Import duty on secondhand clothing up by 153%

Dealers in secondhand clothing have lamented a 153 percent hike in import duty, saying thousands of Ghanaians risk losing their source of livelihood if nothing is done.

In the first quarter of 2022, the Ghana Used Clothing Association (GAUCA) said it cost GH¢15,000 as import duty on a 40-foot container. However, since first quarter of this year it has gone up by over 300 percent to GH¢38,000.

The situation, GAUCA lamented, is further worsened by factors such as cedi-depreciation, high inflation and a harsh economic environment – including deteriorating purchasing power of consumers and further taxes.

As a result, industry players say the once-booming industry is now going through a rough patch, with as many as 70 percent of secondhand clothing dealers losing their livelihood because of the knock-on effect of import duty cost on cost of secondhand clothing bales, which are sold at wholesale points for exorbitant prices.

Samuel Darko Apenteng, Secretary of the Used Clothing Dealers Association in Kantamanto – the biggest secondhand clothing market in the country, revealed that a bale of secondhand clothing which sold at a price of GH¢23,000 during the second quarter of 2022 is now hovering at around GH¢6,500 to GH¢7,000. This, he said, has made it nearly impossible for most used-clothing retailing businesses to stay afloat.

More worryingly, the hike in duty – which will ultimately be transferred to the consumer, could make secondhand clothing too expensive for buyers who are already struggling with heightened economic difficulties, particularly rising cost of food and utilities.

Typically, Ghanaians – with the exception of a few well-to-do ones – patronise secondhand clothing. More so, most middle-class workers rely on what is commonly referred to as ‘first selection’ (prime secondhand clothes) for both their corporate and casual clothing needs.

With the hike in import duty and resultant increase in price of used clothing in the face of current economic difficulties, most dealers are experiencing a drastic drop in sales and patronage – with the always busy Kantamanto market now looking like a desert even on Saturdays.

“The situation is posing an existential threat to our livelihoods. This business used to be very lucrative, serving as a source of income for many Ghanaian young men and women who otherwise would have been home doing nothing; but as I speak, we now operate on narrow profit margins due to the increasing bale-price and low customer patronage. Personally speaking, there are days when I come here and go back home after selling nothing,” he told the B&FT on a hot Tuesday morning in Accra, while pointing to his wares which he says have been in his shop for months.

Mr. Apenteng added that a good number of retailers have either abandoned or sold their sheds to new entrants, because they are unable to pay back loans they contracted before the economic crisis.

“Due to an unexpected hike in bale-price at wholesale points, I defaulted on a loan to the tune of GH¢30,000 with a 10 percent interest rate I took from an individual lender last year. I am unable to settle it because the price of secondhand clothing bales has quadrupled, resulting in me paying more than twice the price it was sold to me at the time of taking the loan. I have become depressed and suicidal, looking over my shoulder while trading because I don’t know when the lender will visit again,” said one of such victims, who pleaded anonymity.

The story of loan default was one that cut across all the dealers B&FT spoke to. For instance, a 29-year old trader by name Benjamin Antwi said he defaulted on a loan of GH¢25,000. With no means of repaying, he admitted that he could be staring at the possibility of going to jail; and said that he has already started psyching himself up for it.

Distressingly, Antwi said about 30 percent of the young men he came to meet in the business are either now down with stroke or hypertension, while others have taken to alcohol.

Meanwhile, the Used Clothing Association in Kantamanto is blaming importers for the industry’s predicaments.

“Aside from failing to voice-out for us, they sometimes of their own free will inflate import duty charges on the goods for no apparent reason; and I believe this practice of theirs partially accounts for the sustained increase in bale prices. They are always using the dollar rate as an excuse,” Mr. Apenteng added.

GUTA

But in a sharp rebuttal, the deputy-Treasurer of Ghana Union of Traders Association (GUTA) – Edward Atobrah, who doubles as Finance Secretary of Ghana Used Clothing Association (GAUCA) – refuted the retailers’ claims, saying they are unfounded.

He explained that contrary to their perceptions about importers, the situation has rather been precipitated by factors such as the continual introduction of new tariffs on imported goods by government, importation costs such as shipping charges, an unstable cedi and rising dollar rate.

“It is the accumulation of government’s taxes on imported goods over a period of time that has brought us to this point. Government is introducing more taxes, and the more the taxes, the more the increment of duty cost.

“In addition, the retailers do not have full appreciation of the current global as well as local economic situation and its effects on the exchange rate of foreign currencies; nor do they appreciate the fact that inflation rate is also a price-determining factor. All they want is to get their goods at a cheaper cost as it used to be, regardless of the situation,” Atobrah elaborated.

He underscored the need for government to as a matter of urgency scrap temporary emergency taxes that have outlived their purpose.

“These taxes need to be taken off for prices to go down. Government introduced some temporary emergency taxes for specific periods, and although those periods have elapsed the taxes still remain in effect. These taxes need to be taken off for prices to go down,” Atobrah appealed.