Lusaka Telecoms Firm Spreads E-commerce across Africa

 

By Derrick Silimina

Lusaka Telecom Solutions (LTS) has invested more than US$12 million in fibre optic and information communication technology (ICT) services in the last seven years and has spread to various countries in Africa.

The company runs three business lines namely fibre optic solutions, microwave, ICT, wireless solutions, infrastructure and power solutions, and operates in Botswana, Malawi, Uganda, Mauritius, Namibia, Tunisia, Egypt, Mozambique, Ghana, Democratic Republic of Congo with Zambia being the headquarters. 

This emerged when ZDA Acting Director-General Albert Halwampa led senior management on a tour of the LTS to appreciate their operations. 

He said opportunities were vast for e-commerce in the country especially in the wake of Covid 19 pandemic which had disrupted supply chains worldwide. 

Halwampa stated that all that is needed is a reliable online platform to connect buyers and sellers. 

“The Agency is looking for an investor that can invest in e-commerce infrastructure to make sure that exporters keep interacting with importers in other countries to clinch as well as seal export deals,” he said. 

Halwampa was elated upon learning that LTS had started reaping fruits from the ZDA Congo Trade Mission in Lubumbashi in October 2021 and the Intra-Africa Trade Fair in Durban South Africa in which the ZDA facilitated participation for the various private sector players. 

The LTS has since commenced business into the DRC as a result of participating in the ZDA Trade Mission. 

LTS Business Development Manager Mohamed Abd El-razek disclosed that a total of K14 million had been spent to date on providing forward and backward linkages to large and small businesses. 

The company is at the moment working with about 30 local subcontractors among them MSMEs on their various projects across the country.

He highlighted that in the wake of the COVID-19 pandemic, telecommunication services have become important for people to continue transacting and running their day to business.

“Currently, we have more than 200 employees and plan to increase to 900 by March and by the end of this year we expect to have over 1,000 employees,” El-razek said.

ILO, SIDA Back Up Renewable Energy Drive

By Derrick Silimina

At first glance, Zambia’s generation of hydropower, clean energy, seems normal as the country benefits from the water flows of the mighty Zambezi and Kafue Rivers.

However, droughts in recent years have caused electricity shortages estimated at nearly one-third of Zambia’s total installed hydroelectric capacity of 2,380 megawatts. 

In 2019, water levels in the Kariba Dam plummeted to their lowest level since 1996, falling to 10 percent of usable storage. Some observers described this as the worst drought that has ever hit the southern African country since independence in 1964. 

For this reason, the International Labor Organization (ILO), with funding by the Swedish International Development Agency (Sida), and in close collaboration with Kafue Gorge Regional Training Center (KGRTC), has embarked on upskilling more Zambians with competencies to tap into technologies in renewable energy, energy efficiency and renewable energy integration. 

UNESCO Chair in Renewable Energy and Environment Professor Prem Jain says climate change is a genuine man made problem. 

“Climate change has significant adverse impacts on all sectors of the economy and African nations are likely to suffer more from impacts of climate change. We need to urgently respond to the threat of climate change,” Professor Jain said. 

He was speaking during the Skills for Energy in Southern Africa (SESA) media training programme dubbed Reporting on Energy held at KGRTC from March 30 to April 1 in Namalundu area of Chikankata District.

 

DIVERSIFYING 

In this context, energy experts believe that diversifying and expanding the country’s energy mix enables the creation of jobs and the development of small and medium enterprises both locally and in the region. 

Professor Jain, a renowned lecturer at the University of Zambia Physics Department, noted that fossil fuels such as coal, petrol, diesel and gas are drivers of modern industrialization but are culprits of climate change. 

According to energy statistics, chronic under-investment in hydro projects has also caused problems such that even when enough rain falls, power supply cannot keep up with demand from the mining, manufacturing and agriculture industries. 

In line with the United Nations Sustainable Development Goal Seven, which aims to ensure “access to affordable, reliable, sustainable and modern energy for all,” the Southern African Development Community (SADC) key priority is to ensure energy access and security for all populations and businesses in the region. 

Despite being one of the suppliers of hydroelectricity in the SADC region, Zambia’s population is still grappling with access to efficient and affordable energy supply. 

