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Mitumba ban will boost local firms but hurt the poor

UREPORT
By Martha Bekele | March 16th 2016

Second-hand clothes and shoes, known as mitumba, are commonly available throughout East Africa. In addition to employing thousands in these countries, the sector also allows governments to earn from import revenues and business licence fees.

Consumers are also a happy lot as mitumba allow them to have access to variety.

The mitumba sector caters mainly for the poor. One would be mistaken, however, to think only the poor buy second-hand clothes and shoes.

It is not uncommon to spot a corporate look with a designer office suit and shoes, complete with a designer handbag or designer tie – thanks to mitumba – and all this at cheaper prices.

East Africans are spoilt for choice. One can buy a Calvin Klein dress for about $5, which is definitely better than that $30 Chinese dress which fades after the second wash, or a pair of Grenson shoes for less than $10, certainly better than those shoes imported from Asia that burn your feet.

But not everyone is happy with mitumba. Local producers have been lobbying East African governments to impose a higher levy on second-hand clothes and footwear.

It must have been music to their ears when the 17th Ordinary Summit of the East African Community Heads of State held in Arusha, Tanzania on March 2, 2016, directed member states to phase out importation of used textile and footwear within three years.

The clarion call ‘Buy East Africa, Build East Africa’, is aimed at promoting industrialisation of the region.

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POSITIVE IMPACT

Any economist worth their salt will tell you mass shipment of second-hand clothes and footwear will literally kill the local textile and leather industry.

Notwithstanding the positive impact of banning used clothes and shoes in local industries and long-term growth of the region, the move may not necessarily be optimal.

Improving the business environment under which domestic producers can be as competitive is optimal through providing reliable and cheap electricity and water; improving access to good roads; reducing corruption that adds onto the cost of doing business; and providing incentives to foreign companies to establish plants in the region.

The move to ban used clothes and shoes will result in socio-economic costs, albeit in the short run.

The reality is thousands of second-hand business operators will be out of a job after three years without a safety net.

East Africans will be forced to buy either first-hand imports or low-quality but dearly priced locally manufactured clothing and shoes for some years to come, which basically makes the move less pro-poor.

One is inclined to pose more questions such as how the three-year transition period was decided on.

Does it mean either our income levels will rise greatly or our local manufacturers will be able to satisfy East Africans’ demand by 2019 with high-quality and reasonably priced clothes and shoes?

One can only hope the region’s policy makers have done their homework by analysing the benefits in terms of industrialisation and growth through protection of local industries as well as costing the negative effects of banning mitumba.

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