Turning Down Hand-Me-Downs: The global politics of the used clothing ban in Kenya, Uganda and Rwanda
Global power dynamics matter for domestic industrial policy. It seems straightforward, but the exercise of influence by big economic powerhouses is often deliberately obscured. In addition, it matters differently in different times and places. The complicated fate of the East African Community’s (EAC) recent ban on the importation of used clothing aptly illustrates the involvement of global actors in African industrial policy.
The Birth and Death of a Ban
With the advent of ‘fast fashion’ and rapidly changing styles, clothing in the Global North increasingly find a home in used clothing donation bins. The term ‘donation’ is slightly misleading, however. Most garments are not gifted, but sold on to commercial traders in the Global South as part of a highly lucrative international trade. In 2013, the US exported $687 million worth of used clothing to commercial importers in the Global South.
The hand-me-downs are not universally loved. Many policy-makers in importing countries argue that they flood the domestic market, stifling a sector that drove economic development and even industrial revolution in today’s richer countries: the textile and apparels industry. This is not a new argument: in 1700, the UK, now the second largest exporter of used clothing,banned the importation of textiles for this reason.
The hand-me-downs are not universally loved. Many policy-makers in importing countries argue that they flood the domestic market, stifling a sector that drove economic development and even industrial revolution in today’s richer countries
This sheds light on the 2016 decision by the East African Community (EAC), one of the biggest importers of used clothing in Africa, to phase out the importation of used clothing within three years.
When East African Heads of State announced the import ban at their annual Summit, it seemed that the efforts of US-based used clothing exporters, who had mobilized against the policy while it was under deliberation, had been in vain. However, political commitment to the ban would prove short-lived. In the spring of 2017, Kenya backed down, announcing that “…it is [Kenya’s] desire to develop and promote our textile industry… but it is not going to be through a ban or anything of that sort.” By February 2018, Tanzania and Uganda followed suit, reverting to pre-2016 tariffs on used clothing and publicly stating that a ban was not on the cards. Only Rwanda’s commitment was steadfast.
Figure 1: Timeline of Used Clothing Ban Policy Developments
What Drives Effective Industrial Policy?
Protectionism and targeted support to specific industries is as old as industry itself. According to infant industry theory, phases of protectionism drive economic transformation, moving resources from lower to higher productivity sectors. Limited structural transformation on the African continent has sparked debate among various theoretical traditions about the conditions under which industrial policy is effective.
Public choice theory and rational actor approaches blame rent-seeking urban elites for unproductive investment decisions. State-centric ‘neo-patrimonialist’ approaches draw pessimistic conclusions about the potential for an African ‘developmental state’ that is able to withstand short-term political pressures, highlighting the prevalence of clientelist relationships in African political economies.
Limited structural transformation on the African continent has sparked debate among various theoretical traditions about the conditions under which industrial policy is effective.
This literature struggles to explain the extraordinary level of commitment to industrialization to which the used clothing ban’s announcement seemed to testify. At the same time, the ban’s short lifespan in Kenya, Uganda and Tanzania suggests that this same political commitment is tenuous, subject to political wrangling, and worthy of further analysis.
According to political settlements theory, the power of the ruling coalition vis-à-vis excluded parties – opposition parties, lower-level officials, and domestic capitalists – helps explain the success or failure of industrial policy. Guided by this theory, it is helpful to ask: if political commitment to the used clothing ban was contested – successfully in Kenya, Uganda and Tanzania and unsuccessfully in Rwanda – who contested it, and to what effect? The answer goes some way toward explaining the divergent outcomes in EAC member states, but only when the theory is expanded to include global actors such as donors and foreign capitalists.
The Power to be Unpopular
The used clothing ban was by and large an unpopular move among low- and middle-income citizens in the EAC. Worth USD 151 million in 2015, imported second-hand clothing is in high demand in East Africa – it is unique, affordable, generally of high quality and offers access to some of the biggest global brands. It is also responsible for an estimated 355,000 jobs in the EAC.
President Uhuru Kenyatta’s Jubilee Party would have found banning used clothing particularly politically dangerous during an election year. Since the 1991 restoration of competitive elections, and the introduction of a new constitution in 2010 that effectively obstructs the formation of political parties on ethnic lines, the centre of political power in Kenya has been hotly contested. The ruling party is an alliance of at least ten other parties, and prominent opposition leader Raila Odinga has not hesitated to contest successive elections through violent (2007-8) and judiciary (2017) means. The incumbent administration has staked its fragile reputation on employment creation. Since representatives of the Association of Mitumba (used clothing) Importers in Kenya (AMIK) went to the State House to discuss the ban with the president in early 2017, the elimination of tens of thousands of jobs may have been more politically costly than the ruling coalition could afford.
