Locals lose out in Rwanda’s second-hand clothes war

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KIGALI, July 1, 2018 (BSS/AFP) – Across Rwanda, markets selling piles of
cast-off clothes once worn by Americans have become the unlikely centre of a
trade war that vendors say is ruining their livelihoods.

Kigali, determined to boost its domestic textiles industry, in 2016 raised
tariffs on the importation of secondhand clothes, disrupting a multi-million
dollar industry and setting it on a collision course with the United States.

Friends Celestin Twagirayezu, 33, and Mercelle Dusabe, 35, began selling
secondhand clothes a decade ago at adjacent stalls in Kigali’s popular
Nyabugogo market in Kigali.

It was a good business which expanded quickly, allowing them to buy homes
and get married.

Then Rwanda slapped a 12-fold increase on import tariffs on used clothes
and a 10-fold increase on used footwear, a price hike that amounts to a de
facto ban for cash-strapped traders.

“The decision took everyone by surprise, at first we relied on the stocked
clothes but after a few months reality kicked in, and things went from bad to
worse,” said Twagirayezu.

“I am soon throwing in the towel”.

– Second-hand economy –

East Africa imports around an eighth of the world’s used clothing into an
industry that employs some 355,000 people who earn $230 million a year,
according to a study by the American development agency, USAID.

The large majority of these clothes come from the US and regional leaders,
including Rwanda’s Paul Kagame, blame the cast-offs for stymieing development
of their own clothing industries.

While Twagirayezu has watched his business wither, Dusabe switched to
selling Chinese imports, but is not faring much better.

“You can’t imagine how many customers I have lost by switching to selling
Chinese clothes! Many people still come asking for second-hand clothes, when
they don’t find them they don’t come back,” he said.

Twagirayezu agreed, saying customers prefer second-hand clothes to Chinese
imports, citing the lower price and higher quality.

Initially, the East African Community regional bloc was united in its
battle against used clothes.

But the alliance cracked as Kenya, Tanzania and Uganda balked at the
prospect of retaliatory loss of access to US markets via the African Growth
and Opportunity Act (AGOA) whereby some countries can export some products to
the US duty free.

– Trade freeze –

Rwanda, alone, did not capitulate and in 2016 its imports of used clothing
dropped by a third.

In late March this year the US told Rwanda it would lose some of its AGOA
benefits within 60 days as a result. The deadline since passed and no action
was announced, but with President Donald Trump on the warpath over trade
Rwanda is unlikely to be forgotten.

Rwanda’s clothing industry is nascent, with only a couple of players,
which means there are some surprising victims of the trade spat.

One of those losing out is Chinese garment maker C&H which set up in
Kigali’s special economic zone in order to enjoy AGOA benefits.

Many of its US clients have put orders on hold until the AGOA issue is
resolved. “We have lost market in the US because of the AGOA situation,” said
manager Emmy Iraguha.

C&H has an annual turnover of $154 million and has been producing
exclusively for export. It has not yet bowed to Rwandan government pressure
to produce clothes for the local market to fill the gap left by the dearth of
second-hand clothes.

Rwanda’s other clothes producer is Uterxwa, which specialises in
industrial clothing and uniforms, has welcomed the “positive move” to ban
second-hand clothes.

– Chinese winners –

“Once the companies making clothes locally are many the products will be
competitive, not only in Rwanda but even in the neighbouring countries,” said
managing director Ritesh Patel, alluding to the difficulty of producing
clothes cheaply enough for the domestic market.

“The alternatives to secondhand clothes are very expensive,” said Kevin
Uwamahoro, a motorcycle taxi driver who crosses into Uganda to go clothes
shopping at its still-thriving second-hand markets.

The big winner in this David and Goliath trade war might well be Chinese
companies whose flood of cheap garments are set to replace used clothing
while continuing to stifle local industrialisation.

“Considerable imports of Chinese clothing, both legitimate and undeclared,
constitute the real threat to the East African textile industry,” said the
USAID study.

However, Andrew Mold of the UN’s Economic Commission for Africa, said high
import tariffs on clothes from China and India mean there is a “margin for
regional firms to compete”.

In the meantime, however, it is ordinary Rwandans — buyers and sellers of
second-hand clothes — who continue to suffer.