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Used Clothes as Development Aid: The Political Economy of Rags

  • Göteborgs Universitet, Göteborg, Sverige (Sweden)


Should Swedish used-clothes exports continue to be subsidized as development aid? Theoretical analysis and review of empirical evidence regarding effects of both commercial and charitable (subsidized) used-clothes imports in LDCs. Includes statistics on the world used-clothes trade, including 127 gross used-clothes- exporting countries and 181 importing countries in 1990 (with values, weights, average prices, and weights-per-capita), and some specifics of U.S. and Swedish imports and exports. Discussion of images of the trade in labor and popular media; trends in national trade policies and practices; NGO attitudes and involvement; similar issues with food aid; and excerpts regarding the trade in 18th century Britain. Conclusion: Greater benefits are possible for poor people with a more imaginative approach. Poor people who need clothes need many things. Used clothes can be sold and the proceeds used, along with erstwhile subsidy funds, for income-generating projects. A possible exception: if supply has broken down due to catastrophe, and clothing is not available in the market.
Rick Wicks
Arne Bigsten
Department of Economics
Göteborg University
Göteborg, Sweden
February 1996
Report of a study for Sida
email addresses:
Used Clothes As Development Aid
Four possible positions vi
Our plan of analysis vii
Possible empirical questions vii
Theoretical questions ix
The organization of the report ix
Our conclusions x
Worldwide textile and clothing trade, including Third World exports 1
Worldwide gross and net used-clothes exports, 1984-’93 2
Twenty-four net used-clothes exporting countries, 1984-’93 3
Gross exports of 127 countries or trading territories in 1990 4
Commercial used-clothes exporters: the “rag merchants” 5
Charitable used-clothes (and other) exports 7
Sweden’s used-clothes collections, exports, and imports 8
Summary and conclusions 10
Ninety net used-clothes importing countries, 1984-’93 11
Gross imports of 181 countries or trading territories in 1990 11
Distribution of used clothes in Rwanda 12
Distribution of used clothes in Zambia 13
Summary and conclusions 16
Popular images: producer organizations, labor unions, and the mass media 22
A possibly more balanced, African media view 23
National government used-clothes trade policies and practices 24
Summary and conclusions 25
The naked truth (1988): PS and UFF used-clothes exports to Mozambique 28
Another slightly out-of-date example: the Swedish Red Cross (1992) 31
Combining commercial used-clothes sales with development projects (UFF) 32
Non-Swedish and international NGO attitudes towards used-clothes exports 35
Commercial “for-profit” involvement in used-clothes collection and distribution 36
Summary and conclusions 37
Initial assumptions: Perfect markets (full employment of resources), free trade 39
Why are used-clothes imports welfare-maximizing? (Real goods are real income) 41
Our analytic strategy 42
Government support via production subsidy to capture positive externality 42
Other arguments for protection of infant industries 43
Production subsidy effects on exporting, and benefits 43
Less than fully functioning markets: Unemployment 44
Government support via import tariffs 44
The negative side-effect of tariffs 44
Less than fully functioning markets: Unemployment again 45
Conclusions 45
Haggblade’s analysis of the economic effects of used-clothes imports in Rwanda 47
Global extensions of Haggblade’s analysis, including a multi-market model 48
Conclusion 49
Report of a study for Sida
LDCs: Hansen’s study of used clothes in modern Zambia 51
The re-use of second-hand goods in modern industrial countries 52
Lemire’s study of the used-clothes trade in eighteenth century Britain 52
Used clothes for disaster relief 53
Conclusions 53
Introduction of a freight subsidy 55
The positive externality (infant industry) argument again 57
Less than fully functioning markets: Unemployment yet again 57
Distributional effects: Benefiting the poor 58
Import subsidy effects on exporting, and benefits 58
If there is no domestic clothes production 59
Dumping, and other cautions regarding who gets the subsidy, and how 59
Conclusions 60
The cost of the freight subsidy 61
The alternative cost of the freight subsidy: Cash 61
Best use of the cash 62
Best use of the clothes 62
Situations where freight subsidies would be warranted: Catastrophes, no supply 62
Conclusions 64
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Table A1: Twenty-four net used-clothes exporting countries, 1984-’93 A-5
Table A2: Some 1984 used-clothes exporters (19) and importers (51), with net weights and
values, and average prices; ranked by net value of exports or imports A-6
Table A3: 1990 world used-clothes gross exporters (127) ranked by value, with reported
and imputed weights, value and weight shares of total, weights per capita, and
average prices A-8
Table A4: 1990 world used-clothes gross exporters (127) ranked by weight per capita, with
values, reported and imputed weights, value and weight shares of total, and
average prices A-11
Table A5: 1990 world used-clothes gross exporters (127) ranked by average price, with
values, reported and imputed weights, value and weight shares of total, and
weights per capita A-14
Table A6: 1994 recipients of Swedish used-clothes exports (89) ranked by weight, with
values, prices, and weight-shares A-18
Table A7: 1994 recipients of Swedish used-clothes exports (89) ranked by value, with
weights, prices, and value-shares A-20
Table A8: 1994 recipients of Swedish used-clothes exports (89) ranked by price, with values
and weights A-22
Table A9: 1994 sources of Swedish used-clothes imports (16) ranked by value, with
weights, prices, and value-shares A-25
Table A10: Ninety net used-clothes importing countries, 1984-’93 A-26
Table A11: 1990 world used-clothes gross importers (181) ranked by value, with reported
and imputed weights, value and weight shares of total, weights per capita, and
average prices A-28
Table A12: 1990 world used-clothes gross importers (181) ranked by weight per capita, with
values, reported and imputed weights, value and weight shares of total, and
average prices A-32
Used Clothes As Development Aid
Table A13: 1990 world used-clothes gross importers (181) ranked by average price, with
values, reported and imputed weights, value and weight shares of total, and
weights per capita A-36
The practice of netting imports and exports, and correlation of prices A-41
Table A14: Correlation of import and export prices, 1984-’93 A-41
Table A15: Comparison of 1987 import and export prices by country (US$/kg) A-42
Miscellaneous minor problems A-43
The origin of markets, and their social and political context A-45
Doubts about the “evils” of the used-clothes trade, and about proposed solutions A-45
ILO draft resolution on increasing world trade in clothing (except used clothing) A-49
A labor media (Free Labour World) image of the used-clothes trade A-49
A Canadian media (Ottawa Citizen, 1993) image of the used-clothes trade A-50
Spain and some former Spanish colonies A-53
Other industrial, transitional, and new industrial economies A-55
Other less-developed countries A-55
The textile industry in Senegal A-57
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Are Swedish NGOs effectively targeting “the poorest of the poor”? A-61
Two 1992 studies of Swedish Red Cross used-clothes practices A-62
Possible types of food aid (or used-clothes aid) A-67
Arguments for and against food aid
An empirical study of food for work in Kenya A-68
Disincentive effects of food aid A-69
Another point of view on food aid A-70
Some suggested guidelines for food aid A-71
Report of a study for Sida
Table 0: Qualitative effects of used-clothes imports, and of subsidies thereon vi
Table 1: Leading traders in textiles and clothing, 1993 (US$billions) 1
Table 2: 1984 world textile and clothing exports, including those to and from LDCs (US$billions) 2
Table 3: Index numbers of textile and clothing production, 1973-’85 (1980=100) 2
Table 4: Worldwide gross and net used-clothes exports, 1984-’93 3
Table 5: U.S. exports and imports of used clothes and rags, 1984-’93 (US$1000s) 6
Table 6: U.S. private charitable exports, including food, wearing apparel, pharmaceuticals, and all
other goods, 1990-’94 (US$1000s) 7
Table 7: Sweden’s 1992 production, import, export, and net supply, of fiber, yarn, fabric, and clothing
(1000 kgs) 8
Table 8: Sweden’s 1994 used-clothes collections, resales, and exports (1000 kgs) 9
Table 9: Sweden’s used-clothes exports, 1984-’94 9
Table 10: Qualitative effects of used-clothes imports, and of subsidies thereon 19
Table 11: 1986 and 1987 used-clothes exports to Mozambique, by price 30
Diagram 1
: Domestic new clothes (with production subsidy) 40
Diagram 1
: Imported new clothes (with domestic production subsidy) 40
Diagram 1
: Imported used clothes (with domestic production subsidy) 41
Diagram 2
: Imported used clothes (showing welfare gain with freight subsidy, and its cost) 55
Diagram 2
: Domestic new clothes (showing welfare loss with used-clothes freight subsidy) 56
Diagram 2
: Imported new clothes (showing welfare loss with used-clothes freight subsidy) 56
Diagram 3
: Domestic new clothes (with exports, and used-clothes freight subsidy) 59
Diagram 4
: Imported used clothes (catastrophe = no supply—showing welfare gain, and its cost) 63
Used Clothes As Development Aid
What is the nature of used clothes? Are they cheap goods being dumped unfairly,
disrupting local markets and destroying local production and jobs? Or are they
resources, like fish from the sea or oil from the ground, that can be used to improve
people’s lives?
