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Ugandans Yet to Embrace ‘Made in Uganda’

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More than 10 years ago, Uganda began legislation and policy documentation to initiate growth of the local textile industry. This was part of an initiative aimed at enabling the country to cash in on its high quality cotton as opposed to exporting about 90 per cent as lint (in raw form).

But the government strategy to have professionals as main players in the textile industry and progressively phase out importation of used fabrics from especially Europe, Asia and the United States of America is still limping four years after the idea of bans on such imports was discussed at a regional level.

Though some civil society actors are concerned about the lack of political will to expedite the process of phasing out importation and clearance of second hand clothes, there seems to be no clear policy progress.

The National Textile Policy, 2009 notes that with an East African population of 120 million people, the region has a market potential for 820 million metres of cloth per annum, generating about Shs1.4 trillion ($415 million).

“We have always had the capacity to produce enough textiles for Ugandans but what was lacking was a clear policy direction. For anyone to produce, there has to be demand for the product. There is nowhere in the world where someone will comfortably invest in a free space. Currently, our policy has been promoting imports. So it is easier for people to import. People are so used to imported second hand fabrics,” says Mr Mohammad Muzamil, the head of policy at Uganda Manufacturers Association (UMA).

UMA is an industry-association in Uganda that aims at bringing together Ugandan industrialists and manufacturers to guide the industrial actors in the country towards global competitiveness, on a sustainable basis.

“Uganda has many garment firms that are producing finished garments but are limited in their production lines. We have Graphics Systems, Tailors Association, plus others, over 100 garmenting factories. They procure from the local fabric makers then make the finished garments like shirts,” Mr Muzamil explains.

Tanzania and Uganda, in an East Africa Community dialogue in 2017, insisted that doubling levies on imports of used clothing, from $0.20 to $0.40 per kilogramme, was for realignments with the current value. Rwanda increased their tariffs from $0.2 to $2.50 per kilogramme before it was eventually partially suspended from African Growth and Opportunity Act (AGOA).

The increase in import tariffs was expected to enable a progressive and effective ban on importation of second hand clothes amid continuous threats from AGOA should Uganda or any other East African country impose a ban. AGOA which came into force in 2000, enables preferential trade access of about 6,000 products duty free to selected countries in Sub Saharan Africa till 2025.

The East African Community accounts for nearly 13 per cent of global imports of used clothing worth $274 million according to a 2017 study by the United States Agency for International Development (USAID). The study also found that around 67 per cent of the East African Population purchased a portion of their clothes from used clothing markets.

Uganda in 2017 enacted a policy – Buy Uganda Build Uganda (BUBU), to promote import substitution and have most goods locally produced including textile products.

This was to beef up efforts to enable progressive phasing out of importing second-hand clothes into the country.

“Once we engage the small and medium enterprises and train them, we shall be looking at over $200 million per annum,” Trade Minister Amelia Kyambadde told the East African Newspaper in 2017.

To date the textile industry is still struggling due to high costs of production and the inability to compete in a free market economy where imported second hand clothes are cheaper for most Ugandans.

According to traders who deal in second hand clothes, imports are still more viable compared to locally manufactured fabrics.

In the face of locally available raw materials like cotton, Uganda should have been in position to invest in the fabric industry better but most of the cotton gets exported instead.

Cotton, a main raw material in quality textiles, is Uganda’s third largest export crop after coffee and tea. It is the main source of income for some 250,000 households.

But according to Uganda Cotton Organisation, only five per cent of the cotton grown locally is used by two main local manufacturers – Fine Spinners Uganda Limited and Southern Range Nyanza Limited.

The percentage changes with season and demand for the product.

“Consumption varies from year-to-year depending on demand from the manufacturers,” says Ms Damlie Lubwama, the production manager, Cotton Development Organisation.

She adds, “The buffer stock arrangement we have is an incentive by the government to meet the cotton needs of the manufacturers depending on the quantity they require for their textile production.”

But during the Coronavirus (Covid-19) period, Ms Lubwama notes that the demand for cotton has reduced due to low demand for finished garments and purchasing power of textile and garments consumers.

Whereas Uganda and other East African countries are looking at second hand clothes as a threat to the growth of their local textile industry, a bigger challenge exists in the already-made clothing line of “Made in China.” China’s exports of cheap ready-made clothes to East Africa accounts for $1.2 billion according to the USAID study.

Mr Bedi says that apart from the bill of utilities, water and electricity, which is a huge hindrance to competitiveness in Uganda’s textile industry, the cost of finance is high.

“The cost of labour in Uganda is globally competitive but the cost of finance is a big deterrence (to investment) because if you borrow in Uganda shillings at 15 per cent interest, it is not cash competitive. Logistics is also a big cost of business unless one is using locally grown raw materials, then you can sell locally, at the region or across the globe,” he explains.

Logistics costs for importation of in-bound cargo for those who use imported raw materials transported through the port of Mombasa can shoot up the cost of production.

Cotton is a 26 million tonne business while polyester from China or India could be around 80 million tonnes for one to produce and be competitive. Taking locally grown cotton into the factories to make clothes would be a better alternative to imported second hand clothes.

“We should not think of how one company can increase their cotton consumption from 10 to 12 per cent. The discussion now should be, how we can add value to the 90 per cent cotton that we export raw to the rest of the world? If we have strong import substitution and value addition policies, we should be concentrating on that 90 per cent going out and making sure we add value to it,” says Mr Bedi.

Mr Bedi believes that government incentives, if financed through the Uganda Development Bank, will multiply the country’s investments and boost growth of the textile industry since there is local demand for affordable first hand clothes.

With companies in countries where Ugandan textiles are exported filing for bankruptcies especially in the US, retail shops closing and shifting to online sales, Ugandan textile companies could consider looking inwards as talks about phasing out of second hand clothing lingers in the air.

Last month, Trade Minister, Ms Amalia Kyambadde told Daily Monitor that the country has halted its discussion to ban second hand clothes without details of a strategy to enable the textile industry to take off to sustainability.

“What is the problem with second hand clothes? We told you (the media) that there is no ban,” Ms Kyambadde said.

But those in the manufacturing industry say they are working on having Ugandans wear affordable ‘Made in Uganda.’