Interest in East Africa as a destination for textile sourcing has blossomed in recent years. But the growth of its fabric and apparel supply chain could be stymied by a lack of investment in regional production and an influx of used goods from other global markets, experts say.
According to the Kenya Institute for Public Policy Research and Analysis (KIPPRA), the growth of the secondhand economy for goods like shoes and clothes has limited local industries and hampered the success of government stimulus programs like the Buy Kenya Build Kenya initiative. Locals aren’t buying enough new clothing to justify the expansion of the 170 large and medium-sized apparel companies, as well as 74,000 small and micro firms, that are currently struggling to grow domestic business.
Instead, 70 percent of Kenyan apparel makers sell about 80 percent of their output to the U.S., with the Export Processing Zones hosting 21 companies that manufacture clothing for export under the African Growth Opportunity Act (AGOA). Kenya and Ethiopia were the largest beneficiaries of AGOA until the latter was dropped from the preferential trade agreement in January 2022. The Biden administration cited “the gross violations of internationally recognized human rights being perpetrated by the Government of Ethiopia and other parties” amid the conflict in Tigray as the reason for Ethiopia‘s removal.
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A 2022 economic survey from the Kenya National Bureau of Statistics showed that Kenya brought in 183,830 tons of secondhand apparel during 2021—a 20-percent jump from the year prior. During the five-year period from 2017 through 2021, the country imported an average of 160,638 tons of textile goods.
There are a number of reasons that Kenya is bringing in so much used apparel and footwear, according to the country’s Institute of Economic Affairs (IEA Kenya). For one, these secondhand goods generate over $84 million in tax revenue in the form of import duties, and their distribution contributes to the incomes of over 2 million people. There’s also huge local market for the products. “The existence of second-hand clothes is a demand-side issue rather than a supply-side issue,” IEA Kenya wrote in a 2021 report. “For a considerable number of people, incomes in the country can only support the buying of second-hand clothes.”
“This is a reflection on incomes rather than whether the supply of new clothes and footwear is available,” the report’s writers added. There’s a meaningful price differential between new and used clothing in Kenya, with used considered to be much more accessible to the average family. IEA Kenya’s analysis showed that most households purchase new clothes when required—like work or school uniforms, for example. On average, 91.5 percent of households buy secondhand clothing worth less than $7, while just 74.5 percent buy new clothes at the same price, “confirming the price sensitivity of second-hand clothes.” A typical worker in Kenya spends about 40 percent of their monthly income on food alone, and spending on shelter, transportation and health come before necessities like clothing.
Some Kenyan leaders blame the wave of used, foreign goods for the lack of domestic industry growth. KIPPRA reported that the dominance of the secondhand market has sparked a debate about limiting its growth, especially as Kenya attempts to rebuild its textile sector, but the public is largely opposed. The country’s government earlier this year committed $1.6 million to revamping and reopening closed garment factories and textile mills. It is also eager to curb the mass accumulation of textile waste, which results from the dumping of unsalable or unusable low-quality goods, which are being shipped into the country daily.
The country is home to 52 mills with the ability to spin fibers into yarns, but just 15 were operational as of January. “Due to low labor productivity and low technology, operating textile mills use only 45 percent of their capacity,” KIPPRA wrote. “The textile industry is also facing increased business costs such as high electricity costs, which are eroding their market competitiveness.”
The effects of limited growth have upstream effects on the Kenyan supply chain. Kenya’s cotton industry is propped up by small-scale farmers who operate on less than 2.5 acres of land, on average. In most cases, that land is shared with other food crops. The number of smallholder cotton farmers in the country has plummeted from 200,000 in the mid-1980s—“when the textile and apparel industry was at its peak”—to just 40,000. The country’s cotton mills consume just 41,200 bales of Kenyan cotton per year, while meeting national need would require 140,000 bales. Therefore, most of Kenya’s cotton is imported.
“These statistics show that the high potential of the textile industry is curtailed by undersupply of cotton raw materials,” KIPPRA said. “The major reasons for the undersupply of cotton are the constraints faced by cotton farmers, including the decline in seed cotton production, low quality of cotton seeds leading to declining yields, and relatively high costs of production due to low productivity.”
The country’s wool industry has also failed to grow significantly due to a lack of research and development, and a greater domestic demand for livestock raised for food. And while a promising leather industry emerged in the 20th century, competition from imported products cut its growth short. The value of leather hides and other exports has continued to decline in recent years, from a $49.72-million industry in 2017 to one worth just $18.49 million in 2021, KIPPRA data showed. Polyester has also become more popular as secondhand fast fashion deluges the retail market, further diminishing the market for goods made from natural fibers and leather.
The phenomenon began in earnest during the 1990s, KIPPRA said, and it led to the shuttering of many Kenyan clothing and textile firms. “The continued increase of cheap imported clothing and textiles led to reduced effective demand for local textile products and made secondhand clothing and textiles the preference of the majority population.”
The volumes, and economic value, of imported secondhand goods have grown exponentially, and demand continues to snowball, according to IEA Kenya. Between 2015 and 2019, the nominal value of footwear and apparel imports into Kenya grew by 80 percent, from about $70.7 million to $127.2 million. “What this growth in import volumes shows is that along with the overall economic growth and the rise in incomes, the imports reflect the demand for secondhand clothing among Kenyan households and that this industry has supply stability,” the group wrote.