The used clothing ban was by and large an unpopular move among low- and middle-income citizens in the EAC.
In contrast, the ruling coalition in Rwanda is more dominant. President Kagame’s Rwandan Patriotic Front (RPF) enjoys considerable legitimacy from ending the genocide in 1994 and continues to face few challenges to its leadership, partly because Rwanda’s main opposition parties formed in exile and are barred from fielding candidates in elections. For better or for worse, this has given the RPF both the mandate to undertake bold, long-term industrial policy, and the capabilities to organise and enforce policy. An official from the Ministry of Trade and Industry in Rwanda recounted that “the day [a policy] is approved is the day it starts to be implemented.” In the aftermath of the EAC Heads of State summit in 2016, Rwanda increased its tariff on used clothing beyond the Common External Tariff rate, allocated over USD 2 million to the state purchase of 5 hectares in the Special Economic Zone (SEZ) for textile and footwear factories, and amended public procurement law to give preference to local producers.
Like the RPF, President Museveni’s National Resistance Movement (NRM) took its first steps as a small group of elites riding the crest of military victory, this time from ending the civil war in 1986. Since the return of multiparty elections in 1996, Museveni has faced increased competition from lower-level factions, but the opposition continues to lack any real prospect of securing power. Coupled with a history of relying on a dense security apparatus to stabilise unrest, this encourages an unflinching attitude toward unpopular policy, further evidenced by the 2018 imposition of a social media tax. But while Uganda’s political settlement helps explain initial defiance in the face of consumer grumbling – the Minister of Finance boldly declared that Uganda would not “bow to pressure” or “back away from the planned phasing out” – it does not shed light on why, by February 2018, Uganda had followed Kenya in reversing its tariff increase on used clothing. There must be more to the story.
The Power of the Protected
Neo-patrimonialist and rational actor theories generally assume that industrial policies in Africa are handouts to a clientelist regime’s most favoured firms. Political settlements theory complicates this assumption, but maintains that the power of domestic capitalists plays an important role. The greater their technological capabilities, for example, the more likely they are to put government support to productive use; the greater their political influence, the more viable it is to enforce industrial policy. The used clothing ban, however, casts doubt on the relevance of domestic capitalists to African industrial policy.
The used clothing ban, however, casts doubt on the relevance of domestic capitalists to African industrial policy.
Kenya, the first country to withdraw from the ban, has the EAC’s biggest textile and apparel sector. In 2016, the sector contributed roughly 9.3% to national export value, and its export-oriented apparel subsector was by far the most competitive in the region. Kenya benefited lavishly from the African Growth and Opportunity Act (AGOA), a preferential trade agreement offering duty-free, quota-free access to the US market for beneficiary countries. On the other hand, Ugandan and Rwandan textile and apparel exports under AGOA remained meager. Both countries possess only one national champion in the sector: in Uganda, Southern Range Nyanza Ltd. is reportedly a “shadow of its former self,” and in Rwanda, UTEXRWA struggles to maintain market share, producing only for the local market and generally only for public procurement.
Table 1: Exports of textiles and apparel under AGOA, 2015 (in USD thousand)
Police uniforms in production at UTEXRWA
The strongest textile and apparel players in Kenya did not perceive imported used clothing as their biggest threat. An official from the Kenya Association of Manufacturers (KAM) explained that KAM had no official position on the clothing ban and, in fact, considered illicit trade in new clothing (e.g. from China) to be a bigger thorn in its side. Equally, the Uganda Investment Authority (UIA) saw the ban as a handout to Chinese producers of ready-made garments: during presidential roundtables, representatives of the textile sector opted to discuss AGOA rather than used clothing. At best, the policy was met with indifference from the capitalists it was supposed to protect. Because the least influential, least economically powerful sector – the Rwandan – benefited the most, the move also does not read easily as clientelism.
Enter: Foreign Capitalists
Political settlements theory largely restricts its analysis to domestic capitalists. The reality is that the textile and apparel sector in the EAC is dominated by foreign-owned, export-oriented manufacturers. The import of used clothing may not have been of particular salience for them, but before long, much more would be at stake.
In March 2017, the Secondary Materials and Recycled Textiles association (SMART) formally petitioned the US Trade Representative (USTR) for an out-of-cycle review of EAC Partner States’ eligibility for AGOA. They argued that the used clothing ban constituted a barrier to US trade and investment, and that AGOA privileges were contingent on the elimination of such barriers.