These questions bring up some of the most fundamental issues in aid and
development. Should we send used clothes to be given to people in the Third (or
Second) Worlds, or should we help people there to make or buy their own clothes? The
latter might seem preferable in many ways, but is it possible that giving people used
clothes might also enable them to increase their productive power?
We have been asked to consider the economic effects of the commercial and charitable
import of used clothes, and other used goods,
from industrial countries to less-
developed countries (LDCs), and specifically whether, in the light of those effects, we
would recommend that the Swedish International Development Cooperation Agency
(Sida) should, or should not, continue subsidizing freight and related costs for used-
clothes exports by Swedish non-governmental organizations (NGOs).
Expressing our terms of reference
schematically, we are asked to consider the
following questions:
1. What is happening in world used-clothes trade?
2. What are the economic effects:
a. of used-clothes imports in less-developed countries?
b. of subsidizing used-clothes exports from industrial countries?
3. Should Sida subsidize such exports?
Other used goods and materials that are sometimes WUDGHG internationally include cars, engines, busses and
airplanes, etc.; tires and tire cases [625.9]; waste and scrap iron, steel and other metals [282]; scrap
unhardened rubber [233.2]; waste paper and paperboard [251.1]; rags [269.02]; and waste and scrap
photographic film. [The numbers in brackets refer to the Standard International Trade Classification,
Revision 3; used clothes are 269.01; other used goods are not distinguished from new goods in
international trade statistics.]
Besides food [9802.1] and used clothing [9802.3], other goods that are sometimes GRQDWHG internationally
include surplus (out-dated) pharmaceuticals [9802.2] and school supplies including books, used sporting
equipment, used bicycles, used computers, and used agricultural or medical equipment. [These numbers
in brackets refer to the U.S. Census Schedule B classifications for U.S. charitable shipments only;
international data does not distinguish charitable from other shipments.]
6WLOO RWKHU used items traded internationally include production machinery and occasionally even entire
industrial plants. Other second-hand goods traded primarily in domestic markets include old phonograph
records and all kinds of household articles.
There is much more literature extant regarding second-hand machinery in development (such as used
agricultural or medical equipment, that Sida might also consider subsidizing), than there is literature
regarding second-hand clothing, but as the issues raised seem quite different from those relating to
second-hand clothing, we have not explored this channel. Clothes generally can be produced in the
recipient country, whereas there may be no industry producing similar agricultural or medical equipment
at present, and no likelihood of one developing in the near future. Thus the issues raised by such exports
are quite different—emphasizing, for example, appropriateness of technology, maintenance, and spare
parts—and they should probably be dealt with in a separate study, if interest warrants. For this reason, we
will neglect them for the remainder of this report.
An English translation of the terms of reference is attached as Appendix 1.
Report of a study for Sida
We will answer question 1 in Part I, including a look at the general context of the used-
clothes trade: producer, labor union, media, and government reactions to it—regardless
of the basis of those reactions in economic analysis—as well as NGO attitudes towards
and participation in it. We will answer the two parts of question 2 in Parts II-A and II-B,
respectively. We will discuss question 3 in Part III.
The two parts of question 2 above (what are the economic effects of used-clothes
imports in general, and of subsidizing exports in particular?) can evoke analysis and
response in various ways. A table of four possible sets of simple answers might look like
effects of: 1 2 3 4
used-clothes imports good good bad bad
subsidies thereon better bad good worse
(not the best) (in catastrophes)
The two extreme columns in the table (columns 1 and 4) might be thought of as
representing two diametrically opposed positions:
one position (column 1: used-clothes imports are good, and subsidizing exports is
better) might advocate re-use of used clothes as a simple and direct development
another position (column 4: used-clothes imports are bad, and subsidizing exports is
worse) might seek to ban used-clothes imports (or exports)—or to impose high tariffs
on them—and certainly not to subsidize them!
Sida and the organizations currently receiving subsidies are perhaps more familiar with
the first position, which we will review briefly in Part I while exploring more extensively
the other “extreme” position, which may be less familiar. The following quote may give a
sense of the feelings attached to the position represented in column 4:
FRQYHUWLQJ LW LQWR FDVK´—Neil Kearney, general secretary of the Brussels-based
International Textile, Garment and Leather Workers’ Federation
Between the extremes are two possible middle positions:
One position (column 2: used-clothes trade is good, but subsidizing such trade is bad
or, at least, not best) could represent the most common point of view of classical
economics (assuming simple, “ideal” conditions); while
the other position (column 3: the used-clothes trade might be bad—if it increases
unemployment and hinders development, for instance; but subsidizing it—in the case
of catastrophes, for instance—might be good) could represent a realistic economic
analysis under more complex conditions.
Of course, generalizations are difficult; for instance, some who would propose to ban the commercial
used-clothes trade might be willing to allow charitable imports of used clothes, to be given away only to
those who are too poor to enter the market. But then what is to keep the recipients from selling on the
market the clothes they received for free? In that case, there would be the same (or similar) disincentive
effect on local production as if the used clothes were imported and sold commercially in the first place, so
it seems that a more logically consistent position would be to ban all imports.
Used Clothes As Development Aid
The following quote may give a sense of the feelings attached to at least the first part of
the position represented in columns 1 and 2:
president of Trans-Americas FSO Inc. (a commercial used-clothes exporter), Brooklyn,
New York
Part I explores all these positions: as adopted by producer organizations and labor
unions; as depicted in the media; as represented by government trade policies and
practices; and as expressed by various Swedish and international NGOs. Parts II-A and
II-B are devoted to economic analysis as a basis for taking one of these positions.
To discover where on the table above we believe the correct answers lie, we break the
two parts of question 2 above into the following four questions:
1. Is there overall net economic benefit, or damage, from used-clothes imports in
2. If there is no evidence of overall net damage from imports in general, we must still
consider the particular effects of subsidizing used-clothes exports—that is, do
subsidies introduce damaging distortions, either in general, or in any special
3. On the other hand, even if there is evidence of overall net damage from imports in
general, might there still be special situations in which subsidizing used-clothes
exports would be beneficial?
