IS MITUMBA BUSINESS PROFITABLE?
There is never a fixed amount of revenue that you are expected to get.
With mitumba business, you can make a profit of more than 50% of the buying price with a suitable location with many customers like near colleges or in market centers.
The startup cost is low and you can start with little capital and grow your business over time.
Its expenses are less since you only need to pay for licenses and permits. You can opt to sell from a store, open market centers or online.
Mwangi, who asked me not to use his real name, has been a mitumba distributor since 2011 when he took the business over from his mother. “I am a textiles importer,” he says. Textiles are items like clothes, beddings, towels, curtains, dish and table clothes.
He describes the journey once the clothes are given over for export to third world countries. Export companies buy what doesn’t go to charity, for up to 0.90 cents USD (Sh.91) per kilo. The items are then sorted, graded, fumigated and packed for export.
“Once they have been processed, the second-hand clothes are packed into 45-kilo bales. Each bale is graded,” he says.
Grade A items are in near-new condition. Grade B items are gently used and in good condition. Grade C goods have minor defects. Grade D clothes have major defects. These companies are in business with local guys like Mwangi.
“The bales are packed into a standard 40-foot container. One container takes 550 bales,” says Mwangi. That’s 25 tonnes of clothes.
Mwangi is based at Gikomba Market, the largest second-hand market in East and Central Africa, and the core distribution point for mitumba merchandise in the country.
His store is a simple timber and mabati structure with a concrete floor. It’s hard to believe that he deals in goods worth millions. Bales run the length and breadth of his shop.
“I buy the 40-foot container for 50,000 USD (Sh.5 million). I have a shipping company so my suppliers in Canada and Australia load it into our ship.
I used to import from China but not anymore, their quality was not good.
It takes between four weeks to seven weeks for the container to get to the port of Mombasa. I have my agent who clears the consignment for me,” he says.
“A 40-foot container costs around Sh.1.5 million to clear.”
Mwangi pauses to speak to some retailers who have come to buy bales. Mwangi tells them that another shipment is on the high seas, and that it won’t get here until next month. They leave, disappointed.
Which brings us to another reason the business is profitable: no taxes are levied on the items you and I purchase.
Githii Mburu, a deputy commissioner at KRA (Kenya Revenue Authority), says, “We don’t collect taxes from the people who sell mitumba, unless that business is registered for VAT. All taxes on mitumba are collected at the point of entry only. The mitumba sector is an informal economy that is yet to be brought into the tax net.”
Mwangi continues, “We load the container onto a truck then it heads for our warehouse in Industrial Area, where it will be offloaded. I keep all the bales there.
My rent for the warehouse is Sh.80,000 per month. I move the bales from the warehouse to my store in Gikomba. I pay Sh.20,000 per month for this space in Gikomba. My customers come to collect the bales from here.”
“A bale costs anywhere between Sh.1,500 to Sh.50,000,” Mwangi says.
“The cheaper bales are for items that aren’t in high demand like ties and men’s coats. The expensive bales are for trendy items of camera 1 and 2 – items like designer jeans and jackets.”
In Gikomba, says Mwangi, the lingo for the grades is ‘camera 1’ for Grade A, ‘camera 2’ for Grade B, ‘camera 3’ for Grade C and ‘wa kufagia’ for Grade D.
Mwangi can sell up to 100 bales in a day. That’s upwards of Sh1.5 million.
But he considers himself a small businessman; there are some who ship in up to three containers a week, others more.
It takes him about two months to sell all the bales from one container, which is around the time another consignment lands in Mombasa.
The mitumba business employs a sub-structure of support. There is a whole other industry of fundis who repair clothes and shoes. There are people who steam-iron the clothes. There are transporters, security… the buffet is endless. The cost of these services range from Sh.20 to Sh.200.
Below Mwangi are brokers who deal in the trade of buying then opening the bales to sell individual pieces to retailers. Breaking the bales, it’s called, and it runs on priority basis, with ‘camera 1’ being given the first priority to select items from the opened bales, then ‘camera 2’ and so on.
By
Timothy Angwenyi
Business Consultant
Justine Nyachieo
Business Man & Mentor
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