At this point, export-oriented manufacturers in the EAC started to pay attention. The loss of preferences under AGOA would have delivered a massive blow to Kenya’s (predominantly foreign-owned) textile and apparel firms, who sell 80% of their output under AGOA. Kenyan public officials acknowledge the centrality of the US to their withdrawal from the ban. A quick glance at AGOA export figures underscores how costly the proposed sanction would have been for Kenya relative to its neighbours.
Table 2: Total exports under AGOA, 2005-2017 (in USD million)
In Uganda, though the sector overall contributes relatively little to export earnings, the firm with the greatest technological capabilities, Fine Spinners, also stood to lose, since their second biggest end market is the US. Indeed, people familiar with President Museveni’s order to halt implementation of a separate but related local content policy – Buy Uganda Build Uganda – say that it followed a group of foreign investors approaching the president.
Kenyan public officials acknowledge the centrality of the US to their withdrawal from the ban.
Things played out differently in Rwanda, which is perhaps surprising since the strongest player on the Rwandan textile and apparel scene, C&H Garments, is also foreign-owned and export-oriented. The RPF forced C&H to kick its production for the local market into high gear as key US orders were put on hold following the threat of removal from AGOA. Why was the RPF able to resist catering to foreign capitalists’ needs?
The answer could lie in the fact that Rwanda relies less than its neighbours on revenue from income, profits, and capital gains tax. For obvious reasons, large tax contributions to government revenue have historically constituted a significant source of foreign investors’ power and influence.
Table 3: Contribution of income, profits, and capital gains tax, 2015 (as a % of total revenue)
Another reason is that Rwanda relies comparatively less on foreign capital for informal financing. In Rwanda, the relationship between the state and foreign capital is negotiated at the Rwanda Development Board (RDB), whose highly apolitical, technocratic nature helps separate the interests of ruling elites from global capital. In Kenya, in contrast, senior state bureaucrats and politicians share in the fortunes of transnational companies in return for concessions like senior management positions. To understand the used clothing ban, then, it needs to be read not only as a hand-out to domestic capitalists, but, because of the American threat to rescind AGOA benefits, as a blow to foreign capitalists.
The fact that the involvement of the US Trade Representative was so influential deserves further attention. It suggests that the distribution of power in global society may be at least as important for domestic economic outcomes as the distribution of power in domestic society.
[The clothing ban] suggests that the distribution of power in global society may be at least as important for domestic economic outcomes as the distribution of power in domestic society.
In Uganda, foreign interests have long affected economic policy. Soon after taking the reins of a hobbling post-war economy, President Museveni embraced free market reforms involving privatization and liberalization as prescribed by the International Monetary Fund and World Bank in order to secure much-needed debt relief and concessional loans. High growth rates earned him “lavish” budget assistance and the political leeway to maintain ‘one-party rule’ as long as Uganda, a ‘donor darling’, continued to demonstrate the virtues of neoliberal reforms. Since then, international finance has remained ever-attentive to Ugandan policy. As the ban was being discussed, an official at the EAC noted that the World Bank was one of many actors to “emerge from the woodwork” to add its voice to the debate. For President Museveni’s NRM, falling out with one of its key financial and aid patrons would have jeopardized a key source of legitimacy.
Table 4: Top three donors of gross Official Development Assistance for Uganda, 2015-2016 average (in USD million)
The political rewards of appeasing donors helps explain Uganda’s withdrawal from the ban. But it also raises a new puzzle. Rwanda is even more dependent on foreign aid than Uganda. What explains the Rwandan ruling coalition’s resolve to stick with the ban despite donor pressure?
Table 5: Aid dependency ratio, 2016 (in % of central government expenditure)
As a tiny, landlocked country, Rwanda’s reliance on aid has historically been accompanied by intense national rhetoric related to self-sufficiency; and this narrative feeds the RPF’s legitimacy more than donor funding. In 2012, donors drastically reduced aid in response to Rwanda’s involvement in the Democratic Republic of Congo (DRC). Pritish Behuria argues that the Rwandan ruling coalition responded by mobilising Agaciro, a Kinyarwanda idea signifying dignity or self-worth, establishing its first sovereign fund by that name, and resurrecting export-oriented manufacturing because of its promise of export earnings.