Only 37 percent of people in urban areas have access to energy while four per cent of people in the rural areas are connected to the national grid, according to the Ministry of Energy statistics.

 ENERGY SOURCES 

“We need to harness all the energy sources that we have, especially renewable energy sources because energy is the driver of economic activity in the country, whether industrial or agriculture among others,” Ministry of Energy Principle Energy Officer Brian Mainza told journalists during the training. 

Sustainable energy was essential, especially looking at the SDG7 goal where by 2030 everyone should have universal access to clean and affordable energy. 

“We need as Zambia to embark on harnessing the other energy resources that we have such as solar, wind, and biomass because we have also seen that in the past, the concentration has been on hydropower generation,” he stated. 

According to the US Agency for International Development (USAID), the country draws 85 percent of its power from hydro projects. 

Kafue Gorge Regional Training Centre Consultant for Research and Training Martin Hamanyanga disclosed that the institution has received funds from the Swedish Government for the development of a 10 megawatt mini hydropower project on the Kafue River. 

Recently, the Government initiated a 200 MW wind-power project in Katete, Eastern Province. This is the first phase of the larger Unika 1 wind project, which is to be financed by private investors. 

SOLAR PROJECTS 

Zambia also signed an agreement with the World Banks’ International Finance Corporation (IFC) to develop two large scale solar projects. 

A competitive auction through the IFC’s Scaling Solar programme attracted bids from competing solar developers. 

In terms of energy efficiency rating, the SADC Centre for Renewable Energy and Energy Efficiency (SACREEE) is thrilled that Zambia is one of the few countries in the region that has significantly achieved energy efficiency through the introduction of energy-saving lighting measures. 

“Zambia has cut down on energy wastage resulting in savings for both individuals at household level and the heavy power consumers such as mines and industries,” SACREEE Lead Renewable Energy Expert Readlay Makaliki said on the sidelines of the workshop.

Aiding Industrialization

Engineers operate a milling machine at the UIRI in Kampala, Uganda (COURTESY)

By Derrick Silimina

Christine Kamugyisha has realized her dream of studying engineering through her exemplary academic hard work. Kamugyisha is among the 150 young engineers who recently graduated from the Chinese-funded Uganda Industrial Research Institute (UIRI).

Kamugyisha, 30, said it wasn’t easy to pursue a male-dominated course, and is upbeat about her prospects of building a career and being able to contribute to Uganda’s industrialization agenda.

The UIRI, a $30-million facility funded by the Chinese Government, was commissioned by President Yoweri Museveni recently. It’s designed to combine industrial skills training with apprenticeship to develop skills necessary for employment. A production facility attached to the institute is also intended to make high-quality precision machine parts and accessories.

“I am living my dream because engineering is the bedrock for any developing country’s socio-economic development. Therefore, any investment in industrial research institutes is vital to improve local capacity building and expand industrialization through talents like me,” Kamugyisha told ChinAfrica.

Career advancement

Through its Machining Manufacturing Industrial Skilling Development Center, the UIRI recently hosted a career event dubbed China-Uganda Technical Skills Development and Innovation Competition, which saw 150 young engineers awarded certificates and recognized for their outstanding performances.

In collaboration with the UIRI, the contest was organized by China’s Huanggang Polytechnic College and Sichuan College of Architectural Technology. The event is aimed at boosting engineers’ skill sets in the application of appropriate technology such as conventional lathe, computer numerical control machining, welding and automatic control with programmable logic controllers.

As Africa pushes for industry-led economic growth, many countries on the continent have prioritized investment in industrial research institutes, so as to further their industrialization agenda.

For this reason, many locals in Uganda have enrolled at the UIRI, especially at the institute’s Namanve campus, which is a vocational training center. The institute has five manufacturing workshops and electronic, electrical and mechanical processing training facilities with the capacity to train up to 960 people at a time.

“I am grateful to the authorities who made it possible to host this event because it is an ideal platform for graduates like me to assess my engineering expertise with ease. Many thanks to China for having invested in this state-of-the-art facility in our country,” said Franklin Barugahare, one of the young trainees at the institute.

