Not the Tariffs but the Value Chains

My friend Mahesh Punia posted an article, Reframing Kenya's Textile Competitiveness. Building a Holistic Value Chain for Sustainable Growth. This paper resonates with my previous week's article on optimizing value chains. Knowing that many policymakers may not have time to read a six-page document, I summarize the article here.

Kenya's textile industry finds itself at a pivotal juncture. For years, a dominant narrative has suggested that the country's relatively low textile import tariff—10% compared to India’s 27%, China’s 54%, and Bangladesh’s 37%—offers it a significant edge in global trade. However, this perspective is fundamentally flawed. As Mahesh Punia argues in Reframing Kenya’s Textile Competitiveness, it is not tariffs but a robust, integrated ecosystem that truly defines a country’s competitiveness in textiles.

Countries like India, China, and Bangladesh have succeeded not because of tariff advantages, but because they have built end-to-end value chains. These range from cotton seed development and local raw material production to skilled labor, reliable infrastructure, and close integration with global buyers. India, in particular, exemplifies this model. It produces its own cotton at low cost, houses thousands of spinning and weaving mills, trains a productive labor force, and supports manufacturers with reliable utilities, financing, and access to a massive domestic market. These strengths enable Indian textile manufacturers to operate at scale, reduce costs, and deliver high-quality goods faster than many of their competitors, including Kenya.

By contrast, Kenyan manufacturers struggle with structural inefficiencies despite duty-free input access within export processing zones (EPZs). They face high electricity and financing costs, longer production lead times, poor logistics, and limited access to affordable raw materials. Moreover, the influx of second-hand clothes (Mitumba) undermines local textile demand and stunts the growth of a vibrant domestic market—one of the hidden engines of success for countries like India.

To reposition Kenya as a global textile powerhouse, Punia calls for a holistic and ambitious transformation strategy. This begins with building a complete cotton-to-garment ecosystem: improving seed quality, establishing regional cotton clusters, and investing in local ginneries, spinning, and weaving facilities. Kenya must also develop modern textile parks with shared infrastructure along strategic transport corridors like the proposed Nairobi–Mombasa Expressway. These parks would house co-located dyeing, sewing, and finishing units, reducing logistics costs and boosting production efficiency.

Another vital pillar is human capital. Kenya must invest in national textile training institutes, forge global partnerships, and align its vocational programs with international buyer standards. These efforts will help increase labor productivity and attract higher-value manufacturing.

Infrastructure and logistics also need urgent attention. The modernization of Mombasa Port, establishment of inland dry ports, and introduction of digital freight systems would dramatically cut export costs and timelines. Meanwhile, smart financing models—such as low-interest loans, credit guarantees, and order-based financing—are essential to unlock growth for SMEs and attract investment across the value chain.

Punia also advocates for strategic specialization. Kenya’s climate makes it ideal for cultivating alternative, high-value fibers like hemp, nettle, and ramie. With early investment in research, training, and processing, these crops could position Kenya as a unique, sustainable textile source. Equally important is transitioning the domestic market from Mitumba dependence to one that champions affordable, locally made garments. This shift could be phased in over 5 to 10 years, supported by policy and reinvestment of Mitumba import duties into industrial development.

Furthermore, to truly integrate into global value chains, Kenya must incentivize global brands to establish local sourcing, design, and quality control offices. A trusted, ESG-compliant sourcing hub, powered by green energy and transparent supply chains, will attract forward-looking buyers. The country must also diversify its textile portfolio beyond garments, leveraging its artisan heritage to produce soft furnishings, home décor, and sustainable lifestyle products.

Ultimately, Kenya’s global competitiveness will not be won through tariff relief or piecemeal incentives. It will depend on the scale and coherence of its textile ecosystem, the vibrancy of its domestic market, and the boldness of its policy execution. The future belongs to nations that build self-reliant, sustainable industrial capabilities. Kenya, with its strategic advantages and youthful potential, can be one of them—if it chooses to build.