4. Finally, even if we find no overall net damage, or only minimal or uncertain damage,
from subsidizing used-clothes exports, either in general or in any special situations,
we must still ask, are such subsidies the most efficient use of scarce development
aid resources (both the funds used for subsidies, and the clothes themselves)?
To analyze fully just the first of these questions, regarding the degree of economic
benefits or damages resulting from used-clothes imports, we would probably need
extensive empirical work to answer all the following questions:
1. In the absence of used-clothes imports, to what extent would demand for clothing be
met from domestic production of new clothes, and to what extent would it be met
from production of new clothes in industrial or new industrial economies?
2. To what extent would demand for clothes not be met at all? That is, to what extent
are people “too poor to enter the market”? (In such cases, do they literally go naked,
or what do they wear?)
3. To what extent is domestic production exported? What are the prospects for
exporting domestic production in the future?
4. Is there unemployment? How well are factor markets working, and how easy is it for
resources (including labor and physical capital) to shift to other occupations or other
5. To what extent are imported used clothes, domestically-produced new clothes, and
imported new clothes, substitutes for one another? That is, what are the cross-price
elasticities between these three sectors?
6. Do used-clothes imports reduce demand for locally produced clothes, thus reducing
employment and incomes directly?
Report of a study for Sida
7. Do used-clothes imports hurt the prospects for future local clothes production by
reducing demand that would otherwise be an incentive for local production?
8. Do used-clothes imports affect growth—and thus employment and national
income—via the loss of any positive externalities associated with such production?
That is, for instance, do textile and garment production teach skills that are
especially useful for further development?
9. How much do used-clothes imports increase employment, income, and growth, both
in the used-clothes sector and in other unrelated sectors, and how do they affect
income distribution?
Incidentally, to the extent that new clothes may be imported from one less-developed
country to another, used-clothes imports to the latter may not damage production in that
latter country—if there is no production there to damage—but they may damage
production in the former country. In either case, less-developed country production is
damaged. This consideration must be understood to apply, not only to clothes
production itself, but also to the fiber and textile production which preceded it. Thus, in
the questions above:
“Production” must be understood to include not only garment production as such, but
also the prior fiber and textile production; and
“Local production” or “domestic production” must be understood to include production
not only in the particular less-developed country under consideration, but also in any
other less-developed countries. “Imported”, on the other hand, must be understood to
mean from industrial or new industrial economies.
Thus, to begin with, we would need a thorough empirical study of the effects of
importing used clothes generally. Then, in order to answer, the second and third
questions in our plan of analysis above, we would need answers to a further set of
empirical questions regarding the specific circumstances in which subsidized used
clothes were being distributed or sold, including the specific operational methods of all
relevant projects, etc. Possibilities we would have to study in detail range from free
distribution in disaster situations, or free distribution to the poor generally (or perhaps
only to those too poor to enter the clothes market at all), to selling cheaply to the poor,
or selling at maximum profit to maximize funds for other development purposes.
However, we are not engaged in an empirical study; we have not been asked to
conduct a field study ourselves.
The terms of reference for the project do ask questions
about the details of Swedish NGO involvement in the overseas distribution of used
clothes, but we have not found it feasible to pursue these questions very far. We have
not been encouraged to seek current information about specific projects or NGOs
receiving such subsidies. Rather, we have been asked primarily to review existing
economic literature, and to present a broad theoretical analysis.
We do include some data on Swedish NGO collections of used clothes and resulting
exports, however. We also include extensive analysis of several Scandinavian studies
on used-clothes exporting organizations. Further, we have discussed this report and its
conclusions, in draft form, with several of the relevant organizations. But we have not
attempted an exhaustive look at the project methodologies of all the Swedish NGOs
exporting used clothes, which would take us far afield.
Which, incidentally, we do not believe is necessary for the present purpose.
Used Clothes As Development Aid
Anyway, looked at theoretically rather than empirically, the problem actually becomes
much simpler. Although we will explore theoretical (and to some extent, empirical)
analyses of the first three questions in our plan of analysis above—regarding the
economic effects of imports in general, and of subsidies in particular—in fact it will turn
out that it is only the last question that matters, concerning efficient use of scarce
development aid resources. We can state that concern more explicitly in the following
1. What are the alternative uses of the development funds available for freight aid?
What is the best use of the development funds?
2. What are the alternative uses of the used clothes available for export? What is the
best use of the used clothes?
3. In summary, would the intended beneficiaries rather receive subsidized used clothes
or, using the available resources, is some greater benefit possible?
To elaborate a bit, the most important effect of subsidizing used-clothes imports—and
the effect most often neglected—is that it preempts whatever alternative uses of the aid
funds and of the clothes there might have been. If the intended beneficiaries would
rather have cash or something else, rather than whatever used clothes they might
receive via subsidized imports, then it might not matter if there are no negative effects
from used-clothes imports in general, or from subsidizing them in particular; even if
there were demonstrable overall positive effects from subsidizing used-clothes imports,
still greater alternative benefits might be possible, and would thus be desirable.
We will start in Part I by looking at the facts of used-clothes exports (Chapter 1) and
imports (Chapter 2), both worldwide, and in and out of Sweden in particular. We will
note the relative importance of textiles and clothes from less-developed countries in
industrial country imports, and the relative importance of used clothes in total world
textile trade. We will examine the nature of imported and exported used clothes (in the
same country), and note that they are usually quite different markets. Finally, we will
see where most exports originate, and where most of them go, and we will note which
countries export or import the most per capita, and which ones receive or pay the
highest and lowest prices for their exports or imports.
Once we have an understanding of what is actually happening in world used-clothes
trade, it will be helpful to understand how powerful forces in the world are already
responding to that trade. Thus in the last two chapters of Part I we will look at some of
the social and political factors which might lead individuals, organizations, and
governments to take the extreme positions we have already discussed, while reviewing
more fully all four positions expressed in the table above. In Chapter 3 we will look at
some producer-organization damage estimates and at some labor union documents; at
some extreme and more moderate media descriptions of the used-clothes trade; and at
government trade policies and practices around the world. In Chapter 4 we will look at
some Swedish and international NGO attitudes and practices—including some possible
alternative policies, and controversies regarding them.
Then we begin our own analysis. Part II-A—which focuses on commercial used-clothes
imports in general (not on subsidies)—is divided into three chapters: Chapter 5 is totally
theoretical; Chapter 6 is based on an empirical study in Rwanda, which unfortunately is
a very special case; and Chapter 7 is a brief but wide-ranging sociological and historical
Report of a study for Sida
review of the re-use of used clothes. Though somewhat ambiguous, the conclusions
tentatively reached in the first (theoretical) chapter are basically corroborated in the
second (empirical) one, and in the final sociological and historical review as well.
Part II-B consists of two theoretical chapters: In Chapter 8 we look at the direct impact
of subsidies, without regard to their cost, or to any possible alternative uses of the aid
funds. Then in Chapter 9 we consider alternative uses of the aid funds, and of the
Part III summarizes the previous sections briefly and then outlines our policy
recommendations. Various Appendices are also attached, including statistical tables
and fuller explorations of issues too lengthy for the main text, as well as References and
numbered Source Notes.
Any of the chapters can be read independently of any or all others. Except for the
general point that the commercial market for used clothes seems to be working quite
well both internationally and within most LDCs, none of the parts or chapters is really
crucial to our argument, except for the last chapter of Part II-B (Chapter 9).
