While used shoes and clothes suffered a major blow in the 2016/17 National Budget with a 12 per cent increase on taxes, the locally produced textile and leather products received a major boost, thanks to the new tax and incentives regimes.
Sector players say skills and infrastructure development should be seen as central in the implementation of the new budget that was designed to allocate 27 per cent to key priority sectors, including textile, garments, and leather.
Presenting the Rwf1,949.4 billion Budget to Parliament last week, the Minister for Finance and Economic Planning, Claver Gatete, announced 27 per cent of the money will be allocated to economic transformation with key focus on textiles, garments and leather industry, agriculture export crops, agri-business, construction, livestock, wood industry, minerals, tourism and ICT and trade and investment facilitation.
He mentioned a number of tax cuts, exemptions and increase on imports from outside the East African region, of which used products entering the local market saw a dramatic increase on their taxes.
Used clothes’ tax will be increased from $0.2 to $2.5 per kilogramme, while taxes on second-hand shoes will increase from $0.2 to $3 per kilogramme.
Sonia Mugabo, the chief executive and founder of SM House of Fashion, said skilling of local tailors is key in the development of textile and leather market in the country.
With the skills, she said, local tailors would be able to produce high quality textile to fairly compete with imported textile and garments.
“This is an exciting time for us in the textile industry. We are going to be a priority to be able to promote our products in the Rwandan market,” said Mugabo, who has been in the business for two years.
“The Budget support it will enable us to grow, expand and hopefully become global brands and be able to export as well.”
Mugabo said without enough textile manufacturing industries, efforts should be put onto ways of establishing a powerful textile industry—where tailors are well-trained to increase textile production.
“There has to be trained tailors, trained fabric makers, trained designers—the whole cycle of textile production should be focused on how to boost quality and quantity of textile,” she added.
According to Mugabo, most of the textile and garments dealers get their textile from abroad, subjected to a lot of taxation, hence affecting their pricing.
“Raw materials are really expensive, a lot of import taxes, but with mass production—coupled with improved textile industry growth in terms of mass production and quality, prices will go down,” she said.
Imported used textile retails for as low as Rwf1,000, while the minimum price for locally made textile stands at about Rwf5,000.
Muhammad Mugemangango, the chairperson of Rwanda Association for the Promotion of Leather and Leather Products, (RAPROLEP), told The New Times that in a recent meeting with government officials, they were informed that Italian investors plan to build a factory in Bugesera in the next three years to manufacture local textiles.
He said this will definitely help them to provide enough products for the market, but argued that, more focus should, at least for now be put on improving skills of sector players.
Mugemangango’s comments were echoed by Kevine Kagirimpundu, the co-founder of UZURI K&Y, a local footwear brand, who said earmarking 27 per cent to the sector is good, but the Government should be mindful of, “who is going to receive that money and for what reasons.”
“That is an amazing idea,” Kagirimpundu says, “the question is how are they going to streamline that Budget; is it going to go into real practice or it is going to be given to bureaucrats, who are going to sit in offices planning for things that will not come to action, and pay salaries of those whose ideas are not solving the real issues? That is my only worry.”
She stressed the need to invest money in people, skills development of those in the identified sectors and encourage more to join.
“Later factories should be built such that we can have more made-in-Rwanda products,” said Kagirimpundu, adding that without trained personnel the plan could backfire.
“We need a far-reaching plan to have a successful rollout of the Made-in-Rwanda concept.”
With about 20 local trained shoe-makers, UZURI K&Y, produces about 660 pairs of shoes per day, and they sell 20 per cent in the country with 80 per cent going outside the country, according to Kagirimpundu. They serve Japan, Americas and European markets, among others.