The unintended consequences of clothing donations
Acton Institute Powerblog

The unintended consequences of clothing donations

A recent article in the Wall Street Journal focuses on the market for the global clothing donation and recycling industry, centering on the trade from the United States to India. One of the most immediately striking elements of the piece are the photographs that accompany it, featuring piles and piles of used clothing on large trucks and people picking through the mountains of fabric taller than they are. The quantity of donated clothing is astounding.  These pictures show a fraction of the total exports of second-hand clothes each year, which measured an estimated 860,387 tons in 2015.

However, nobody in India will wear the donated clothing. Though India allows the processing and repackaging of such donations for resale, India has banned the resale of donated clothing within its own borders. India, like many other countries around the world, perceives the threat that the large influx of used clothing poses to local textile and clothing manufacturing industries.  In response, the country, like many other developing nations that receive clothing donations, has attempted to protect its textile and clothing manufacturers with such a ban.

This system has benefitted India – many people make a living processing and packaging the clothing, and the legal protections have protected the local textile and clothing manufacturing industries. The cost of buying second-hand clothing from American charities or distributers is relatively low, and there is demand for the goods in other countries. However, the system has severely harmed the clothing industries of many developing nations in sub-Saharan Africa, the eventual destination of most of the repackaged second-hand clothing.  

The impact of second-hand clothing sales on the markets of developing countries is visible and hugely negative. Andrew Brooks, the author of Clothing Poverty: The Hidden World of Fast Fashion and Second-Hand Clothes, notes that, while many developing countries in Africa are dependent on second-hand clothing today, several had healthy local industries just 30 years ago.  Explains Brooks:

Many African countries established clothing factories to serve local markets after the end of colonialism to spur industrialisation, as happened in South Korea and China. Unlike their Asian counterparts, African leaders were unable to protect their infant industries and under political pressure from banks and governments in the West, were forced to liberalise their economies in the 1980s and 1990s.

This meant that African clothing factories had to compete with imported goods, like second-hand clothes. Cheaper imported garments flooded African markets and workers in clothing factories lost their jobs. Meanwhile there were falling incomes across the continent due to the debt crisis and the long-term decline in the price of agricultural products, such as cotton. Used clothing imports boomed, forging a relationship of dependency …

Trucks piled with clothes idle on the road in the Special Economic Zone January 7, 2016 in Kutch Gujarat. Dozens of warehouses in the Special Economic Zone in Gujarat handle the sorting and recycling of tons and tons of donated clothes from the west. Allison Joyce for the Wall Street Journal
Trucks piled with clothes idle on the road in the Special Economic Zone January 7, 2016 in Kutch Gujarat.  Allison Joyce for the Wall Street Journal

The destruction of the local garment industries was swift and unforgiving.  The number of people employed in the garment industry in Kenya has decreased from 500,000 to 20,000 since the 1980’s.  In some developing countries, second-hand clothing makes up the majority of clothing sales in the country.  For example, in Uganda, an estimated 81 percent of all clothing sales are of second-hand items. The second-hand market provides some jobs, but the inconsistency of product quality and lack of control over the supply makes for weak employment; many traders in the business call it a totobola, or lottery.  Furthermore, a strong domestic clothing industry is important for overall economic health.  Garth Frazer, a professor from University of Toronto, notes that “no country has ever achieved a sustainable per capita national income” without a strong domestic garment industry (he estimates it at employing 1 percent of the states’ population).

Recently, several East African countries have moved toward banning the sale of second-hand clothing, but the rebuilding of the largely diminished garment industries will require renewed infrastructure, access to inputs such as cotton, and support for reopening factories. However, the United States and the United Kingdom, the largest exporters of second-hand clothing, can also help to mitigate the problem by recognizing the effects of the second-hand donations on other markets and working with the governments and people of impacted countries to reduce the unintended consequences of the donation market.