Nevertheless, because the larger context is both fraught with emotion and little dealt
with in serious economic literature, we believe it is worthwhile to take this opportunity to
explore the full context of the used-clothes trade somewhat thoroughly. Those who wish
to focus only on the most specific question we have been asked—whether Sida should
continue to subsidize used-clothes exports—should feel free to skip straight to Chapter
Based mostly on economic theory, and thus having abstracted from most (but not all) of
the messy details, we will come to rather clear conclusions:
1. In a simple ideal world, used-clothes imports would result in net welfare gains.
2. In the real world, where there may be positive externalities associated with clothes
production, and where markets may be less than fully functioning so that there may
be chronic high unemployment, then used-clothes imports may result in net welfare
3. The exceptions, where used-clothes imports would not result in net welfare losses
(or perhaps in any welfare losses at all), would be if there is no supply, or if there is
no effective demand.
4. Even if there is no effective demand (so that people are too poor to buy clothes),
there are probably more effective uses of scarce development aid resources, and
thus more effective ways of helping the poor, than subsidizing used-clothes exports.
5. If there is no supply, subsidies may be justified on humanitarian grounds.
Thus we will ultimately come to the conclusion that possible damage from imports, and
probable better uses of aid funds, militate against freight subsidies in almost all
situations; we believe that there are generally—but perhaps not always—better uses for
scarce development aid funds than subsidizing used-clothes exports.
But we want to be clear about several points:
1. While economic theory is fairly clear, empirical studies tend to be somewhat murkier;
we acknowledge that, in many cases, the situation may be far from clear in practice.
At least in the short run, and unless countered by increased exports of domestically-produced new
clothes, and/or possible production subsidies.
Used Clothes As Development Aid
2. While we believe in recycling and re-use wherever and whenever feasible, and we
empathize with individuals and NGOs in Sweden who have used clothes available
and who want to assist development processes in Second and Third World
countries, we believe it is important to understand both the real and the perceived
potential for damage from used-clothes imports. Consequently, we will spend some
time exploring union and media images of the used-clothes trade.
3. But we want to be clear that we have no sympathy for the view that valuable goods
such as used clothes, and the labor and materials embodied in them, should be
wasted, with garments burned, for instance, or reduced to raw fibers, in order to
increase possibilities for employment. Far better employment-generating solutions
exist. While we empathize with those in less-developed countries who believe that
their industries are being harmed by cheap used-clothes imports, we do not
generally believe in protection against imports, and we would not want to be
misinterpreted as advocating such protection. (Making factor markets work better, so
that capital and labor can find alternative employment, and producing for export, are
better responses.) Consequently, we will spend some time exploring the general
pattern and recent history of trade regulations worldwide, which will demonstrate that
there is no trend towards increased protection in this area.
4. Finally, while we empathize with those who might desire that the very clothes which
they have donated, collected, or sorted, might be given (with the help of freight
subsidies) directly into the hands of the people in greatest need, we want to point out
that there may well be greater benefits possible for those people, derivable from
alternative uses of both the used clothes and the development funds available.
Consequently, we will spend some time exploring some of the problems inherent in
direct subsidized delivery, and some alternatives.
So, in summary, we shall conduct a largely theoretical exploration of the effects of used-
clothes imports in general and of subsidies in particular, with concern not only for
market effects, but also for social and political ones. We shall not look much at the
specifics of Sida-funded projects, but we shall describe the used-clothes trade in
general (including its broad context), which is how we will begin.
Report of a study for Sida
Arne Bigsten wrote the basic theoretical argument in Chapters 5, 8, and 9, while Rick
Wicks elaborated and embellished it, and wrote the rest. We would like to especially
acknowledge the following people for their support and assistance in the conduct of this
Eva von Oelreich of Svenska Röda Korset (the Swedish Red Cross),
Göran Larsson of Praktisk Solidaritet (Practical Solidarity),
Merete Schiøler of the UFF federation (Development Aid from People to People),
Arne Sjöberg of Myrorna/Frälsningsarmén (the Salvation Army),
Steven Haggblade, author of a major previous economic study,
Karen Tranberg Hansen, author of a major sociological study, and
Robert Thompson, who found some of our sources as part of a preliminary
investigation for Sida.
We also gratefully acknowledge the assistance of many others who took an interest in
the study, including all who are identified as sources herein. Magnus Lindell of Sida
gave excellent guidance. Ellinor Garbring translated sources from Swedish, read
successive drafts very carefully, and offered many helpful suggestions.
Cause and effect, chain of events,
all of the chaos makes perfect sense.
When you’re spinning round, things come undone —
welcome to Earth, third rock from the Sun!
We are not sure that everything makes perfect sense, but it is clear that, especially in
this complicated world, things can come undone, and the chains of cause and effect
bear close scrutiny.
Used Clothes As Development Aid
To begin with, in order to understand the context for world trade in used clothes, it will
be helpful to have some sense of total trade in new textiles and clothing, including
production trends.
Table 1 (below) shows that the total 1993 trade of just the top six
exporters and importers was in the range of US$50-100 billion in both textiles and
value value value value
Germany 11.9 Hong Kong 12.8 Hong Kong 21.0 United States 35.6
Hong Kong 11.2 Germany 10.4 China 18.4 Germany 22.5
Italy 10.0 United States 8.9 Italy 11.8 Japan 12.6
South Korea 9.0 China 7.6 Germany 6.7 Hong Kong 11.8
China 8.7 United Kingdom 6.1 South Korea 6.2 France 8.6
Taiwan 8.2 France 6.0 United States 5.0 United Kingdom 7.4
total 59.0 total 51.8 total 69.1 total 98.5
Source: WTO Focus, No. 1 (Jan.-Feb. 1995), p. 2.
As we will soon see (Table 4, below), total world used-clothes trade in 1993 amounted
to only US$0.78 billion, or less than 1% of just these top six textile and clothing
exporters and importers; thus it was clearly a much lower percentage of total worldwide
textile and clothing trade, when all countries are considered.
Several of the leading exporters of textiles and clothing shown in the table above are
new industrial or less-developed economies (Hong Kong, South Korea, China, and
Taiwan—Hong Kong and China are also major textile importers). There are also many
other major textile and clothing exporters among the less-developed countries (LDCs) of
the world, including Turkey, Thailand, Indonesia, and India, among others.
By contrast,
none of the top fifteen importers of new clothing in 1992 were LDCs.
Table 2 (below) shows that, by 1984, LDCs were already exporting far more textiles and
clothing to industrial countries (US$27.4 billion) than they were importing in return
(US$11.9 billion). Even if we were to add used clothes to the industrial country exports,
the LDCs as a group would still have a large trade surplus in textiles and clothing.
The trend in the last several decades has generally been for a decreasing share of
production of textiles and clothing in industrial countries, and for an increasing share of
production in, and exports from, LDCs. These trends are vividly illustrated in Table 3
(below), for the period from 1973 to 1985, with 1980 as the base year, with index value
We do not have figures on total world production of new textiles and clothing, nor on total world re-use of
second-hand textiles and clothing, both of which types of data would probably be almost impossible to
obtain accurately in any event. But we do have international trade data, which is collected at borders for
various reasons, and is generally considered to be fairly accurate for most purposes.
