Plans by Uganda, Tanzania and Rwanda to ban the importation of used clothes (mitumba) may soon make the three countries pay the price after the US said it would impose trade penalties in retaliation to what it sees as a disruption of free trade.

The US State Department’s Harry Sullivan, the Africa Bureau acting head of the economic and regional affairs, stated that the three East African countries, whose leaders are expected to meet at a summit in Uganda, have until this week to reverse the decision or face heavy penalties.

East African Heads of State are set to meet at Summit on Infrastructure and Health Financing and Development in Kampala, Uganda on February 23, and Sullivan says he is waiting for the outcome.

“I believe the results of the meeting next week will determine how we proceed,” Sullivan said in a conference days.

The EAC member states agreed two years ago to impose a phased ban on used clothing imports (known as mitumba) over a three-year period beginning 2019.

Kenya subsequently withdrew from that agreement following US threats to end its eligibility for duty-free clothing exports to the US market under the African Growth and Opportunity Act (Agoa). 

US trade officials say that the mitumba ban violates an Agoa stipulation requiring beneficiary countries to eliminate barriers to trade with America, and Kenya reportedly feared the loss of the duty-free and quota-free access to the US, its third largest market.

Uganda, Rwanda and Tanzania, each of which earns far less through Agoa than Kenya — jointly affirmed last July that they intend to proceed with the mitumba ban.

The three countries argued that the action was essential to their efforts to develop domestic clothing manufacturing industries. The Trump administration disputes that reasoning.

“While we understand the East African Community’s desire to build a domestic textile sector, we firmly believe the EAC ban on imports of used clothing will not achieve that,” Sullivan told reporters.

Making inexpensive mitumba unavailable will adversely affect many people in the three countries, he suggested.

“Leaders or the EAC are saying to consumers of used clothing we are going to take this choice away from you and you will not have access to this market anymore,” he said.

“We question whether consumers of used clothing will be able to afford the new apparel being made in the East African Community market.”

A more effective way of developing domestic clothing industries would entail encouraging middle-class consumers to buy locally made apparel, Sullivan proposed.

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Meera Investiments has dragged Dfcu Bank to Land Division of the High Court, seeking to reclaim its 46 branches that were allegedly acquired illegally countrywide following the dissolution of Crane Bank.
These are part of the shares of Meera Investment that Sudhir lost during the takeover of Crane Bank by DFCU early last year.
Should court agree with the arguments of Meera Investments, all the 46 countrywide DFCU Bank branches will be closed and reverted to former.
Also sued alongside DFCU Bank, is the Commissioner of land registration in connection with the land on which the buildings for the 46 branches sit.

CASE 1 – BRANCHES – REPLY TO 1ST DEFENDANTS WRITTEN STATEMENT

In the suit, Meera Investments contends that it is the rightful owner of the 46 branches formerly trading as Crane Bank and that for any transfer to have been effected to Dfcu Bank; it is consent should have first been sought.
“The Commissioner land registration connived with DFCU Bank to transfer the leases of the 46 properties into the latter’s names without the written prior consent of Meera Investments, a move which is null and void,” Sudhir argues.
Meera Investments, which is one of the entities owned by business tycoon, Sudhir Ruparelia, wants court to declare that the continued presence of DFCU Bank on its properties amounts to trespass and that they should be ordered to vacate with immediate effect.

CASE 1 – BRANCHES – 1ST DEFENDANTS WRITTEN STATEMENT OF DEFENCE

On the part of the Commission land registration, Meera Investiments wants court to direct them to immediately cancel out DFCU Bank as being the right full owner of those suit properties and reinstate them as the rightful owners.
Meera in its law suit, avers that at the time when Bank of Uganda (BoU) took over the management of then Crane Bank, now under receivership, in October 2016 before its eventual sell to DFCU, was the lessee of the suit properties and paying US $6,000 every beginning of the year.
Meera adds that by transferring the same properties to DFCU Bank without their prior written consent, is illegal.
In exercise of its powers, Bank of Uganda in January transferred the liabilities (including deposits) of Crane Bank to DFCU Bank.
Bank of Uganda Governor Emmanuel Mutebile said in a statement that the central bank also conveyed Crane Bank’s assets to DFCU bank.
Addressing journalists in Kampala, Mr Mutebile explained that all customers and depositors of Crane Bank were to have their accounts operated by DFCU Bank through its wide branch network.

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