Barugahare, who holds a certificate in auto-mechanical engineering, said that using the skills he has acquired will benefit the country as local people can produce auto parts, thus eliminating the need to import them from abroad.

According to Ugandan Government sources, the country hopes to utilize the center as a production unit for automotive spare parts in a bid to bring down the import bill as figures show that the East African country spends $23 million annually on importing motor vehicle spare parts and $18 million on spares for motorcycles.

UIRI trainees take a group photo at a course completion ceremony in Kampala, Uganda (COURTESY)

Manufacturing push

The head of the institute Charles Kwesiga recently described the facility as the first step toward manufacturing quality products that meet international standards.

“This facility serves as the initial step of establishing modern manufacturing and that way we can get in the market with competitive high-quality products,” Kwesiga said during the launch of the facility in January last year.

It is a fact that Sub-Saharan Africa is the least industrialized of the world’s sub-regions, hence there is the pressing need to accelerate economic expansion through the establishment of an industrial base for the export of finished agricultural and mineral products.

Some scholars argue that industrialization is a crucial component of socio-economic development, so much so that without manufacturing, Africa’s national economies cannot begin to effectively control and utilize their resources for meeting the needs of their populations.

Arguably, in order to develop indigenous manufacturing capabilities, African countries need access to technology which can be better achieved through China-Africa economic collaboration, and the Asian economic giant is doing just that so that most African countries can attain their industrialization aspirations.

It is for this reason that the Government of Uganda has made a commitment to working with private sector, academia and development partners to ensure that spare parts of trucks, pickups, SUVs, two or three wheelers and tractors are made locally by Uganda’s engineers and technicians.

President Museveni recently predicted that the East African country will be producing at least half a million vehicles per year by 2030, in a move aimed at promoting import substitution in the automotive industry, and is expected to employ over 100,000 locals.

Progressively, the government has funded the construction of the Kiira Vehicle Plant that sits on 100 acres (40.47 hectares) of land at the Jinja Industrial and Business Park and already, the Kiira EV and Kayoola buses have conducted test drives.

Zheng Zhimin, one of the Chinese tutors at the UIRI, recently hinted that hands-on experience among his learners is key to operating hi-tech machinery.

“We are changing from the conventional way of doing things to the more automated way. It is very easy to make more intricate parts,” said Zheng, an industrial engineering expert.

Museveni has since urged Ugandans to fully utilize the Namanve-based facility by developing skills that will help them achieve prosperity.

“Africans have slept enough. You should wake up and don’t miss out. Use this important facility because it can make many things, including design and machines,” Museveni noted during the commissioning ceremony of the UIRI.

Mobile Money Increases Financial Inclusion

 
By Derrick Silimina

The African mobile money story is known to have started in Kenya in 2007 when Safaricom launched its MPESA solution for peer to peer money transfer.

Before that, due to a low rate of banking, sending money from point to point used to be a big issue. 

In Zambia today, the dawn of digital payment technologies is opening doors to a whole new generation of clientele whose very first bank account is accessed purely through their mobile phones. 

“With just my mobile phone, I can now be able to transact at low cost. For me, this is a real deal unlike before where access to an existing bank account was hectic,” says Joe Mutemwa, a mobile money account holder from Sioma District in Western Province. 

Thelma Chinyama, a Lusaka based entrepreneur, echoes Mutemwa: “My mobile money account is cost effective because it has enabled me to save my cash flow and grow my enterprise with ease and at less costs unlike a bank account that attracts monthly charges.” 

According to Zambia’s National Financial Inclusion Strategy Paper for 2017- 2022, more than 40 percent of Zambian adults have no access to quality financial products, and about 60 percent of adults who have such access do not use it. 

In vast areas of Zambia, especially remote rural regions, people still rely on the barter system (the use of unregulated and unsecured channels, to make payments and store savings). 

The main reasons for this poor showing are lack of funds, time-consuming travel to a bank branch, high bank charges, and lack of trust in the financial sector, according to a 2017 World Bank study titled Enhancing Financial Capability and Inclusion in Zambia.

Therefore, the onset of mobile money technology is helping transform economic sectors in the Southern African country, hence it is being flaunted as a revolutionary tool that is expanding access to financial services in low-resource environments. 

