Former Nigerian President Olusegun Obasanjo has backed East Africa’s move to phase out and eventually ban the importation of used clothes.
Speaking to Saturday Times yesterday, Obasanjo said Rwanda should proceed with what is in the country’s best interest despite US’s threats to review East Africa’s eligibility to trade under the African Growth and Opportunity Act (AGOA).
Rwanda, Uganda and Tanzania’s eligibility to trade with the US is under review following the region’s move to phase out importation of used clothes.
The review could see the regional countries lose duty-free access to the American market under AGOA.
Speaking on the sidelines of the ongoing Afreximbank Annual General Meeting in Kigali, Obasanjo said, as long as the move was in the country’s best interest, Rwanda should not be cowed.
“The country should do what is in their best interest and be unafraid to stand by it. The continent should always ask itself what is in our best interest. We should not be afraid to cut some ties if it is in our best interest,” he said.
EAC member countries have moved to phase out importation of used clothes and shoes as part of an industrialisation policy to give rise to the growth of the local textile industry.
As part of the move, Rwanda last year increased taxes on used clothes from $0.2 to $2.5 per kilogramme, while taxes on used shoes will increase from $0.2 to $3 per kilogramme.
In the 2017/18 Budget, the Government eased taxes on inputs to the Made-in-Rwanda campaign, which is expected to facilitate the growth of the local textile industry.
Dr Benedict Oromah, the chairperson and president of Afreximbank, said protecting African industries and markets was important as the continent builds ties with the rest of the world.
Obasanjo’s comments come days after President Paul Kagame said Rwanda would go ahead with the planned phase-out of importation of used clothes despite the threats from the US.
Trade experts have downplayed the impact of the review of the duty-free deal to the Rwandan economy, saying the trade volumes are minimal and that there is more value in developing the Rwandan textile industry.
By developing the local textile industry, Rwanda could significantly reduce its trade deficit.
The deficit has reduced from $749.7 million to $580.6 million in the first five months of 2017 compared to the same period last year due to an increase in formal exports by 37.2 per cent and a decrease in imports by 9.2 per cent.