Report of a study for Sida
exports of exports of exports of industrial LDC
industrial LDC centrally total country exports to
market market planned world exports industrial
economies economies economies exports to LDCs countries
textile fibers 10.8 4.4 2.5 17.7 2.7 2.1
yarns and fabrics 33.9 14.5 5.5 53.9 7.3 6.3
clothing 18.7 21.8 5.3 45.8 1.9 19.0
totals to and from LDCs 11.9 27.4
Source: UN Centre on Transnational Corporations, p. 2.
of 100. While industrial country production of textiles declined dramatically and then
recovered only partially, LDC production increased consistently throughout the period;
and while industrial country production of wearing apparel generally declined, LDC
production increased not only consistently, but spectacularly.
1973 1975 1982 1983 1984 1985
industrial market economies 103.3 91.4 93.0 94.8 96.1 97.0
LDC market economies 83.7 87.5 100.9 104.4 108.4 112.1
industrial market economies 101.3 96.6 94.5 94.2 95.5 94.5
LDC market economies 76.5 84.3 104.9 107.4 114.9 116.3
Source: UN Centre on Transnational Corporations, p. 3.
Note: Wearing apparel includes footwear and leather goods, in addition to clothing.
There is no indication that these trends have done anything other than continue and
accelerate in the decade since 1985: Indeed, from 1986 to 1989, while industrial
country clothing exports went up 37%, LDC exports went up nearly 64%; and from 1986
to 1992, while the industrial countries’ share of world clothing exports fell from 28% to
22%, the LDC share went up from 62% to 74%.
With the Uruguay Round of GATT negotiations and the resulting elimination of the Multi-
Fiber Agreement, the incorporation of textile trade into GATT and the World Trade
Organization, and further liberalization of trade rules, one can only expect the trends to
continue. As industrial countries increasingly open their markets to clothes exports from
the Third World, it almost seems fair that LDCs open their markets in return—and in fact
this is what is generally expected under the recently concluded Uruguay Round
agreements of the GATT/WTO.
International trade in used clothes has also been consistently growing over the last
several decades, with dramatic increases in the early 1990s (see Table 4, below). Total
weight rose to at least 722,722 metric tons in 1993, and total value to over
WTO Focus No. 1, January-February 1995, reports that the WTO agreements provide for “the eventual
elimination of the Multi-Fiber Arrangement”, with “progressive liberalization of trade in textiles and clothing
over ten years”, while “export restraints on textiles and clothing will be dismantled.” Used clothes are
specifically included in the Annex (List of Products Covered) to the Agreement on Textiles and Clothing.
While this may mean that it is expected that restrictions on used-clothes imports will be relaxed over the
next ten years, it also means that “safeguards” can be imposed for a time if excessive damage is caused
by such imports.
Used Clothes As Development Aid
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
39 44 51 52 51 55 55 60 59 50
value (US$1000s) 229,735 241,651 286,211 322,088 360,905 375,370 477,642 532,325 713,186 782,834
reported weight
(1000 kgs)
343,623 350,193 364,413 381,856 442,886 454,622 385,609 439,635 702,479 722,722
average export
price (US$/kg)
$0.67 $0.69 $0.79 $0.84 $0.79 $0.80 $0.89 $0.86 $0.99 $1.05
19 20 19 25 24 20 20 20 26 26
net export value
169,085 178,808 207,823 240,952 268,936 274,726 344,560 379,436 505,852 574,446
Source: Derived from SITC2 data obtained from the United Nations Statistical Division, International Trade Statistics Branch.
Notes: All values for all years are nominal, not corrected for inflation. In addition, some countries still using SITC1 at the beginning
of the period may have begun reporting under SITC2 during the period, so that later figures (both value and weight) may be
inflated for this reason as well. Neither effect should be large on total values or weights, first because inflation of the U.S.
dollar during the period was not especially high, and secondly because countries initially reporting on SITC1 were not major
exporters. Data was obtained in June 1995; data for 1993 may still have been incomplete.
While this trade is quite substantial, it is of course a very small part of total world trade
in fabric and garments.
Haggblade (1990) reported that in 1980, when total world used-
clothes exports were 244,000 tons, worth US$207 million,
used clothes represented
about 7% by weight of total garment-equivalents (fabric plus garments) traded
By value, used clothes accounted for far less, about 0.4%.
As we noted
in discussion of Table 1 (above), the 1993 percentage was probably not much different.
Twenty-four net exporting countries over the period 1984-’93 are shown in Table A1 (in
Appendix 2). The U.S. alone provided 38% of total net exports during the period,
followed by Germany, Belgium-Luxembourg, Netherlands, Japan, United Kingdom,
Italy, Australia, Canada, Mexico, Denmark, and then Sweden, in 12
place, with 0.9% of
total net exports.
Annual data for 1984 (only) is provided in Table A2 (also in Appendix 2), showing gross
exports and imports for the 19 net exporters reporting under SITC2
in that year (and for
the 51 net importers).
Net weights and values are also shown, as are average prices.
Fabric (textiles) is included because its most usual purpose is for garment production (clothes).
For an average export value of $0.39 per pound, or $0.85 per kilogram.
This was the most recent data available for Haggblade’s study; we have not thought it necessary to
update Haggblade’s data in every detail, as we have no reason to expect any radical changes.
Because, of course, weight-for-weight, new clothes or even textiles are worth much more than used
SITC refers to the Standard International Trade Classification, a system of product codes which has now
gone through two revisions (SITC2 and SITC3). Data reported to the UN under SITC2 can be converted
into SITC1, but not vice-versa. Thus SITC1 data can pick up some countries which SITC2 data misses.
Unfortunately, we were first given SITC2 data, and invested a great deal of work in it; rather than
reworking new data for the entire decade, we consider it adequate for the purposes of Tables 4, A1, A2,
and A10. But because countries reporting under SITC1 are missed in SITC2 data, as well as because
some countries’ data is considered of poor quality and thus is not reported by the UN at all, these tables
under-represent total exports (and imports) and the number of exporters (and importers). To correct
these problems, SITC1 data (including partner data, to pick up countries not reporting at all) is used in
most other tables.
At the bottom of the table we note that virtually all (99.96%) of exports by value also had weights reported,
and that nearly as much of imports (91%) had weights reported. Missing weights cause problems in
calculating average prices, but were not an especially big problem in this particular year. A bigger
problem is that, of course, all exports should show up somewhere as imports, but in 1984 only 67% by
weight, and 74% by value, did so (using SITC2 data). The problem, as discussed in an earlier note, is
Report of a study for Sida
This table clearly illustrates the fact that most net used-clothes exporters are also
importers, and many net importers are also exporters: Of 19 net exporting countries, 18
had imports as well; and of 51 net importing countries, 20 had exports. Thus, in that
particular year, although Denmark exported more used-clothes by weight (both gross,
and net) than did Sweden, Sweden ranked 8
by net export value, above Denmark, due
to having a higher average export price than Denmark. A more anomalous case is
Austria, which ranked 32
among net importers by value, but was a next exporter by
weight, exporting almost twice as much as it imported. This was made possible because
Austria’s average import price was almost three times its average export price.
Used clothes are in fact a mixed bag (so to speak), and cannot be treated as a uniform
commodity: It appears that, in very many net-exporting countries, imports are not re-
exported, but are quite a different commodity from exports, with quite a different niche in
the market. This is most obvious when one considers the many cases where import
prices are far higher than export prices, such as Iceland, Austria, Japan, and Ethiopia
(at the bottom of Table A15 in Appendix 3). But it seems equally unlikely that Mexico,
Mali, India, or China (at the top of the same table) were adding sufficient value to
imported used clothes to account for their recorded export prices.