“As a farmer, my mobile money account is a game-changer to me because each time I need farming inputs such as fertilizer or seeds, I just transact with some agro-dealers in town and they send me my commodities on time. 

This is unlike before when it used to be cumbersome to do business via the now defunct Lima Bank,” says Clement Tembo, a renowned tobacco farmer from Petauke District in Eastern Province. 

INCREASED USAGE 

In this context, the Bank of Zambia recently disclosed that mobile money platforms had recorded increased usage in 2020, with numbers growing to 8.6 million users by December 31 compared to around 4.85 million in 2019. 

The central bank further hinted that higher mobile money usage in Zambia has coincided with increased financial inclusion over the two corresponding years, by 10.1 percentage points last year. 

“Zambia has continued to make significant progress in the digital transformation agenda, especially in the area of digital financial services. For example, the number of active MNO (Mobile Network Operators)-based mobile money users increased by 77 percent from 4,852,040 as at December 31, 2019, to 8,607,461 as at December 31, 2020,” BoZ Deputy Governor for Operations,” Dr Francis Chipimo states. 

As recounted by Nyagaka Anyona Ouko, a Kenyan man who is alleged to be the innovator of the mobile money solution, the idea came as a ‘Eureka’ moment which has remained effective to the informal sector and has the potential of reaching out to the whole population. 

It is estimated that in Uganda, 43 percent of people have a mobile money account while in Kenya, the numbers have reached 72 percent. 

ADVANCEMENTS 

In Zambia, some enthusiastic mobile money agents say life in the world of financial inclusion has now been made easier, thanks to technological advancements. 

“The mobile money solution has undoubtedly created jobs for youths, including myself, and we depend on this sector for survival,” says Sara Chola, a mobile money agent based at Lusaka’s sprawling Kamwala market. 

Undoubtedly, just as the Internet has changed the way people search for information and shop for products, cellular phones are gadgets that are equally transforming many industries ranging from finance and travel to advertising and retail. 

According to telecommunication experts, the mobile money App is installing the SIM card of the device and can be used on regular and smartphone devices. Users can receive, withdraw, and send money without being connected to the formal banking system. 

The FinScope Survey of 2020 stated that the financial inclusion increase of 10.1 percentage points to 69.4 percent from 59.3 percent in 2015 was mainly attributable to mobile money transactions. 

With approximately 100,000 plus agent lines officially registered in Zambia, according to the Mobile Money Business Association of Zambia, the sector is contributing to the national treasury in terms of taxes. 

UNBANKED 

Lusaka-based economist Mambo Haamaundu has observed that there is a realization of very low financial inclusion as there still remains a high unbanked population in the country, especially among informal sector players. 

“For me, mobile money services are tapping into the unbanked population and as a result play a complementary role with traditional banks. For instance, cash can now easily be transferred from one bank account to a mobile money account with ease,” says Haamaundu. 

In view of the global outbreak of the Covid-19 pandemic, most businesses in Zambia have been crippled with some left gasping for breath. 

Hence Airtel Networks Zambia Plc, one of the major telecommunication firms in the country, is on course to provide the Zambian business sector with digital transaction solutions in light of the negative impact of the Coronavirus pandemic. 

Airtel Network Zambia Enterprise Business Director Lindiwe Banda announces: “We would like to be the partner of choice for any SME customer, so that we grow with them and they grow with us; such that at the point where they are moving from small to medium organizations into large corporates, we can proudly look back with them and say we did it together.”

Inflation Decline Assures Economic Stability

 

By Derrick Silimina

Zambia has started 2022 with a record low 10.2 percent inflation rate, the lowest since October 2020.

After being elected in August against the backdrop of a strong campaign message to fix the economy and restore fiscal stability, President Hakainde Hichilema’s Government has hit the ground running. 

Barely five months into office, the Hichilema administration secured a staff level agreement for a $1.4 billion economic structural adjustment programme with the International Monetary Fund (IMF). 

Arguably, the dividends of Zambia’s macroeconomic stabilisation programme have started yielding positive results and one such critical fundamental that has so far responded positively is the inflation rate, which has reduced to 10.2 percent in May 2022 from 16.4 percent recorded in December 2021. 