The used clothing ban must be situated in this context. The textile sector is a pillar of Rwanda’s manufacturing sector, and the ban is widely framed as being about dignity. One Rwandan official compared trade in used clothing to a (hypothetical) trade in the dirty water that remains after one has cleaned themselves: “it is not even trade; it is like garbage.” Rwanda’s relationship to foreign donors is constantly under negotiation. Indeed, Rwandan officials explained that they had attempted to offer concessions to the US, “as it is a superpower” – but that these efforts were in vain. They expressed disappointment that the ban “ended up being political; it was purely out of commercial interests”.
The Global Politics of Industrial Policy
The used clothing ban offers important insights into the politics of trade and industrial policy. As political settlements theory predicts, the domestic vulnerability of Kenya’s ruling coalition helps explain why it struggled to maintain commitment to an unpopular policy during an election year. In contrast, the dominance of Rwanda’s RPF over domestic political dissent partly explains its ability to hold out in conflict against opposing domestic voices.
But without accounting for global power dynamics, no explanation is complete. The main opposition to the policy came from the US Trade Representative, acting on the interests of US-based used clothing exporters. And by threatening to revoke AGOA benefits, the US effectively incited opposition from the very sectors the ban was meant to protect and stimulate in East Africa, whose leading firms stood to lose one of their main markets, the US. The ability of governments to hold out in conflict with these groups was not uniform, but varied depending on the distribution of power in society. The Kenyan and Ugandan governments backtracked, calculating that the ban was not worth the negative impact on relations with the US, as well as on short-term domestic job losses, more expensive clothing for consumers, and dissent from leading capitalists. In comparison, Rwanda’s dominant ruling coalition relies less on foreign donors for legitimacy, and on foreign capitalists for financing. It withstood international pressure, imposed costs on its foreign capitalists and set out to convince the Rwandan public of the benefits of consuming locally.
Apart from highlighting the importance of international power relations in explaining industrial policy outcomes in East Africa, this story also calls into question long-held assumptions about the protectionist motivations behind industrial policy. The ban was clearly not well-aligned with the interests of the very sector it was designed to stimulate: the textile and apparel sectors were led by foreign-owned, export-oriented firms who were much more interested in international markets than in the domestic market which the ban would have opened up for them. Had these players been strongly on board with a ban, the American threat might have been much less effective in Kenya and Uganda. Instead their stance towards the ban was one of ambivalence, at best. As a result, there is little evidence here to support the notion that African industrial policy amounts to a clientelistic hand-out to favoured firms, as it is popularly perceived. Instead, in this case, free market conditions seem to have been more beneficial to the politically important foreign firms that dominate the East African textile and apparel sector. Still, EAC governments appeared to have been willing to impose costs on this sector in the name of economic transformation – until the US intervened.
..this story also calls into question long-held assumptions about the protectionist motivations behind industrial policy […] free market conditions seem to have been more beneficial to the politically important foreign firms that dominate the East African textile and apparel sector.
The stakes of industrial policy, it would seem, have changed drastically since England imposed its own ban on textile imports during the 1700 Calico Acts. Vulnerable African governments need to accommodate the influence of powerful foreign governments and firms in a way that previous industrializers did not. The literature on the politics of industrial policy would do well to acknowledge both the presence of ambitious political commitment to industrialization in the Global South, as well as the new and challenging context in which it sits.
This is a post for the Centre for Development Alternatives (CDA) blog derived from Emily Anne Wolff’s dissertation, submitted August 2018 to the Department of Government at the London School of Economics. Original field research from June-July 2018 constitutes a main source as well as secondary literature, cited as a hyperlink where used. Limitations of time and resources precluded the inclusion of Tanzania. She is grateful to all anonymous respondents in the region who offered their thoughts.
 Today, a good proxy for technological capabilities is the degree to which the value chain is integrated. Where a value chain is defined as a set of sequential activities that transform an input into a final output (Porter, 1985), an integrated value chain is one where these activities are undertaken in a coordinated fashion by the same firm or by a variety of firms acting in such close cooperation that they can be seen as an “extended enterprise” (Papazoglou et al. 2000: 324).
 Source: KAM Officer, personal communications, 25 June 2018.
 Source: UIA Official, personal communications, 3 July 2018.
 It is worth noting that, as preferential trade agreements, AGOA and similar agreements are supposed to be non-reciprocal – i.e. the US is supposed to provide market access without requiring market access from beneficiary countries.
 EAC Official, personal communications, 24 June 2018.
 Via the International Development Association.
 Rwandan Ministry Official 1, personal communications, 12 July 2018.
 Rwandan Ministry Official 2, personal communications, 13 July 2018.