Thus, in attempting to get an overall sense of the worldwide trade in used clothes, in
addition to using SITC1 data and partner data (as discussed in footnotes above), it is
probably more useful to also retain data on both imports and exports for each country,
rather than just netting them out. Gross export tables in Appendix 2 (to be discussed
next) do just that. Similar import tables will be discussed in Chapter 2.
Gross (not net) export figures for the single year 1990, for all countries either reporting
themselves under SITC1, or reported by their partner countries, are shown in Tables
A3-A5 in Appendix 2.
In 1990 there were actually 127 countries or separate trading
territories with exports recorded by the UN (and 181 countries or trading territories with
Thus the re-use of used clothes is clearly a worldwide phenomenon, not a
one-sided export from industrial to less-developed countries.
Comparing Table A3 (1990 gross exports) with the previously discussed Table A1 (net
exports for the whole period 1984-’93), we see that, although a few of the other
countries have changed places, Sweden was in 12
place of gross exports in 1990
that many importing countries were not reporting on SITC2, but rather on SITC1, or not reporting at all.
We will address this problem shortly, using SITC1 data—including trading partners, to pick up those not
reporting at all.
This in itself is nothing unusual: The related problem of netting imports and exports is discussed at some
length in Appendix 3.
No 1990 data was found for the following countries or territories: Anguilla, Bhutan, British Virgin Islands,
Christmas Island, Cook Islands, Falkland Islands, Iraq, Maldives, Marshall Islands, Micronesia, Mongolia,
North Mariana Islands, Palau, St. Kitts-Nevis, Taiwan, Tokelau, Turks & Caicos, and Western Sahara;
the absence of a listing does not necessarily mean that no trade occurred.
Partner data is necessary in the case where, say, an importer does not report at all, or does not report in
a form satisfactory to the UN, but exporters may report exporting WR that country (as trade partner).
Interesting differences can arise in cases where a country reports its own imports and exports, but
partner countries also report exports to and imports from that country; our universal solution was to
assume that the one reporting the higher total value was correct, although in retrospect, this solution was
problematic, because of unrecognized differences in f.o.b. and c.i.f. values.
Nevertheless, the increase in 1990 total export value from Table 4 above (SITC2 data) to Tables A3-A5
(SITC1 data) is not great, about 3%; the increase in (imputed) weight is greater, about 45%.
Used Clothes As Development Aid
(with 1.1% of total exports), just as it was for the decade as a whole. The U.S. was also
in first place, but with only 25.4% of total gross exports.
In terms of weight per capita exported in 1990 (see Table A4), Belgium-Luxembourg
was in first place with 6.6 kgs, followed distantly by the Netherlands with 3.6 kgs, and
then (among others) by West Germany with 1.9 kgs, Denmark with 1.5 kgs, and Austria
with 1.3 kgs. Presumably at least the first two figures reflect the presence of major re-
exports, which is rather rare in the used-clothes trade, as discussed further in Appendix
The U.S. was in 11
place with 0.55 kgs in 1990, and Sweden was in 13
place with
0.43 kgs.
Despite the minor statistical problems discussed in Appendix 3, the gross export and
import tables (Tables A3-A5 and A11-A13 in Appendix 2) should give somewhat more
accurate prices than those reported in Table A2 (in Appendix 2) and Table A15 (in
Appendix 3). Still, the variation is quite astounding: Export prices in 1990 (Table A5)
ranged from highs of US$22.67 (Burma), $15.29 (Israel), $12.53 (Yugoslavia), $10.20
(El Salvador), $9.00 (Madagascar), and $8.86 (Niger), to lows of US$0.27 (Austria),
$0.26 (Nauru), and $0.04 (Mali)! Sweden was in 54
place (US$1.42), and the U.S. was
in 82
place ($0.91).
It is clear that there are large international transfers of used clothes occurring, but we
have not yet explored how this is happening. As reported by Haggblade (1990) and
Hansen (1994) and corroborated by many reports in the mass media, most used
clothes traded internationally are initially donated by individuals to charity organizations
in the industrial countries of North America, Europe and Japan. Most donated articles of
clothing are initially sorted into one of at least three possible categories: those suitable
for domestic resale in local “thrift shops”; those with no value other than recycling the
fiber, for instance into “wiper cloths”; and those suitable for export.
The actual collection and sorting operations may be run by the charities themselves, or
they may contract out these operations to professional management companies. In the
U.S. at least, many thrift shops themselves—as well as the collection and sorting
operations which supply them—are run by professional management companies, and
there is some controversy as to whether the charities in whose names they act are
getting a fair deal, or not.
But in any case, clothes which are judged not suitable for
This probably does not indicate a decline in the relative size of U.S. exports, but rather the fact that
worldwide total JURVV exports are much larger than total QHW exports, so that the U.S. portion of the former
is a smaller share of a much bigger pile.
Data in Table A15 in Appendix 3 is consistent with this hypothesis: Both Belgium-Luxembourg and the
Netherlands show import prices substantially below export prices, in contrast to Sweden and many other
industrial countries, which are presumably importing rather specialized used clothes for use, not for re-
Haggblade (1990) noted that QHW exports from Belgium and the Netherlands peaked at about 0.9 kgs per
capita in the late 1970s (which he took as a sort of empirical hypothetical maximum), and he noted that in
1984 the U.S. exported 0.4 kgs per capita. The figures in the text are gross exports, not net, but neither
the U.S. nor Sweden is a major used-clothes importer, so there is not much difference. U.S. exports (and
Swedish exports also) have continued to climb gradually, and in 1990 were still far from the hypothetical
peak noted by Haggblade. However, rough estimates for more recent years (based on data in Tables 5
and 9, below) show the U.S. exporting over that hypothetical peak level in 1993 (0.99 kgs per capita),
while Sweden in 1994 was far over that level (1.39 kgs per capita).
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resale locally, but which are still judged to have remaining value as clothing, are
generally sold, even by the biggest charities,
to “the rag merchants”.
The rag merchants, as the name suggests, are “the domestic rag industry—a network of
recyclers, rag makers, wholesalers, and used clothing exporters”.
The U.S. Council for
Textile Recycling estimates that there are more than 100 commercial used-clothes
exporters from the U.S. alone.
The appellation “rag merchants”, and even the subtitle
of this paper,
may be a bit misleading, however: Although rags are clearly related to
used clothes, used clothes are actually quite a different commodity,
and at least in U.S.
exports, they are a much bigger (and growing) share of the business than rags, as
illustrated by the statistics in Table 5 (below). The value of U.S. used-clothes exports
has almost tripled in ten years, while rag exports have stayed virtually constant. Thus
the used-clothes share of the total has grown steadily, as it has for imports as well.
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
used clothes 76,714 72,891 84,330 96,457 98,305 98,772 124,774 140,623 197,196 227,977
rags 65,052 60,621 58,658 60,898 65,192 55,356 49,495 47,979 61,381 64,310
total 141,766 133,512 142,988 157,355 163,497 154,128 174,269 188,602 258,577 292,287
used-clothes share 54% 55% 59% 61% 60% 64% 72% 75% 76% 78%
used clothes - - - - - 3,404 4,057 3,647 4,718 5,194
rags 8,564 9,844 8,486 8,040 8,669 10,145 7,470 8,289 6,944 6,166
total 8,564 9,844 8,486 8,040 8,669 13,549 11,527 11,936 11,662 11,360
used-clothes share ? ? ? ? ? 25% 35% 31% 40% 46%
Source: U.S. Department of Commerce, Bureau of the Census, Foreign Trade Division, Commodity Analysis Branch.