“The continued reduction in the inflation rate is supported by the stability in the price of many goods, stable exchange rate, and the confidence stakeholders have in our capabilities to manage the economy and bring normalcy. The situation where people’s incomes or salaries every month are buying fewer goods and services each time the rate increases will soon be over,” President Hakainde Hichilema recently posted on his Facebook page. 

The Zambia Statistics Agency (ZamStats) says the decrease of inflation by 1.3 percentage points means that on average, prices of goods and services increased by 10.2 percent between January 2021 and January 2022. 

“The slowdown in annual inflation was mainly attributed to favourable price movements in food items,” said ZamStats Interim Statistician General Mulenga Musepa. 

The fiscal space is now on the mend with a considered aim to achieve a single-digit inflation rate by the end of the year, bringing about manageable levels in the cost of living. 

OVERALL INCREASE 

A critical analysis of the month of December 2021 shows an overall increase in the prices of essential items. For instance, the cost of living for a family of five in Lusaka as measured by the Jesuit Centre for Theological Reflection (JCTR) Basic Needs and Nutrition Basket (BNNB) for December 2021 stood at K8, 359.80, a K214.52 increase in comparison to the November basket that stood at K8, 145.28. 

According to JCTR’s monthly bulletin, the increase in the prices of fuel also appears to have had an impact. While justified especially in view of key variables such as the exchange rate and the price of crude oil per barrel on the international market, its impact on the cost of living is undeniable.

 

PETROLEUM PRODUCTS 

Recently, the Energy Regulation Board (ERB) reduced the pump price of petroleum products by K1.32 for petrol and K1.22 per litre for diesel. 

In a statement, ERB Board Chairperson Reynolds Bowa said that according to the market fundamentals for the month of December 2021, international oil prices for petrol and diesel recorded a notable decline with the Kwacha also appreciating against the United States Dollar. 

Bowa noted that the petrol prices declined by 11.56 percent from $96.39 cents per barrel recorded in October 2021 to $85.25 cents in December 2021 while Diesel Prices also declined by 10.64 percent from $93.27 cents per barrel to $83.35 cents per barrel. 

The local currency, the kwacha, has opened the year with a gain of nearly seven percent against the US dollar, with the central bank projecting inflation to average 15 percent next year and 9.3 percent in the first three quarters of 2023. 

Economic analysts observe that the IMF Staff Level Agreement with the Zambian Government and sustained supply of foreign exchange, particularly from mining companies and foreign investors in Government securities, has contributed to the rebound of the Kwacha. 

Despite the recent hike in transport fares of 18 to 34 percent early this year, the USD-ZMW pair opened the forex market with a bullish Kwacha and as at January 31, 2022, the local currency traded at 17.23/18.89 against the US dollar. 

PRICING CARTELS 

In this context, the Zambian Roads and Highway Safety Group (ZRHSG) has urged the Zambian Government to stop the pricing cartels within the public passenger bus sector and allow each bus operator to determine their own bus fares. 

The Highway Safety Group has noted with concern the continued existence of this pricing cartel for many years that benefits only the bus owners and tends to hold to ransom public bus passengers who have no choice but to pay the fixed bus fare. 

The ZRHSG believes that the pricing cartel has always left passengers disadvantaged as they have no choice when it comes to bus fares as all fares are pegged at the same cartel price and bus fare regardless of the type and standard of bus services being provided. 

“The Highway Safety Group looks forward to safer, efficient and cheaper modes of passenger transport as better and newer models of buses are introduced on our roads,” ZRHSG Group Admin Mthoniswa Banda said. 

For this reason, it is envisaged that the long-term odds for the country’s economy remain bright, especially if the New Dawn administration sticks to its campaign promise of rooting out Government corruption and prudently spending public resources.

Digital payment fraudsters at work

 

By Derrick Silimina

Digital technologies such as mobile wallets via telecom networks are helping to promote financial inclusion in many developing countries.

In Zambia, fraudsters are taking advantage of users and threatening the growth of digital payments.

Sitting unsettled in her business kiosk along Cairo road – one of the busiest highways in Lusaka, Zambia’s capital –, 25-year-old Susan Chembo narrated through tears how she had been conned of her hard-earned money. 

