Push to increase duty on textile imports

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Workers at an EPZ textile factory. Textile manufacturers want the government to impose additional import duties on new and second hand clothes to protect the local market from cheaper imports. Photo/File 

By MWANIKI WAHOME

In Summary

• According to a report prepared by Charmy Investments Ltd on the textile industry that outlines the development of the sector and challenges, those in the industry say the duties collected should be used to set up a stabilisation fund to guard the local industry against shocks in the international market.

Textile manufacturers want the government to impose additional import duties on new and second hand clothes to protect the local market from cheaper imports.

The manufacturers are also calling for a policy change to force government institutions to increase their uptake of locally manufactured textile products.

According to the 2013 Economic Survey, cotton production declined to 10,000 tonnes from 22,000 tonnes in 2011, sending the alarm to the manufacturers that the future of the industry was bleak.

The number of those employed in the textile and apparel industries in the Export Processing Zones contracted by 5.4 per cent from 25,169 to 23,811 workers.

Capital investment in the sector declined for the second consecutive year from Sh6.9 billion to Sh6.2 billion.

If the ‘buy Kenyan, build Kenya” concept succeeds, it would see government institutions like security agencies, prison department and learning institutions turn more to locally produced fabric.

Currently about 93 per cent of the fabric used in these institutions is imported.

The textile industry has been identified as a key plank in industrialisation in the Vision 2030 blueprint that stipulates how the country will achieve medium-income status in the next 17 years.

According to a report prepared by Charmy Investments Ltd on the textile industry that outlines the development of the sector and challenges, those in the industry say the duties collected should be used to set up a stabilisation fund to guard the local industry against shocks in the international market.

“The government institutions buy only 7 per cent of local textiles which should be increased to enable the local industries invest more in the sector. If a small duty is levied on imports, this will make money that can go to the stabilisation fund,” said Ms Margaret Chemengich of Charmy Investments Ltd when she presented the report.

The performance of the textile industry nose-dived in the late 1980s following market liberalisation that opened local industry up to competition from mass- producing low-cost countries like China and India.

By buying locally, the players said, the government will inject into the industry about Sh2.55 billion and create 8,275 direct jobs while improving the lives of more than 6,000 cotton farmers in the country.

The report was launched at a forum organised by the African Cotton and Textile Industries Federation to provide a platform for the preparation of the African Growth and Opportunities Act Forum to be held in Addis Ababa next month.

The 12 ginneries currently operating in the country have occasionally complained of lack of raw materials and are forced to import cotton from Uganda and Tanzania.

In total, there are 22 ginneries with a combined capacity of processing 140,000 bales, but most of the capacity is un-utilised since the ginneries rarely process 25,000 bales.

Kenya has not been able to exploit the Agoa initiative fully as manufacturers source their raw materials from the Far East, thereby denying the country backward linkages that would promote local cotton production.