How Mitumba, local textile firms can co-exist side by side

Establishing standards for imported second-hand clothes and those manufactured locally is one of the ways players in the Mitumba sector believe will allow these two industries to co-exist.

Amidst claims that the growth of imported second-hand clothes known as ‘mitumba’ is choking out the domestic textile industry, a latest report on the sector details how these two sectors can operate simultaneously.

The study, sanctioned by the Mitumba Consortium Association of Kenya and authored by the Institute of Economic Affairs (IEA), prefers incentives for the domestic textile sector.

Further, the study, titled A Future Look at the Apparel and Footwear Industry in Kenya, published last month, seeks enforcement of sustainability measures for both sectors, even as it notes that the mitumba industry already adheres to this provision.

IEA points out in the study that much policy discourse on the trade of used clothes in the country has been built on the premise that the importation of these garments restricts the growth of local textile manufacturing.

“This claim is disproved by research and evidence demonstrating that promoting a harmonious coexistence between the industries is beneficial both for Kenya’s economy and the wider East African region,” the study says.

It adds that regulation, which plays a key role in advancing or slowing the growth of the mitumba sector, should be designed in a way to facilitates an interdependent relationship between the two industries.

The reason is that they serve different demographics of the market.

“The most progressive regulatory instruments should be designed to facilitate an interdependent relationship that not only safeguards the interests of both sectors but also creates fair competition, expands consumer choice, and strengthens the growth and sustainability of the textile industry as a whole,” the study says.

This should then create fair competition, expand consumer choice and strengthen the growth and sustainability of the textile industry.

“Our study proposes regulatory approaches for the effective coexistence of the mitumba industry and the textile manufacturing sector,” notes the study.

The study says and further lists harmonisation of regulations, quality control, market access, and environmental sustainability as the areas where the seesaw needs to balance to ensure sustainable growth in both sectors.

The study notes that implementing a harmonised set of import regulations could balance the inflow of used clothing and raw materials for the country’s textile industry.

“Establishing quality standards for both used clothing and locally manufactured textiles will safeguard consumer interests and support the growth of a competitive and reputable domestic textile industry,” the study says.

Lower incomes

The study adds that the clothing and footwear supplied by the mitumba industry are supplements rather than substitutes for apparel manufactured in Kenya. It argues that the two sectors complement each other in important ways.

“Many Kenyan households purchase both new and used clothing. Customers with lower incomes are sensitive to prices,” the study states. “New clothing and footwear are purchased across the income spectrum, as indicated by the wide range in prices. Used clothes are sensitive to pricing.”

And as incomes increase, Kenyans tend to buy fewer used clothes, the study says, especially when there are more expensive alternatives. “The widespread use of secondhand clothing reflects lower income levels in Kenya,” the study adds.

IEA says new and used clothes not only follow separate value chains and demand patterns but also vary significantly in price sensitivity.  It adds that intellectual property and product design are unique to specific firms or individuals, indicating that they have distinct markets.

“Consequently, it is essential to regulate these two markets separately,” the think tank says in the study.

The discourse on whether to ban the importation of second-hand clothes and footwear is one that Kenya, being a member of the East African Community (EAC), has been evading, even as other markets boldly institute it, albeit with consequences from the global community where these apparels originate.

Rwanda implemented a ban on mitumba in 2019, which led to threats of trade sanctions from the United States in relation to the African Growth and Opportunity Act (Agoa) that gives products from select nations on the continent duty-free access to the US market.

This ban had been jointly agreed by East African Community (EAC) Heads of State in 2016 and was to be implemented in phases between 2017 and 2019.

However, due to different conflicting interests, some of them associated with politics, like in Kenya, this is yet to be implemented. The discourse, however, is still alive.

For Kenya, while politics play a major role in effecting the ban, considering the two million livelihoods at risk, the country’s trade relations with the US are also critical, with data showing the Donald Trump-led nation is Kenya’s top destination (outside of Uganda) for exports.

A majority of these exports are textile and apparel, responsible for thousands of jobs in the Export Processing Zones (EPZs).

IEA says some policy makers strongly support the restraint of trade and imports of used clothing and shoes within the Eastern Africa region.

“Indeed, some countries within the region have activated total bans on the import of used clothing and footwear while others have tried to place it on the agenda of the EAC,” the study says.

The study argues that an import substitution strategy with an outright ban would be viewed as an extreme policy that would constrain supply and limit the overall size of the apparel and footwear markets in Kenya.

Severe restrictions

It goes ahead and postulates what the sector would look like if such were instituted

“In this scenario, the government of Kenya’s policy posture would result in lost revenues because the volumes of imports would be reduced towards zero in order to comply with the severe restrictions and bans,” the study says. “The result would be that the policy would not accommodate the possibility of coexistence.”

Additionally, the two million jobs the sector provides would shrink.

“Given that the clothes market is a dual market, and incomes determine substitution of goods or the other, it is clear that the used clothes and new clothes cannot replace each other,” the study says.

But it argues that if there were severe restrictions or a complete ban, the used clothes might not necessarily disappear for two reasons. First, a secondary market for used clothes will appear within the economy where used clothes bought as new will be sold in the market.

Second, there will be new incentives to smuggle, given how lucrative the sector is. “Here, the government will lose revenue, jobs will be lost, and secondary industries like ‘rag facturing’ that depend on used clothes will die,” the study says.

The study says offering incentives and support to Kenya’s textile manufacturers could enhance the local industry’s competitiveness.

“This may include tax incentives or preferential procurement policies to spur the growth of the textile industry. Additionally, providing access to technology and skills development programs could enhance the capabilities of local manufacturers, allowing them to produce higher quality products and compete more effectively,” it says.

Additionally, enforcing eco-friendly practices in both sectors is crucial, the study says. It explains that Kenya’s used clothing industry has demonstrated commendable progress in embracing eco-friendly practices by recycling and reusing clothing items.

“This shift is evident in the growing popularity of vintage and upcycled fashion, encouraging consumers to make environmentally conscious choices.

The textiles industry should adopt similar standards,” it says. The study says textile firms should adopt efficient production processes and the use of environmentally friendly materials as well. The study opines that banning the import of used clothes may be easy to impose, but its effectiveness in ensuring a strong and export-focused sector is not evident.

“Banning the import of second-hand clothes can negatively impact the livelihoods of those involved in the trading and selling of these items, including small-scale entrepreneurs and low-income individuals who rely on the affordability of second-hand clothing,” the study says.

A ban can also limit consumer choices and hinder market competition, potentially leading to higher prices and reduced quality of clothing options for consumers.  Additionally, infrastructure such as open markets will be severely affected.

“Used clothes that are in good condition help reduce carbon footprint, promote sustainable consumption, and support the principles of a circular economy,” the study says. It cites other examples of items being reused, including listing phones, computers, books, and furniture.

“It is evident that Kenya’s industrial policy should seek the expansion of domestic manufacturing through other policy approaches without making a ban on used apparel a precondition,” the study recommends.