Small traders will continue paying 35 per cent duty on imported cheap clothes, piling pressure on their bottom lines. The traders who have recently been protesting high levies and delays in clearance at the port of Mombasa will have to absorb the punitive taxes for another year. This is as President Uhuru Kenyatta moves to implement his job creation agenda by protecting local textile industries.
Last year, National Treasury Cabinet Secretary Henry Rotich introduced an import duty of 35 per cent, suspending East Africa Community’s Common External Tariff of 25 per cent.
CS said the move was meant to protect the local textile and footwear sector from “unfair competition.” Rather than revert to the 25 per cent CET, Kenya, through a gazette notice issued on June 30, maintained the 35 per cent import duty on “articles of apparel and clothing accessories, knitted or crocheted and Articles of apparel and clothing accessories, not knitted or crocheted.”
Kenya has also assigned the items as ‘sensitive’ for one year since they are critical to employment agenda. Kenyatta has earmarked the textile and apparel sector as one of the key drivers of job creation under the Big Four agenda, a move that has seen Treasury turn up the tax-knob on imported clothes. “Speaker, our textile and footwear sector are closing down due to increased unfair competition from cheap imported textiles and footwear as well as second-hand clothing and footwear,” said Rotich. “In order to encourage local production and create jobs for our youth in the sector, I have introduced a specific rate of import duty of Sh500 per unit or 35 per cent whichever is higher. This should guard against undervaluation.”
The revived Eldoret-based textile manufacturer Rivatex was among the firms that had shut down following intense competition from imported clothes. However, import of second-hand clothes, which experts blame for the death of the country’s textile sector, will not attract higher tariffs.
Last year, Kenya broke ranks with its EAC peers to reduce tariffs on imported second-hand clothes to appease the US. The value of imported second-hand clothes in the first three months of this year increased by nine per cent to Sh4 bn compared to Sh3.7 bn imported in the first quarter of 2018.
However, importation of clothes – reduced by 22 per cent to Sh3.5 billion in the first quarter of 2019 compared to Sh4.4 bn in the same quarter.
