In the heart of Uganda’s economy lies a multimillion-dollar contradiction — bundled in compressed bales and traded in vibrant markets from Owino to Busia. The second-hand clothing (SHC) sector is both a powerful economic engine and a constant source of national tension.
A new report by the Gateway Research Centre lays bare this paradox, portraying a trade that serves as a lifeline for millions of Ugandans even as policymakers see it as a stumbling block to the country’s industrial ambitions.
On the one hand, the sector’s economic importance is undeniable. Drawing on data from 332 respondents, the study finds that second-hand clothing provides a crucial source of employment, particularly for Uganda’s youth. A remarkable 73.9 percent of traders are between 18 and 35 years old — a demographic directly confronting the country’s 12.3 percent unemployment rate.
The report also challenges long-held assumptions about who drives the trade. Far from being an informal hustle for the uneducated, the business is run largely by educated entrepreneurs. Nearly 96 percent of traders have at least a primary education, and 61 percent have reached A-Level or earned a bachelor’s degree — upending the stereotype of the unskilled street vendor.
“I studied up to master’s level, but second-hand trading has been more rewarding than my previous jobs. It’s not a business for the desperate; it’s a smart move for anyone who wants to survive in this economy,” testified Mr. Okumu, a shoe trader in Busia.
The economic data is compelling. In 2023, Uganda’s imports of worn clothing were valued at USD 95.9 million, surpassing the USD 79.1 million for new clothing imports. This trade generated tax revenue of approximately USD 87 million in the 2022/23 financial year. For consumers, particularly the 16.9 percent of Ugandans living below the poverty line, SHC provides affordable apparel in an economy where new, locally manufactured garments are often out of reach.
However, this very success frames the other edge of the sword. The government views the sector as a liability to its industrialization goals. President Museveni has repeatedly reaffirmed his commitment to a ban on SHC, ostensibly to grow the domestic textile sector, famously dismissing second-hand clothes as “for the dead people.” In 2020, the government raised the import duty on textile fabrics to 35 percent and imposed high specific taxes, aiming to nurture local giants like Nytil and Southern Range Nyanza through an import-substitution approach.
This protectionist policy, however, is built on a fragile foundation. A report by the Economic Policy Research Centre (EPRC) indicates that Uganda produces approximately 150,000 bales of cotton annually, yet only 10 percent is processed domestically. The remaining 90 percent is exported as raw lint, severely limiting job creation and value addition. The report argues that imposing high taxes on imports without first addressing underlying weaknesses, such as high electricity costs, low industrial financing, and inefficient supply chains, makes local textiles uncompetitive.
The result is a policy stalemate. Protectionist measures have not spurred a local textile boom but have instead fueled inflation in the clothing and footwear sector, which rose to 4.2 percent in 2024, straining household budgets. As one Owino Market trader noted, “A bale we used to get at UGX 500,000 is now costing over UGX 700,000… Customers complain about the prices, but we also can’t reduce them because we are barely making a profit.”
This double-edged reality demands nuanced, evidence-based policies that acknowledge the sector’s current value while strategically building local capacity. Outright bans or punitive taxes only jeopardize livelihoods without delivering a viable alternative.
Key Policy Recommendations:
- Pursue a Phased, Investment-Led Approach to Local Industry.Instead of attempting to ban SHC through taxation, the Ministry of Finance, Planning, and Economic Development (MoFPED) should suspend any proposed bans and redirect policy focus towards making local production competitive. This means first addressing the high cost of doing business by investing in reliable energy, offering targeted industrial financing for textile factories, and supporting cotton farmers to increase yield and quality. You cannot kill a lifeline before building a bridge.
- Formalize and Integrate the SHG Sector into National Development Planning.Parliament should enact a comprehensive SHGs Trade Policy that formally recognizes the sector’s contribution to employment and affordability. This policy should harmonize the currently disjointed regulations and provide a clear, stable framework for traders. By bringing the sector in from the cold, the government can improve oversight, expand the tax base through fairer valuation methods, and harness the entrepreneurial energy of its youth.
- Leverage the SHG Sector for Local Value Addition.The government and trade associations like KACITA should launch programs that create linkages between the second-hand trade and local tailoring and artisan industries. The SHG sector can be a source of raw materials for Ugandan tailors, designers, and upholsterers who transform second-hand items or use the fabrics to create new products. This supports local skills and adds value within Uganda, blending the second-hand economy with local creativity.
- Mandate Inclusive Stakeholder Dialogue.The government must institutionalize quarterly forums between MoFPED, URA, the Ministry of Trade, and SHGs associations. These dialogues should transparently address the challenges and opportunities on both sides, discussing realistic transition timelines and co-designing policies that do not sacrifice present livelihoods for uncertain future industries.
The second-hand clothing sector is neither a saint nor a sinner. It is a reflection of Uganda’s current economic realities. The choice is not between preserving it or destroying it, but between managing it punitively and strategically harnessing its strengths while systematically building a competitive local alternative. For now, it remains the lifeline that keeps millions afloat; the challenge is to ensure it becomes part of a more robust economic future, rather than a casualty of it.
The authors are researchers at Gateway Research Center, Kampala Uganda.
