Rwanda’s Clothing Spat With The US Helps China. According to BBC, over 100 sewing machines rattle away at a factory on the outskirts of Kigali, the capital of Rwanda.
Last year, a cooperative of 83 of the American nation’s tailor established the company, known as the Kigali Garment section. The company is located in an industrial area built on one of the rolling green hills surrounding the city. Thus, it was setup in line with the Rwandan government’s strategy for boosting the country’s clothing manufacturing sector.
Jerome Mugabo, the firm’s director general and co-founder say “ we’ve trained 130 youngsters, of whom 97% are female since the factory launched.” Behind him on the main factory floor, employees who all seem to be in their teens of 20s, are producing chino trousers.
Rwanda’s Clothing Spat With The US Helps China
The country’s efforts to boost its domestic garment industry have seen it fight a lonely and continuing, trader battle with the US that dates back to 2015.
As ate then, six members of the East Africa Community block of countries, like Burundi, Rwanda, South Sudan, Kenya, Tanzania, and Uganda, announced that they would all put one place high tariffs on the import of second-hand clothing or charges.
However, the idea behind the defacto ban was to stop the import of large quantities of cheap used clothing, mostly from the US and the UK, which the African nations said were stifling the growth of their nascent garment industries.
The extent of the problem for the six countries was disclosed by widely reported 2015 figures from the US Agency for international development. Moreover, the USAID said that in that year the EAC states accounted for almost 13% of the global imports of used clothing.
They also discovered that almost two-thirds of the combined populations purchased some second-hand clothes.
The US responded that the proposed ban would violate free trade agreements, and it threatened to remove the EAC countries from the AGOA( African Growth and Opportunity Act). Established back in 2000. It lets 39 sub-Saharan African nations to export thousands of goods duty-free to the US.
Furthermore, after the US’s announcement all EAC members except for Rwanda backed out. It went on to introduce a tariff of $4 each kilogram on imports of used clothing in 2018. The United States also responded by putting tariffs of 30% on Rwanda’s clothing, where there had previously been none.
As Rwanda was only exporting about $1.5m of clothing each year to the US then, this stopped that overnight and meant that the African nation could not hope to increase it.
Jerome says he remains pleased by Rwanda’s decision to do it alone. He says “it helped us to setup our business, as we get more customers since the ban.” The managing director of Rwanda’s oldest garment factory Ritesh Patel says “the country needs to do this to be able to grow its economy. As people were able to purchase a second-hand men’s shirt for 800 Rwandan francs, they were not interested in a new men’s shirts of 4,000 Rwandan francs that we could produce.”
He added “ it really helps that we no longer have to compete with cheap charges, while we simultaneously witness a quickly growing middle class that will be able to afford made in Rwanda products.
Moreover, the withdrawal of the AGOA trade benefits for apparel also makes Rwanda less attractive as a manufacturing base for international garment producers.
China Increased Influence In Rwanda
Chinese firm C&H garment closed its factory in Kigali a few months after the US retaliated. The industry had exported over half of its production to the US. Hong Kong’s C&D products, a Chinese clothing firm with an operation in Rwanda, agrees that the standoff with the US is an issue. Co-owner of its Rwandan subsidiary, Maryse Mbonyumutwa said “ its obviously a problem.”
These Chinese firms are increasingly interested in operating factories in Africa, as the labor costs are much lower than in China. What C&D firm does is to export to Europe from the Rwanda factory, while planning to build two manufacturing sites in Tanzania to focus on the US market. So to help Rwanda’s clothing manufacturers, the Rwandan government has removed import taxes on raw materials such as cotton. And gives grants and loans to new factories.