Challenges for EAC to phase out 'Caguwa' by 2019

The ban on the importation of second-hand clothing, footwear and motor vehicles that was endorsed by the EAC Heads of State on March 2 during the summit held in Arusha, Tanzania continues to cause ripples within the member countries. The decision is in line with the EAC industrialisation policy that sets a regional framework for growing and expanding the manufacturing and small enterprise development businesses for the creation of employment and generation of income. The ban on the importation of second-hand clothes, locally known as caguwa, is particularly aimed at resuscitating the struggling EAC textile industries, create entry level jobs, reduce trade deficits through reduced imports and increase trade within the now six member states, with the new entry of South Sudan. The EAC decision seems to have been informed by strategies adopted by other countries like Ghana, Egypt, Ethiopia, India and Vietnam that now have a vibrant textile industry. At first glance, all these are seemingly valid socio-economic reasons for the move; however on closer observation an array of fundamental questions concerning the decision arise. First and foremost is the fundamental question of what will happen to the lives and livelihoods of the millions of East Africans who directly depend on the multi-million dollar industry for their daily bread. There is no denying that the industry has created numerous jobs and improved the livelihoods of many people in East Africa. Thanks to the little capital required to start and run these businesses and the ever increasing demand for the goods, many have found it an attractive venture. In fact, the returns are so enticing that the venture has not only attracted unskilled workers but also graduates who have failed to be absorbed into the formal workforce due to the high levels of unemployment in the region. Second is the issue of whether three years is adequate time to transition from importation to local production. Generally, a move to local production will mean, for the most part, rebuilding the textile and manufacturing industries in the sector from the ground since most of them have been operating below optimal level while others simply stand as empty shells devoid of the former glory they enjoyed in their hay days. Rebuilding the industries is only the crux of the matter though as industries will be required to satisfy the current demand once the ban takes effect. For example, Rwanda’s Utexrwa has a capacity to produce only 12,000 metres of fabric against an annual demand of close to 72 million metres, according to existing statistics. The factory is currently operating at only 20 per cent of its installed capacity. Other matters to be considered is the availability of raw materials such as cotton, silk and leather whose supply has continued to spiral downwards over the years due to lack of demand and lack of investment by both the public and private sectors. It should also be recalled that the growing of cotton and silk is in direct competition with the more lucrative horticulture and flower industry. Engaging farmers to invest in what is today considered a dying venture will be an uphill task for the governments. There is also the need to change the mentality of people on how they view home grown products. There is a deep seated philosophy among East Africans that locally manufactured products are of poor quality compared to imported ones. The view is not entirely misplaced however as the textile industries have traditionally been known to produce expensive low quality clothes and shoes that offer little variety. It will take time to change the existing mentality, build trust among the population and sensitise them on the national economic benefits that can be derived from vibrant local textile industries. There are also concerns that the local industries producing clothes and shoes are not only competing with imported second-hand clothes but also new clothes sourced from established markets like China and India. These are economies that have perfected their sectors and have the ability to produce new lines and extremely low production costs that are subtly subsidised by their respective governments. Lastly is the inevitable question of whether the industries will have the capacity to produce quality, affordable fashionable clothing and footwear. The reason second hand clothes and shoes are so popular is because they are inexpensive, of good quality and come in a variety of vogue. And the big question therefore is whether local production will be up for the task? For this to happen, production costs will have to be at a minimum and the governments will need to invest heavily in technology and capacity building. The government will also need to attract both local and foreign investors into the sector by providing incentives. The intentions of the ban are economically sound and promise a brighter future for EAC in the long term. However, the approach calls for more research on how to best implement it without destabilizing millions of households that depend on second-hand clothing and footwear industry. The writer is a social commentator based in Kigali. njerri@gmail.com

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Challenges for EAC to phase out 'Caguwa' by 2019