Rwanda eyes 100% tax for second hand products (mivumba)
KIGALI, RWANDA – Importing second hand products such as clothes, shoes, bags among other similar items into Rwanda will soon be history with the different strategies that the government has developed to stop this business.
“One of the strategies we have is increasing taxes on second hand imported products aimed mainly at promoting made-in Rwanda,” the Minister of Trade and Industry,” Francois Kanimba said last week at a meeting that brought together leather industry stakeholders.
“This again aims at reducing the volume of second hand products and promoting local hence overcome the pertinent deficit of trade balance,” Kanimba said.
From January, 2016, the government will raise taxes on imported second hand shoes to 70% from the current 35% and later to 100% in July, 2016 one process which will support government’s idea of stopping importation of second hand shoes into the country.
The leather meeting was aimed at discussing the role of leather cluster operations in reducing the importation of used products such as shoes, bags and belts among others and come up with a strategic orientation of the leather industry.
Government of Rwanda is looking for more strategies that will help completely outdo the big market for second hand shoes in our country.
“We however need to be sure our shoe companies have the capacity to make shoes that Rwandans need so we can stop bringing in the second hand shoes. The idea here is not to stop importing second hand shoes, but also importing the new ones,” Kanimba said.
From a study carried out by the Ministry of Trade and Industry, last year Rwanda exported unprocessed leather worth $14million. If clear strategies are developed to stop exporting leather to other countries but process it from within the country, making good finished products such as shoes, bags among others, which can be used by Rwandans and some of these exported to international and regional, the government hopes this will bring in about $170million.
“We need therefore to see what to do to hit this big target and do this very fast,” Kanimba said.
The leather cluster is among SMEs cluster industries that import many leather products in Rwanda, in addition hides and skins from Rwanda are processed abroad whereas this industry has many local operators.
Leather industry stakeholders believe such a big target can be met if government helps them to overcome the different challenges they still face which include among others lack of machines, and proper skills etc.
Kanimba said the fact that Rwanda’s leather industry still has less capacity to make many good shoes.
“This is why the government together with other potential investors in this industry is willing to work with the leather industry, start up a big leather factory which will make many good shoes that can be sold at a reasonable price,” Kanimba said.
“We do not have to go out and look for people to work from this factory. We have to start with these one that we have in the country. What we need is to build their capacities,” the minister said.
“Once we get more machines we will be able to satisfy the Rwandan market hence stop the reliance there is on imported leather products,” President RAPROREP (Rwanda Association for the Promotion of Leather and Leather Products),” Augustin Muremangango said.
“We again need to work very well with the banks to be able to satisfy the Rwandans market,” he said.
Muremangango believes if government starts up the leather factory, many youth that are currently unemployed will be able to get employment.
This is yet another strategy that can support government’s target of creating the 200,000 off-farm jobs annually.
Government of Rwanda, COMESA and the Workforce Development Authority (WDA) have therefore signed an agreement to start training the leather sector stakeholders, as the government looks at starting up the factory.