What Is The Economic Impact Of Secondhand Clothes To Kenya?

The Institute of Economic Affairs in conjunction with the Mitumba Consortium Association of Kenya released a report on the state of mitumba trade in Kenya. The report showed some breathtaking figures about the role the sector plays in the economy.

There is no doubt that Kenya is one of the largest importers of second-hand clothes in Sub-Saharan Africa. The sector is therefore crucial to Kenya’s economy based on its contribution to employment and as a source for government revenues.

Between 2015 and 2018, the scale of wholesale trade of second-hand garments is estimated to involve 741,000 tonnes of used items. The annual value of this trade was reported in 2019 to be on average Ksh 18 billion which is less than 1 of the total country’s imports.

The total imports of textiles in Kenya were valued at around Ksh 131 billion depicting that secondhand clothes represented 12.5 percent of this.

READ: Kenya Imported 185,000 Tonnes Of Mitumba In 2019

Taxes

Secondhand clothes play a major role in paying revenue to the government. The taxes levied on second-hand clothes are import duties, a railway development levy, and an import declaration levy. Accumulatively, the importer incurs about Ksh 1.5 million per container in taxes.

A 40 feet container carries an average of 24 tonnes. Out of the 185,000 tonnes imported in 2019, it then is averaged to have been transported in 8,000 forty feet containers. Each importer pays an average of 1.5 million per container totaling 12 billion shillings in import duty.

Every wholesaler or retailer in the sector has to pay for a business permit and a fire certificate that is often accorded based on the size of your business. One trader mentioned that they pay Ksh 10,000 and Ksh 5,000 annually for a business permit and a fire certificate respectively. They also pay a turnover tax that is at a 3 percent rate of their gross sales.

Satisfying the demand

Second-hand clothes make clothes affordable for all as not all consumers can afford new clothes. For most consumers, second-hand clothes are both trendy and affordable.

Brand new clothes are deemed as expensive for most and poor quality. Economically, giving consumers choices expands competition between peers. This ends up being beneficial to both consumers and businesses as it complements rather than displaces the production of new textiles and apparel.

Creating employment

In Kenya, about two million people are employed in the formal sector, leaving out millions of people to either work in the informal sector or suffer unemployment. The informal sector is a blend of both skilled and unskilled labor but absorbs a lot of people who can’t be accommodated by the formal sector.

Kenya National Bureau of Statistics (KNBS) Manpower Survey identified mitumba traders fall under the second-hand clothes and footwear industry and as a whole, the industry employs an estimate of 10% of the extended labor force.

“Based on the Kenya National Bureau of Statistics (KNBS) Manpower Survey, the mitumba industry employs an estimated 10 percent of the extended labor force, which translates to at least 2 million people,” said the Mitumba Consortium Association of Kenya Chairperson, Rev. Teresiah Njenga.

READ: 91.5 Percent Of Kenyan Household Use Mitumba Clothes

The total extended labor force based on the Labour Force Survey report in 2020 is 20,641,175. Second-hand clothes and footwear employ at least two million people. The employment chains cover handling, alterations,
refinements, and distribution of the used clothes.

“We cannot run away from mitumba. We cannot say that mitumba is killing the local sector. It is like chopping off your nose to spank your face. The value of mitumba cannot be undermined,” said Mr. Kwame Owino from the Institute of Economic Affairs.