Note: The lack of data for 1984-’88 used-clothes imports may not mean that no used clothes were imported; it may simply indicate
missing data.
We have just seen evidence of the same discrimination of quality and potential use
ZLWKLQ the category of used-clothes itself. Observing the great differences in the prices
of used-clothes exports and imports of different countries, we must assume that there
are corresponding differences in quality, and in suitability for different purposes.
Undoubtedly, such differences also exist within the exports (and imports) of any given
Items of clothing which are donated to charities may be reclassified as rags if they are
too worn out, but we will note (in Appendix 5) much anecdotal evidence that many
donated items of clothing are of very fine quality indeed. It is just these differences that
the “sieve-like action” of the commercial rag industry is designed to discover and exploit.
It exploits these differences by directing particular types of clothes to particular countries
at particular seasons, so that those who will value those clothes the most, and will get
the most benefit from them, will in fact have the opportunity to do so. (We leave aside
Like the Salvation Army and Goodwill Industries in the U.S., both of which operate their own chains of
thrift shops and often provide vocational training as project aid in those operations; funds raised from the
sale for export of locally unsalable used clothes also generally go to support the charities’ projects.
Some used clothing may also be given away as project aid to needy individuals locally, but according to
Haggblade 1990 ( p. 510), 75% is estimated to find its way to the rag industry.
“The political economy of rags”.
Used clothes are SITC1 code 267.01, or SITC2 code 269.01, whereas rags are SITC1 code 267.02, or
SITC2 code 269.02. Rags may be used to manufacture “wiper cloths” or may be used or recycled in other
ways; used clothes, on the other hand, are mainly sold to be used again as clothes.
We will shortly see evidence for this assertion with regard to Swedish exports and imports.
Used Clothes As Development Aid
for now the question of ability to pay, to which we shall return much later in the paper.
In the process, naturally, the “rag merchants”—including all the in-country handlers and
dealers yet to be described—presumably maximize their profits. (We will explore in-
country commercial distribution in-depth in the next chapter.)
In any event, the rag industry “sifts, sorts, shuffles, reshapes, bales and ultimately ships
a portion of what it gets overseas as used clothing.
Emerging from the sieve-like action
of the rag industry is second-hand clothing sorted by fabric, garment, and sometimes by
size. Thus individual used clothing bales might contain men’s short-sleeved cotton
shirts, or synthetic dresses, or boy’s shorts, or baby clothes, or blue jeans. The sorting
allows exporters to target countries and seasons, thereby increasing both the value of
their exports and their ability to coordinate demand and supply patterns. After binding
like items together, most commonly in 45-kilogram (100 pound) bales, exporters ship
them abroad by the ton.”
According to all available reports, they generally do not clean
extensively, repair, or restyle clothes for export; these functions are performed in the
destination country, and thus provide employment and income there.
Although most used-clothes exports worldwide are handled through commercial
channels similar to those described above, there are significant charitable shipments as
well. Data on such shipments is not kept separately by the United Nations, nor by other
international bodies, but data for the U.S. alone is given in Table 6 below, showing
recent private charitable shipments of food, pharmaceuticals, and all other goods, in
addition to wearing apparel. Wearing apparel seems to constitute 8-10% of total U.S.
private charitable exports, while the charitable share of total U.S. used-clothes exports
is 17-21%. Because the U.S. is the largest single exporter of used clothes, this data
may give a rough indication of the relative share of charitable exports in total used-
clothes exports worldwide.
1990 share 1991 share 1992 share 1993 share 1994 share
food 13,518 6% 14,354 4% 74,780 17% 35,205 8% 25,455 5%
wearing apparel 21,824 10% 27,546 8% 38,186 8% 38,933 8% 41,589 9%
pharmaceuticals 87,405 39% 123,939 36% 134,461 30% 155,336 33% 181,246 38%
all other goods 100,874 45% 179,081 52% 203,743 45% 237,037 51% 228,003 48%
total private charitable exports 223,621 344,920 451,170 466,511 476,293
total used-clothes exports 124,774 140,623 197,196 227,977 197,327
charitable share 17% 20% 19% 17% 21%
Source: U.S. Department of Commerce, Bureau of the Census, Foreign Trade Division, Commodity Analysis Branch.
Note: Only goods “donated for relief or charity by individuals or private agencies” are included here. Wearing apparel includes
footwear and other wearable items, in addition to used clothes.
The definition of the term “charitable exports” is open to question, however: Many less-
developed countries classify goods as charitable imports only if they are given away
rather than sold; but we will see that much, and perhaps most, used-clothes imports,
even on behalf of charitable organizations, are in fact sold when they arrive in-country.
Thus, although goods may be “donated for relief or charity”, they may in fact be sold
The question we have been asked to discuss is not ZKHWKHU we should help poor people (which we
assume to be the case), but rather, whether subsidizing freight for used-clothes exports is the most
efficient way to do so.
What it FDQQRW sell as used clothes, either domestically or overseas, it may sell as rags.
Report of a study for Sida
initially; it is also suggested by some that most of the used clothes that are, in fact,
given away initially, nevertheless enter the market later.
In 1992, Sweden imported 77,000 metric tons of new clothing (see Table 7, below), and
almost as much fiber, yarn, and fabric (combined).
wool cotton homemade
fiber fiber yarn fabric clothing fabric
production - - 9,030 9,470 ??
imports 420 11,900 24,600 22,300 77,000 -
less exports - - 4,150 10,600 ? -
net supply 420 11,900 29,480 21,170 77,000 ?
Source: Statens Naturvårdsverk (Swedish Environmental Protection Agency), 1995, p. 4 (from SCB).
The Swedish Environmental Protection Agency is concerned to know what happens to
all the clothes, textiles, etc., after people in Sweden have finished using them. They
state the following specific concerns:
“Cotton is the most common raw material for textiles, and cotton is one of the most
pesticide-intensive fibres in terms of its cultivation. Other environmental problems in
traditional cotton growing include high water consumption, soil deterioration, and
competition with food production.
“The textile industry itself is characterized by numerous different mechanical and
chemical processes. A host of different chemicals are used in raw material preparation.
The quantity of chemicals used is also great, in many cases several hundred grams per
kilogram of textile. The processes give rise to a contaminated process water, which can
have high environmental impact.”
The Swedish EPA reports estimates that, in the U.S. and Western Europe generally, 3-
5% of household waste is textiles (including used clothes), which are typically burnt or
buried, according to the normal method of trash-disposal in the various localities.
Sweden, the association of sanitation departments estimated that, for 1993, household
trash consisted of about 302 kgs per inhabitant, of which about 2% was textiles, which
works out to about 51,000 metric tons of used textiles in the trash. Another estimate
was in the range of 50-100,000 tons.
In addition, significant amounts of used clothes are collected every year by various
charitable organizations in Sweden, as elsewhere, partly for resale locally, and partly for
export. According to collection estimates from the various organizations involved (shown
in Table 8, below), about 10% is resold locally, roughly the same amount is considered
waste, and about 80% is exported. The organizations also estimate 390 tons of shoes
Since, as we will see later, charitable shipments of used clothes are often not sorted as thoroughly and
carefully as are most commercial shipments, we also cannot assume that they are being allocated to their
“highest and best” use, as a functioning market would tend to do.
Used Clothes As Development Aid
collected resold exported waste
UFF (Development Aid from People to People) 4,805 720 3,322 763
Praktisk Solidaritet (Practical Solidarity)
3,686 153 3,273 260
Myrorna/Frälsningsarmén (Salvation Army) 2,850 450 1,950 450
Röda Korset (Red Cross) 2,682 100 2,382 200
other 904 - 904 -
total 14,927 1,423 11,831 1,673
Source: Adapted from Statens Naturvårdsverk (Swedish Environmental Protection Agency), 1995, p. 22 and Appendix 4.
