With the growth of the informal market, retailers who sell used clothes are rising in number. A glimpse of this is displayed at the biggest used clothing market in Asko near Atena Tera, in Addis Ababa. The second-hand clothes, which are discarded as worthless at charity warehouses or thrift stores in Europe and the USA, are sold off at a very cheap price to developing countries. This makes them preferable to a large portion of the society, chiefly because of the rise in prices of new clothes. The Secondhand clothes market is also becoming a source of revenue for businesses engaged in the illegal trading. EBR’s Ashenafi Endale visited the biggest used clothing market in the city and spoke with traders, contraband smugglers, custom officials, and experts for this report.
On the morning of July 30, 2019, around Asko near Atena Tera located in Kolfe Keraneo District, in a place usually known as chereta (literally mean auction), people gathered to buy and sell contraband clothes that were as cheap as French fries. Hundreds of sellers, each standing on top of a pile of clothes (a.k.a Bonda, which is a name given for a ‘bundle’ with hundreds of clothes tied up together) continuously auctioned clothes by displaying the individual items in the air over their head, telling the buyers to make offers above the floor prices. In the meantime, hundreds of buyers who are scrambling to buy clothes, loudly shout out their offers.
The buyer who offers the highest price throws the money to the seller while the seller tosses the clothing item in the same manner. The market is grouped into separate areas that sell clothes for either children, youth or adults. Though the average price of most clothes is ETB120, common prices for adults’ clothes range from ETB200, in case of trousers, to the maximum of ETB600 for men’s high-fashion jackets. The buyers have different backgrounds. Majority of them are retailers and street vendors, some are individuals who come from remote areas in the rural parts of the country and the rest are residents of Addis Ababa who come to the market aiming to get cheaper items.
Andualem Girma is a retailer who makes his living from selling the clothes he buys in the market. “I buy at least ten clothes each for children and women from the Chereta market, for prices ranging from ETB10 toETB150,” he tells EBR.
Retailers like Andulaem, sell the clothes for twice of the price they initially bought them to boutiques and slightly cheaper for passing by customers on the streets. Dirty clothes are washed at container shops around the market for four Birr with an additional cost of two Birr for ironing.
Nejat Mohammed is among those who wash the clothes. “Majority of my customers are youth from rural areas,” says Nejat, who earns an average of ETB100 a day from washing clothes. “I also serve retailers who own shops in downtown.”
Nejat is among the many, including Alemu Getahun, whose name changed upon request, who are able to make a living from the business activities in and around the market. Alemu joined the market as an auctioneer five years ago, thanks to his loud voice that commands attention. He earns an average of ETB200 from each bundle of clothes (Bonda) he auctions. The sellers, who hire him to sell the clothes, buy him milk or yogurt after every auction. He believes this is essential to work properly. “Besides making a living, the market enabled me to build a house and pay tuition fee for my children at one of the best schools in the area we live in,” says Alemu, who is now retiring because of the death threats he has received from gangsters, commonly known as Kabo, who collect lease payment from those who trade in the area. They ration the land to the clothes traders.
Open between 5:00 am and 11:00 pm, the market operates only on Monday, Tuesday, Thursday and Friday. A minimum of 10,000 transactions takes place in a couple of hours each market day involving the trading of around 400 Bondas, according to insiders. Located on a sloppy land that equals that of a football field, Chereta was formerly in a place commonly known as Lukwanda about 13 years ago, before it relocated near Atena Tera, Kolfe Keraneo District. The city administration was forced to relocate the market to its current location due to the rise of gangsters involved in the clothing business.
Today, though not a stress-free endeavor, anyone can start a business at Chereta with a minimum of ETB5,000 capital, or even less. They can buy clothes from the market and sell them on the streets until they can accumulate adequate capital to open a shop. However, to be a Bonda seller, one needs more money. For instance, a Bonda full of childrens’ clothes, costs ETB20,000 and requires having or renting a warehouse and establishing linkages with traders in border areas. Some Bondas contain very poor quality clothes and the seller might lose as much as two-thirds of the initial capital.
Many traders in the market source the clothes from illegal merchandizers and contraband smugglers as the government has turned a blind eye. However, sometimes, the police officers still crackdown on the market despite receiving a bribe, according to insiders. To avoid such problems, 510 traders in the market organized themselves and established a company, dubbed Kolfe Auctioneers Unity Share Company, which collects ETB50 tax from each Bonda or bundles of clothes sold in the market, according to Mesfin Abebe, the Head of the share company.
The investigation conducted by EBR reveals that after each Bonda enters the country, mainly through illegal channels, they are unbundled and screened in Addis Ababa. Then the clothes inside the Bonda are grouped in to three categories.
