent of the gross domestic product (GDP). Treasury plans to increase revenue from the textile industry from Sh35 billion to Sh200 billion, creating 500,000 cotton jobs and 100,000 new apparel jobs by 2022. Slapping second-hand clothes with higher tariffs was one of the ways the Government planned to protect the local manufacturers. A number of factors might have conspired to make the Government back-peddle on its decision to curb entry of mitumba into the country, contributing to the death of the local textile industry. By the time Kenya was making its policy, Rwanda was at loggerheads with the US over its decision to phase out used clothes from its market by 2019, hitting second-hand clothes with higher tariffs. By then Mr Kenyatta was set to visit the US where negotiations with President Donald Trump would centre on the revamping of manufacturing.

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Related Topics

President Uhuru Kenyatta’s Big Four agendaTreasurymitumbaEACEast African CommunityEAC Common External Tariff