Economists urge government to assess impact of second-hand clothes ban

Economists have urged the government, through the Ministry of Trade, Industries, and Cooperatives, to conduct a comprehensive Regulatory Impact Assessment (RIA) on the proposed ban on second-hand apparel in Uganda. This call comes amidst debates over the economic and social implications of the ban, which could negatively affect local businesses, consumers, and the country’s economy.

During a stakeholder engagement meeting in Kampala on November 27, Ms Sarah Ssewanyana, the Executive Director of the Economic Policy Research Centre (EPRC), asked government to weigh in on the benefits of the sector before making any key decisions. 

“This helps you to be able to know the cost-benefit analysis out of whatever you are going to do. It will also help you to know how to regulate the sector better,” she said.

Ms Ssewanyana further stressed that formulating policies without adequate preparation is unwise. “It’s not good enough for them to be able to come up with policies overnight like that because there are so many stakeholders who are engaged in the sector, who should be engaged. There must be some kind of consensus on what we are going to do because we are going to continue to be stakeholders in the sector,” she noted.

She revealed that when the ban was first announced, imports of second-hand clothes initially dropped but later surged again. “So the imports are up again, and therefore government should intervene immediately. Probably we need to be able to invest in the cotton sector to make sure that we have what it takes for the textile industry because if we do not invest, then we will not be able to get the best out of it,” she said.

Ms Ssewanyana added there should be concerted efforts to advocate for RIAs as the best approach to analyze both the potential costs and benefits of the ban, taking into account factors such as employment opportunities, import economics, and consumer access to affordable clothing.

Ms Aida Nattabi, a research analyst at EPRC, highlighted the disproportionate impact the ban would have on low-income Ugandans.

“This ban will cause severe impact to the several poor households who annually spend at least Shs 40,000 on old clothes. This can be identified between the financial years 2018 to 2019 and 2019 to 2020, where there was a rise in second-hand clothes,” she explained.

Ms. Nattabi added that while the proposed ban is expected to strengthen the regional textile sector, it may result in short-term job losses, reduced import tax revenue, and increased imports of cheaper new clothes from low-cost producers in Asia.

However, Mr Cleopas Ndorere, the Commissioner of External Trade, defended the policy, stating its intent is to protect local industries and address other trade-related concerns.

“The reason why government is taking this stand of import substitution is to save traders because we are running a serious trade deficit. But the good thing is that much of the deficit is on account of the importation we make on infrastructure like electricity and oil and gas. We do this to save our forex exchange,” he said.

Mr. Ndorere further argued that the ban could promote exports. “It’s also a springboard for exports promotion because if you cannot compete locally within your country, then it’s going to be difficult to compete outside,” he added.

In August 2023, President Museveni announced the ban on second-hand clothes, effective September 1, 2023. The primary objective of the ban is to boost the local textile manufacturing industry and promote African wear.