“I’m requesting you to send your money via this number,” the message read, then provided a mobile number.

Coincidentally, Chembo had just told her uncle that she would send him money to help clear her goods at the border. She assumed the anonymous message was from her uncle who works as a clearing agent at Kazungula border in southern Zambia. 

So, she sent 5,000 kwacha (about $ 285) to the number. Her uncle never received the money. Chembo reported the incident to the police, but the mobile number to which she sent the money was no longer in use. It was a fraud and the perpetrator could not be traced.

Mobile digital technologies and innovations such as mobile wallets are becoming popular in Zambia and helping to promote financial inclusion. 

Many Zambians, especially in low resource environments, now rely on their mobile-phone service providers to host virtual “bank” accounts that are easier to access than traditional banking systems.

With its population estimated at 18 million, Zambia’s two largest mobile operators, local units of Airtel and MTN both supply mobile-money services. 

In April 2018, MTN announced a concerted effort to raise the number of agents in the country to expand usage of its platform while the state-owned Zamtel also supplies standard mobile-money services through its kwacha brand and smartphone mobile e-wallet app, Zampay.

The Bank of Zambia recently disclosed that mobile-money platforms had recorded increased usage with numbers growing to 8.6 million users by 31 December 2021 compared to around 4.85 million in 2019. 

Its statistics showed the number of mobile-money agents in Zambia stood at 47,000 by the end of 2018 compared with 23,000 in the previous year. The number of mobile-money accounts increased from 2.3 million at the end of 2017 to 4.3 million in 2018.

Mobile-money services are a major contributor to financial inclusion in Zambia. However, these platforms have lower security checks than traditional banking systems and have therefore become a target for criminals and fraudsters who take advantage of loopholes to con unsuspecting users.

Raymond Solochi who recently also lost K 500 ($ 30) in a mobile-money scam explains how these fraudsters operate. He says, “these thieves are just using psychology, because they know that at one point or another someone might be sending money especially during pay days.”

If left unchecked, digital fraudsters have the capacity to cripple digital payment platforms. Policy makers in Zambia are therefore taking the issue seriously and devising means to check fraud over digital payment platforms.

“As we continue to migrate customers towards digital technologies, it is important to safeguard customer funds, especially new users of such services. We must ensure that we fully exploit these tools. It is therefore imperative that cyber-fraud incidences are addressed to ensure the gains made so far in financial inclusion are maintained and enhanced,” Denny Kalyalya, governor of the Bank of Zambia, recently told stakeholders at a financial event.

Additionally, the Zambia Information and Communications Technology Authority (ZICTA) is on top of things and says it is alert and always sends messages warning people against posting their contact information on social-media networks and to keep their PIN numbers secret.

Transformation Through Textiles

By Derrick Silimina

With his pen neatly clipped in the pocket of his blue work suit, Fabrice Tuyishime gazes at the factory floor, where scores of women are sewing garments, stamping logos, and pressing out wrinkles from various apparel destined for both local and international markets.

After a hard day’s work at Rwanda’s renowned garment factory, Tuyishime is in good spirits.

“From the day I got employed here, I worked hard to attain my financial goals and carried out my duties exceptionally, and my hard work paid off recently. I was first employed as a general worker and rose to first a supervisor, and then a year later, a production manager,” Tuyishime told ChinAfrica.

The production manager is among thousands of local Rwandan employees who have benefited a lot since the establishment of the Chinese apparel manufacturing company that has lifted them out of poverty.

It is a known fact that many textile industries in developing countries have died a natural death after years of downturn. But in Rwanda, the Chinese garment factory is transforming the lives of local people through job creation and improved household income.

As China intensifies its technology and skills transfer and creates more jobs amid Africa’s quest to boost its development, experiences on the continent point to a bright outlook.

A source of livelihood

In Gasabo District on the outskirts of Kigali, Rwanda’s capital, just 4 km from the Kigali International Airport, stands the Kigali Special Economic Zone phase 1, which houses one of the most modern garment factories in East Africa - Pink Mango C&D Products Rwanda, a leading manufacturer and exporter of bags, garments, home textiles and packaging for a wide range of internationally recognizable brands.

