Frankly speaking, the debate is not a new one, but it's now in the headlines after Azimio presidential candidate Raila Odinga promised to revitalise the manufacturing sector. Raila wants Kenyan industries to produce machinery for engineering, transport, fishing, mining and agriculture.
While describing his vision if he wins the August 9 polls, the former Prime Minister blamed economic liberalisation for the collapse of Kenya's post-independence textile industry. "Mitumba (imported second-hand clothing) killed all our textile industries. Our people are only wearing clothes from outside the country. They have been worn by the dead," Raila said.
“We are going to get into primary production so that our people who are importing mitumba can have good products to sell here,” Raila said, while emphasising that nobody would be pushed out of business.
“We will ensure that those who are importing mitumba get the first hand to market goods which are going to be manufactured here.”
Unsurprisingly, Raila's opponents accused him of insensitivity to the plight of millions of Kenyans earning a living by trading mitumba. Deputy President William Ruto, who is neck and neck with Raila in opinion polls, has offered the "bottom-up" economic model as an alternative. Ruto says his approach will help small-scale traders grow.
“We will support such businesses because they drive our economy and employ more than two million people,” Dr Ruto said in a seeming about-turn from a previous stance, when he pledged to stop imports, including clothing, if he wins the election.
We will support such businesses because they drive our economy and employ more than two million people
KEY ECONOMIC ACTIVITY
The trade in second-hand apparel has become an important economic activity over the years. Data from the Institute of Economic Affairs (IEA) shows the value of imported second-hand clothes and footwear almost doubled between 2015 and 2019, from Sh10 billion to Sh18 billion. In 2019 alone, Kenya imported about 8,000 containers of mitumba.
Interestingly, the IEA noted that the existence of mitumba was a demand-side problem rather than a supply-side issue. "Mitumba reflects on incomes rather than whether the supply of new clothes and footwear is available," the Nairobi-based think tank noted in a 2021 report.
Mitumba employs at least 2 million Kenyans, notes the IEA, with some engaging in the trade full-time, while others do it part-time. The employment chain covers retail, handling, alterations, refinements and distribution of the used clothes.
Kenya had a significant textiles industry after Independence, as seen in once-flourishing enterprises such as the Kisumu Cotton Mills (Kicomi), Rift Valley Textiles (Rivatex) among a myriad of government and privately owned textile producers. Cotton was a cash crop in the warm, wet parts of the country. Livestock owners made money selling animal hides and skins to tanneries that would process the raw material into leather for shoes, jackets and handbags.
Cotton gins dotted the landscape across Kenya. These are machines that separate cotton fibre from cotton seeds. Few cotton gins remain standing today. The vast majority of Kenyans below the age of 35 have never seen a cotton plant. Meanwhile, the price of animal hides has plunged to ridiculous levels, selling for as low as Sh10 in some parts of the country.
Massive dumping of used clothes (mitumba) and liberalisation of the Kenyan economy undermined competitiveness and growth prospects of the textile and apparel sector
LOCAL PRODUCTION AILING
Over the past 40 years, many textile industries in Kenya have closed while others relocated to neighbouring countries. In 1984, Kenya had 52 textile mills employing half a million garment workers. At the start of 2022, there were only four large mills in operation, with 54,000 people in the value chain. Kenya is now the world’s fourth-largest importer of second-hand clothing.
Edison Omollo, a textile engineer at the Technical University of Kenya, traces the decline of the country's textile industry to the 1980s. New government policies at the time made it difficult for Kenya's textile industries to compete.
“Around that time, massive dumping of used clothes (mitumba) and liberalisation of the Kenyan economy undermined competitiveness and growth prospects of the textile and apparel sector, leading to a reduction in production,” Omollo says. He estimates that Kenya’s textile industry declined by about 50 per cent at the time.
“High equipment costs and low financial capabilities to expand are also a major bottleneck,” Omollo notes in an article. These factors make it hard for Kenyan textile producers to withstand competition from such global giants as China, Bangladesh, India, Turkey and the European Union.
The production of the new police uniform demonstrates the challenges Kenya’s textile industry faces. In September 2018, the National Police Service unveiled a new-look uniform based on the Persian Blue colour. All police officers were expected to be in the new uniform by the end of 2019. The textile with the specific shade of blue was to be imported.
Problems started when the government insisted that all materials to be used in the new police uniform be made in Kenya. The Persian Blue fabric was not available in Kenya, but after local factories got their hands on it, the pace of production was slow. The deadline for having all police officers in the new uniform was pushed to 2023.
Domestic textile production has problems similar to those faced by Kenya’s industrial sector. Manufacturers complain of high energy costs, inefficient transport infrastructure, high levels of taxation and a large number of regulations, which increase costs.
“When we have multiple regulators, the temptation by each is to raise resources to finance their existence. This creates costs to the citizens who are doing the producing and dampens productivity, and worse, a disincentive to invest,” said Mucai Kunyiha, chairman of the Kenya Association of Manufacturers (KAM).
There's also the problem of counterfeits (fake goods), which results in a loss of market share among genuine producers. A 2018 report by the Anti-Counterfeit Authority (ACA) estimated the value of illicit trade in the textile industry at Sh165 billion. KAM says much of the illicit trade in textiles consists of importers declaring brand new clothes as second-hand. This results in lower import duties.
With lower taxes, the imported new clothes are sold inside Kenya at prices far below the production costs of local manufacturers. This makes it impossible for local textile producers to match the price of the under-priced imports.
With local manufacturing facing so many challenges, why bother making anything in Kenya? It's much cheaper to import everything we need. All of us can start shops and make money selling imported goods, right?
WHY GO LOCAL
The main argument in favour of local manufacturing is job creation. KAM believes that a fully developed textile industry — from cotton farms to textile mills and fashion designers — can employ as many as 5 million people in Kenya. That's lower than the 8.7 million jobs Azimio claims it will create, but still more than double the 2 million people estimated to be in the mitumba trade.
Ajul Shah, KAM’s local textile and apparel sector chairman, says a thriving textile industry would encourage supplementary industries, such as making threads, buttons and the plastic accessories used to package shirts, which currently have to be imported. Furthermore, Kenyans would grow their skills in machine operations, clothing and shoe design, among many other skills.
Therefore, the greatest selling point for local production is the jobs that come with it. This explains why all the presidential candidates are talking about local manufacturing. Voters across Kenya are pleading with whoever wins the presidency to revive the industries that collapsed with the 1980s-1990s wave of economic liberalisation. The rural economy has not recovered from the collapse of those industries.
The United Nations Industrial Development Organisation (Unido) says the advent of manufacturing in the 18th and 19th centuries revolutionised the economies of Europe and the United States. Industrialisation has been the driving force behind more recent economic miracles, such as the transformation of East Asian economies since the 1960s.
Unido notes that moving people from subsistence farming to manufacturing jobs makes the agriculture sector more efficient and raises government revenue through taxation.
On the question of local manufacturing versus imports, there are no easy answers. Kenya is part of a globalised economy, whose emphasis is free trade. For Kenya to export, we must allow imports.
The government's previous attempts to ban imported second-hand attire were met with threats by the source countries to ban Kenya's exports. The situation calls for a balancing act between economic nationalism and free trade.
Edited by T Jalio