The first category, locally known as Taiwan, contains relatively better quality clothes. These are dry cleaned and tags attached to them to make the clothes look like brand new items. The cost of dry cleaning and re-branding these clothes ranges between ETB200 to ETB300. They are later then distributed to boutiques in different corners of Addis Ababa as well as other regional cities. Many boutiques in areas, such as Bole and Haya Hulet, accept at least 15 to 20 of these attires once a week. A trader can buy a jacket or brand new sneaker with ETB400 to ETB2,000 from the market and sell it to boutiques for as high as ETB6,000. Even though the profit margin is high, the bulk (Bonda) containing these high-quality clothes arrives once in six months.
The second category of clothes is called Efoyta, which literally means relief. It contains medium quality clothes, which are directly sent to Merkato and sold in bulk. These are usually from Thailand and the clothes normally do not have different sizes or colors as they are imported in bulk together with other outfits.
The third category of clothes is called ‘Enken’, which literally means defect. These are the kinds of second hand clothes that need more repairs, some to the extent of sewing as well as washing and ironing. It is only these groups of clothes that are available at Atena Tera. To note, these clothes are also directly distributed to registered street vendors operating in the capital. Overall, the increase in second-hand clothes comes as no surprise as the global second-hand clothing industry is worth about USD37 billion, majority of which is destined to African countries, including Kenya, Tanzania, and Ethiopia. Involvement of international development agencies and multinational companies in the trade is also seemingly unconventional, according to Seid Mohammad, who has been a Bonda seller and an auctioneer at Chereta for the past 14 years.
In addition to the second hand clothes, brand new clothes are also smuggled into Ethiopia and sold in an open market. An example would be clothes produced in China and destined for the European market, end up in the different markets found in Addis Ababa. This happens under two circumstances. The first one is when buyers in Europe who ordered shipments from China default. The second is when the clothes shipped to Europe do not fit with the current weather season. Usually, boutiques and clothes suppliers in Europe change their stock in co-relation to the seasons. The existing stocks that remain unsold will be discarded to make room for new shipments that goes along with the upcoming season. The discarded batch will be destined for developing countries, including Ethiopia.
Knowing the exact amount of contraband (Bonda) items that enter into Addis Ababa is still difficult. However, according to data obtained from the Customs Commission, new clothes worth ETB210.8 million and second-hand clothes worth ETB57.43 million were confiscated in the past fiscal year. This constitutes 20.7Pct of the total ETB1.3 billion inward contraband confiscated in the same year. On the other hand, outward contraband confiscated by the Commission stood at ETB334.8 million, out of which ETB236.43 million was foreign currency notes.
According to a research conducted by Fanta Mandefro, Assistant Professor at College of Business and Economics at Addis Ababa University, only 10Pct of the total contraband textiles and garments entering Ethiopia are confiscated. The study, which was conducted in 2018, also revealed 48Pct of the total consumption of clothing textiles and garments demand in Ethiopia is addressed by the contraband market. According to the same research, contraband clothes worth ETB13.7 billion was smuggled into Ethiopia between 2012/13 and 2017/18, which also implies a significant loss in tax.
Smuggling of textiles and clothes in to Ethiopia is threatening the survival of the domestic textile companies. This can be attested to by the measured value of the total textiles and garments output, which declined from ETB9.55 billion in 2011/2 to ETB8.14 billion in 2015, according to the Central Statistics Agency.
Mesfin argues, the government kept a blind eye on the contraband clothes’ markets because a vast majority of the population cannot afford legally imported clothes that are sold in boutiques. “In addition to serving the lower section of the society, these markets support many businesses.” He adds.
To reverse the situation, Fanta recommends long term and short term solutions. “The short term solution is creating accountability in the tax system, and a contraband task force that comprises; defense, federal police, and regional law enforcement forces. Ethiopia needs to have a clear policy for importa substitution. Presently, there is no single institution that is responsible to work on contraband. It is rather a pool of law enforcement members who are given the responsibility.”
Temesgen Tesema, Planning, Monitoring and Evaluation core process owner at the Ministry of Revenue, also argues that the effort towards controlling contraband is in total disarray and could not be effective. “There has been no coordination between the federal police, defense, regional police and customs commission,” he argues.
While awarding 165 ethical and high taxpayers on July 27, 2019, Adanech Abebe, Minister of Revenue, made a bold promise to reduce contraband and boost revenue. “Much of the economy is still driven by the informal sector,” said Adanech. “With that in mind, many initiatives are been fostered to bridge the gap and some of the informal businesses are being legalized.”
8th Year • Aug.16 – Sep.15 2019 • No. 77