Mitumba Remain a threat to upcoming chains of retails shops in The East Africa region
Mitumba refers to second-hand clothing which are imported and sold cheaply in the region. It can also be used to refer to other used and brought back to the market goods for example shoes. Business experts see this business of used goods recycled back in the market as a key hindrance in the formal retail sector particularly for fashion retailers. World Bank report recently ranked Kenya as the fastest growing economies globally.
Retail business has attracted famous international retails shops to Kenya. It is not only used cloth that is getting into the East African market. The market receives used other products like automotive, computers and electronic from japan, Dubai and others place around the world. Some customers argue that mitumba clothes and shoes are of best quality compared to the ones sold retailed .
shop.The East Africa real estate market continues to attract foreign investments with an increase in retail sector investments expected. It sought to be investment destination. It is important to note that East African Region offers investment opportunities in the region, for example Rwanda, Tanzania and Uganda are also growing at same rate.Second goods have advantages of being much affordable to a larger population in the region. One can bargain than most retailed shops which is picking items and paying tagged price.
Shopping at thrift stores, used car yard sales, and second-hand markets, money stretches much farther and car purchase more. It inspires to recycle goods and It’s Easier to Spot Quality
“There is a great demand for variety of retailers in the East African community – the region requires not only high-end retailers but there is also huge demand for more affordable retailers.” Group CEO of the Broll Property Group, Malcolm Horne said in a press release last month.
South Africa and Nigeria are the largest economies in Africa and Kenya climbed to ninth position from previous twelfth because of improved Agriculture, information Communication technology (ICT) and the fast growing real estate sector. The region faces a number of challenges which includes, unemployment, declining manufacturing industries and low export demand. This has led to current account deficit in the countries in the region.
Broll Kenya CEO and Head of East Africa Operations, Jonathan Yach, says Kenya remains the economic powerhouse in East Africa compared to Rwanda ,Tanzania and Uganda.He explained that these three countries will remain stable due to existing government interventions. Kenyans GDP grew up significantly from 5.4 percent in 2014 to 6 percent this year. It is projected to go up 7 percent in the next three years due to increased public investment in infrastructure and energy sectors. Uganda’s GDP is stable but its real estate sector lacks stability due to the current oversupply of office space.
Yach says Tanzania land ownership remains restrictive with ownership vested in the government. This impacts on investments as foreign investors have no full reign to grow their businesses.With rail upgrading, Kenya will increase the lead in the region significantly. The setting up of the standard gauge railway will service landlocked countries such as Congo, South Sudan, Uganda, and Rwanda. It links these countries directly to the Port of Mombasa. Business is hoped to grow significantly the region and movement of goods and services made easy.
Malcolm Horne says the future retail prospects look positive. Kenya leads in retails shops space is estimated that around 1.9 million feet square currently under construction. The first quarter of this is due for opening this year through to the second quarter of next year in Kenya.In Tanzania it is anticipated to be over 650,000 square feet of retail space in Dar es Salaam alone. Rwanda anticipates a further 380,000 square feet of retail space in 2015/2016.
Non-real estate like Centum Investment Group Safaricom, Britam, and UAP Holdings (60.66% owned by Old Mutual Limited) to increase their real estate investments in the future.
Centum is current developer of the biggest retail centre in East Africa – Two Rivers situated off Limuru Road with a total 650,000 square feet.“These individuals who earn between KSh100, 000 – KSh350, 000 ($1,000 – $3,800) also may have more than one job and/or are enrolled in various investment clubs that enable them to diversify their investments and increase their spending power.
“This class is now more receptive to formal fashion, entertainment and purchasing of luxurious goods,” says Horne.
Middle class earners will mostly opt to purchase from markets like Kikomba, Muthurwa market and car yards of imported used cars or prefer to buy a good used phone than buying for retails shop. Most retails target a population in an area before putting up a business.
In East Africa, low earners are many and most see themselves feet for a cheap market.International retailers such as, The Foschini Group, LC Waikiki, Carrefour and others entering the East Africa market still face greatest challenge. Their aim is finding the right local suppliers and service providers while still upholding to their international standards and practice. Horne cites that Kenya has the most developed retail market in East Africa with about 40 percent of retail shopping.
These formal outlets are dominated by, Tusky’s, Uchumi, Nakumatt, and Naivas. Growth is felt in Uganda, Tanzania, and Rwanda. Horne anticipates increase investments into retail in the region, as consumers become more sophisticated and demand a wider variety of new products, brands and technology.