#crossborder trade

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With a population of more than 100 million people, Ethiopia has a large domestic market. Because of the poor state of the economy (per capita income of $790), Ethiopia's per capita expenditure on clothes and shoes is low in comparison with countries that have a smaller population size. Even then, for the majority of Ethiopian households in the countryside and small towns, expenditure on clothing and shoes rank as the most important non-food expenses.

Ethiopia has recently emerged as an important source of clothes and shoes for global brands like H&M, Tommy Hilfiger and Calvin Klein. Ethiopia’s new apparel industries, which feed the lucrative global textile supply chain are not allowed to sell their products to the local market. The Ethiopian government seeks to use the textile and apparel industry to generate foreign exchange and jobs.

Imports cover about 79 % of the domestic market for clothes and 56 % for shoes according to data by the Addis Ababa Chamber of Commerce. Accordingly, clothes and shoes are among the top ten of Ethiopia's (official) imports. Due to high import tariffs and other difficulties, a significant portion of clothes and shoes are imported illicitly. In one estimate, about 48 percent of textiles and apparels imported into Ethiopia come through illicit channels.

Even though it is illegal to import SHC and shoes into Ethiopia, trading in these commodities has been a thriving business. SHC and shoes markets are ubiquitous in Ethiopian cities and towns. Because of their low price and better quality in comparison to imported and locally produced new clothes, SHC and shoes continue to attract a large number of buyers. Young consumers whom we interviewed in Jigjiga jovially explained why they prefer to buy SHC and shoes instead of new ones. They said that in comparison to new imitation clothes and shoes, SHC and shoes were trendy and durable. They argued that new clothes sourced from China and other Asian countries were of lower quality and did not provide enough choice – 'wearing them is like wearing uniforms', an interlocutor pointed out.

Recently, trading in used shoes has become more lucrative than trading in SHC. More and more consumers are buying second hand shoes as the market offers original brands like Nike, Reebok, Adidas or Puma. More often than not second hand shoes in good condition are a lot more expensive than new shoes that imitate global brands.

One of the major gateways for second hand clothes and shoes is the Ethio-Somaliland corridor. These commodities largely originate from the US and Europe and transit through Dubai ports. From Dubai they are brought to Berbera port by Somaliland traders. According to traders in Jigiga, SHC are disaggregated at the point of origin into different kinds such as t-shirts, trousers, shirts, suits and children and women clothes and wrapped separately into different bundles, known in Amharic as bonda. Shoes are also wrapped in separate bundles.

Second hand cloth vendors in Jigjiga, the capital of Ethiopia’s Somali regional state

©  Asnake Kefale (2019)

Tog Wajaale, the main trading hub for the trans-border trade between Ethiopia and Somaliland also serves as a major point of transit for SHC and shoes in the corridor. There are two major transport routes that take commodities to different towns in Eastern Ethiopia and further north to the central parts of Ethiopia. The first and major route is the Jigjiga route. The second one connects Tog Wajaale to the ancient city of Harar through Chinaksen bypassing Jigjiga. This route gained in importance in recent years, in particular after 2015 when security deteriorated as a result of the Somali-Oromo conflict. While the Jigjiga route – which is discussed in this blog – is dominated by Somali traders, the Chinaksen route is in the hands of Oromo traders.

Used clothes and shoes are transported in different ways to Jigjiga from Tog Wajaale. Small traders, usually women, buy small quantities of used clothes and shoes from retailers in the Tog Wajaale market. They then travel by bus or minibus to Jigjiga where they distribute the goods to their clients. They employ different tricks to bypass customs inspection, for example they distribute clothes and shoes among cooperative passengers. Once they arrive in Jigjiga, the traders supply small retailers in the town. Small scale traders diversity the commodities they bring to Jigjiga in order to minimize the risk of getting bankrupt in the event of confiscation of their merchandize. For instance they buy food items like cooking oil, pasta, and sugar, which customs officers usually do not confiscate.

A larger portion of SHC and shoes are transported from Tog Wajaale as bundles by medium sized trucks, predominantly by ISUZU trucks. This option is used by medium and large scale Somali traders. According to informants, traders write their names on the bundle of SHC and Shoes and pay in advance for transport costs. Often a transport operator collects a range of different goods, including SHC and shoes, and has them loaded onto their trucks. These transactions are all based on trust and traders admit that there is always a risk of confiscation. Transporters mostly use the asphalt road. They facilitate the passage of goods by transporting the merchandize at times when customs inspections are more lax or by ‘collaborating’ with officials. In some cases they use bush roads to circumvent customs checkpoints. Each of the transporters has his stores in Jigjiga and when the merchandize arrives in the stores, they inform the traders, inviting them to collect their goods.

The bundles are then taken to different stores in town. Cloth bundles are usually opened on Fridays and Saturdays as these are important market days. Shoe bundles are opened immediately after their arrival. When the bundles are opened the clothes and shoes are graded on the basis of their quality. Retailers tailor, wash and iron textiles to add value to them. Shoes are also washed. There are hundreds of stores in Jigjiga where SHC and shoes are sold. These stores are found in the central market area, the old and new Taiwan markets. There is also a large number of traders who hawk the town. Most of the traders in the main market and the old Taiwan are men while female traders dominate Jigjiga’s new Taiwan market.

A significant portion of SHC and shoes are sent from Jigjiga to the central parts of the country including Addis Ababa. Small traders from Addis Ababa buy smaller quantities of shoes and clothes and then transport them by public transport. A recent development in the trading of second hand quality brand shoes is the usage of scheduled Ethiopian Airlines flights from Jigjiga to Addis Ababa. Traders buy good condition brand shoes like Nike, Adidas, Reebok and others and fly them back to Addis Ababa. One reason why air transport is attractive is that customs inspections at Addis Ababa’s Bole International Airport are less rigorous compared to custom checkpoints along the road.

The shoes brought to Addis Ababa are sold at a considerably higher price than newly imported shoes that are counterfeited. Many of the shops specializing in the supply of second hand shoes brand themselves as 'Torshin shoe stores’, adulterating Adidas Torsion System shoe series.

In sum, although the Ethiopian government bans the trade of used clothes and shoes, it is a thriving business that relies on cross-border transporting. It provides jobs to tens of thousands of people across the country as well as options for consumers. Like other commodities traded in the corridor, for instance electronic goods, the trade in used clothes and shoes happens through the collaboration of various actors including traders, transporters and public officials.

The latest GOVSEA working paper is authored by Asnake Kefale, assistant professor at the Department of Political Science and International Relations at Addis Ababa University and a senior researcher with the Forum for Social Studies. Cross-border trading in East Africa has a long history, is an important source of livelihood and produces considerable public revenue. Why is it then, that the bulk of cross-border trading is done informally and beyond the control of the state? This working paper looks into this and other questions by delving into the history, politics and practices of informal cross-border trading in the Ethio-Somaliland corridor. The author highlights evolving trade routes, the impacts of trading on state formation, Ethiopian customs policy and the different logics animating the export of Ethiopian livestock to Somaliland and the Arab Gulf on the one hand, and the import of consumer goods including cell phones on the other hand. Despite Ethiopian attempts to regulate what it considers as ‘contraband’, informal imports and exports persist and adapt as traders have developed their own mechanisms to ensure the flow of goods.

This DIIS Working Paper is part of the GOVSEA PAPER SERIES (Governing Economic Hubs and Flows in Somali East Africa) edited by Tobias Hagmann and Finn Stepputat.