Imports of secondhand clothes from developed countries continue to rise in many African countries, thereby stifling the continent’s potential to grow its own textile industries. Most donated secondhand clothing is now sold for reuse in markets in Africa. What seems a neat solution to millions of tons of clothing discarded annually is definitely undercutting the local garment manufacturing industry.

For this reason, in its quest to enhance technology transfer and grow the local textile industry, Pink Mango C&D seeks to recruit a total of 7,500 workers in Rwanda and turn itself into the largest and best jacket garment factory in Africa, following an agreement that was inked in 2019 with the Rwanda Development Board (RDB) for the establishment of a modern garment factory in the Kigali Special Economic Zone that will produce garments for both the domestic and export markets.

Since its establishment, Pink Mango C&D is certainly transforming the lives of local Rwandans through job creation and improved household income as the Chinese experts at the factory have equipped local staff with knowledge and skills in tailoring; some are now experts in fashion design and production.

Tuyishime is in charge of production and interviews prospective workers, mostly women who took long, dusty bus rides from far and near villages and have waited for hours to apply for work at the modern textile firm.

“It used to be tough for me to support my family; but now I am assured of a monthly salary that enables me to take care of my household with ease. I have even bought a piece of land where I plan to build my house, something I never thought would happen. I am also able to pay school fees for my children. Thanks to the Chinese experts for imparting skills for me to be able to take care of my family,” Anita Kaberuka, one of Tuyishime’s co-workers, said.

Secondhand clothing

It is estimated that East Africa alone imports over $150 million worth of used clothes and shoes, largely from the U.S. and Europe.

In 2017, the United States Agency for International Development estimated that the industry employed over 350,000 people and generated $230 million in government revenue. It also supported the livelihoods of an additional 1.4 million in the East Africa Community bloc.

According to global trade experts, Africa has one of the largest used clothing markets in the world with 80 percent of people on the continent wearing secondhand clothes that are mainly imported from the U.S., Europe, India and Pakistan.

However, those clothes are not necessarily given away once in Africa but are often sold through intermediaries which retail them to local communities.

While this trade is a form of textile recycling, there can be broader negative social and economic consequences for the end markets. 

The influx of secondhand clothing into African markets has created employment, albeit precarious. But the trade has also displaced local garment manufacturing bases – and it may be suppressing the future development or revival of similar domestic industries.

There is a widespread belief that the popularity of used clothing contributed to the collapse of the domestic textile industry in many parts of Africa in the 1980s and 1990s and that the continued use of used clothing is portrayed as undignified and eroding African pride.

Local industry development

In a bid to resuscitate local manufacturing, East African governments, including those of Kenya, Tanzania, Uganda and Rwanda, agreed in March 2016 to increase tariffs on imported used clothes with the intention of phasing them out by 2019.

In this context, Rwanda has been actively exploring the possibility of banning the import of secondhand clothes. In the 2016/17 financial year, the East African nation raised the tax on imported used clothes from $0.20 to $2.50 per kg and to $4 in the next financial year.

RDB Deputy Chief Executive Officer Emmanuel Hategeka recently affirmed that the country has been using fiscal measures to progressively discourage the importation of secondhand clothes because it was hurting the growth of the domestic textile and garment industry.

“The investment of Pink Mango C&D will upskill Rwandans, giving them access to productive jobs and hence ensuring a better standard of living. Secondly, the investment will not only enable us to increase our exports, but also reduce imports of clothing. Therefore, we are achieving two goals by signing this deal,” Hategeka said during the signing ceremony.

He revealed that the establishment of Pink Mango C&D will support the building up of a garment industry ecosystem attracting other players in dyeing, knitting and weaving as well as accessories suppliers to open shops in Rwanda, hence it’s an exciting addition to the growth of the local textile industry.

According to the RDB, the decision to tax used clothing has already helped develop the local textile and shoe industries as production has increased, and the policy is already producing positive results.

C&D Group Chairman Gu Jingyong stressed that his company is not only pursuing profits in Rwanda, but has taken into consideration the long-term positive impact of the investment in the East African country.

“We have brought technology and we hope to improve the living standards of the local people,” Gu added.