By far the most popular collection method among the organizations is in neighborhood
containers (about 66% by weight overall);
other methods for some organizations
include collections at their thrift shops, and pick-ups at home or at workplaces.
Collection, sorting, and packing costs are estimated from SEK 3.80-5.50/kg, or in the
neighborhood of US$0.57-0.83.
Adding weights of used clothes collected to estimates of textiles in household trash, we
find that 65,000 tons or more of used clothes and textiles are disposed of each year in
Sweden, or about 8 kgs per inhabitant. This estimate is consistent with estimates from
Germany and the Netherlands of 8-10 kgs of clothes consumed per inhabitant per year,
and is also consistent with the figure of 77,000 tons of new clothes imported into
Sweden each year. Thus it appears that about 19% of the amount of new clothes
imported into Sweden annually is collected by charitable organizations for re-use, and
80% of that amount (about 15% of total imports) is exported. The EPA’s goal is that
more used clothing and used textiles should be collected for re-use or recycling, and all
of the collecting organizations indicate that they could increase their collections,
although noting that financing for further investments in collection facilities would be
Table 9 (below) shows recent Swedish used-clothes exports, which have grown
markedly during the last five years, especially in terms of total weight exported. Average
prices, based on the values reported, vary considerably, but may reflect arbitrary
valuation methods, rather than market values.
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
reported value (US$1000s) 2,505 2,160 2,346 2,080 2,093 2,846 5,210 5,599 9,568 5,812 6,233
reported weight (1000 kgs) 3,670 2,746 3,334 2,662 2,337 2,477 3,647 5,165 8,372 9,180 11,831
average price (US$/kg) $0.68 $0.79 $0.70 $0.78 $0.90 $1.15 $1.43 $1.08 $1.14 $0.63 $0.53
Source: Derived from SITC1 data obtained from the United Nations Statistical Division, International Trade Statistics Branch.
Swedish exports go to an amazing variety of destinations (89 in 1994), including many
industrial countries, as well as many less-developed ones; 1994 exports ranked by
weight, value, and price are shown in Tables A6, A7, and A8, respectively (in Appendix
2). Weights probably give a better indication of overall importance, because pricing (or
valuation) methods of the various organizations involved may be somewhat arbitrary,
since much of the goods may not have been handled with normal commercial
Praktisk Solidaritet is an umbrella organization composed of Brödet & Fiskarna and the regional Emmaus
organizations, as well as some smaller groups.
Report of a study for Sida
Africa remains an important destination for used clothes from Sweden: By weight (Table
A6), Mozambique is in third place, and Angola in seventh. The other big recipients are
now all in Europe, however: Estonia is in first place, followed by Latvia, Yugoslavia,
Russia, Lithuania, Poland, Finland, and Croatia.
Nicaragua, which is first in reported value (Table A7), is eleventh by weight. By value,
the U.S. is sixth, and Germany eighth; these are presumably not charitable exports
arbitrarily priced, and thus may represent market values.
By price (Table A8), Australia ranks first at US$49.00/kg, followed by Canada ($21/kg),
Cyprus, India, China, Hong Kong, Ethiopia, Honduras, El Salvador, Bolivia, the U.S.,
Norway, France, Japan, and Nicaragua.
Sweden’s sources of used-clothes imports (16 in 1994) show a similar diversity, and
considerable variation in price as well (see Table A9 in Appendix 2). Although there
were exports to China, Ethiopia, and Poland in 1994, there were also imports from
those countries. Similarly, there were both exports to and imports from Austria,
Denmark, Finland, France, Germany, Hong Kong, the Netherlands, Norway, Saudi
Arabia, Singapore, the United Kingdom, and the U.S. By weight, Sweden imported
about 5% of the amount of used clothes that it exported; by value, about 10%. Import
prices averaged US$1.21, somewhat more than twice the average export price, and
ranged from $7.57 (U.S.) and $5.00 (UK), to $0.56 (Norway) and $0.50 (Austria).
Used-clothes exports are a small and fairly constant proportion of world trade in textiles
and new clothing. The international market appears to be extremely competitive, with
many players: many firms and organizations exporting used clothes from many
countries. Supply has been growing steadily for decades, and there is no reason to
think that it will decline; if anything, it will continue to grow. Thus as more and more new
clothes are exported from less-developed countries to industrial ones, a fairly constant
proportion of them find their way back as used clothes. However, trade in used-clothes
is by no means uni-directional; used clothes are traded: between industrial countries;
between less-developed countries; and from less-developed to industrial countries; as
well as the other way around.
The Swedish role in total exports is rather small, as one would expect based on its
relative population. Thus, on the one hand, Swedish freight subsidies, if continued, will
have a relatively small direct economic effect in the overall scheme of things; but, on the
other hand, there is an extremely active commercial market for used clothes throughout
Europe, so that it should not be at all difficult for Swedish NGOs to change their mode
of operation—in other words, selling into that commercial network, or learning from their
methods—if they should wish to do so.
Used Clothes As Development Aid
Naturally, some countries and areas import far more used clothes than others, ranging
in 1980 from a high of 33.8% (by weight, of all clothes and fabric imported) for Sub-
Saharan Africa, to 10.8% for less-developed Asia, 7.3% for North Africa and the Middle
East, and 1.8% for Latin America. Included in these averages were highs at that time
over 50% for Bangladesh, Zaire, Mali and Tanzania. The value-shares of used-clothes
imports (as percentages of all clothes and fabric imported) were of course much lower,
ranging from a high of 5.0% for Sub-Saharan Africa, to 1.2% for less-developed Asia,
0.6% for North Africa and the Middle East, and 0.5% for Latin America.
Including domestic production as well, Haggblade calculated that “in 1980 second-hand
apparel accounted for roughly 10% of all garments acquired in Bangladesh, Pakistan
and the Southern African Customs Union countries… [while] the used clothing share
rose to 20-30% in Benin, Ghana, Togo and Zaire, and it exceeded 50% in Haiti and
Although some countries and areas account for large proportions of total used-clothes
imports, the trade is highly diversified, even moreso that exports. Worldwide, in the
decade 1984-’93 there were 90 net used-clothes importing countries reporting on
SITC2. But, as we have already seen, Sweden alone had 89 recipients for used-clothes
exports in 1994. SITC1 and partner data shows that worldwide, in the single year 1990,
there were actually twice that many gross importers.
Ninety net importing countries during the period 1984-’93 are shown in Table A10 (in
Appendix 2).
In the period, Pakistan was by far the largest net importer, followed,
perhaps surprisingly, by Hong Kong. African, Asian, and Latin American LDCs took up
the next five places, followed by France and then Spain. The next ten places again were
mostly African, Asian, and Latin American LDCs, but Poland and Hungary had also
already moved into the top twenty.
As discussed in the previous chapter, a much fuller understanding can be gained from
seeing data on gross imports. We already looked briefly at 1984 SITC2 import data in
Chapter 1 (Table A2 in Appendix 2). Tables A11-A13 show 1990 imports for all
countries reporting using SITC1, plus their partner countries and territories: 181 in all.
In 1990, France-Monaco was the biggest gross used-clothes importer by value
(US$33,646,000, see Table A11 in Appendix 2), followed by Belgium-Luxembourg,
Pakistan, Netherlands, Tunisia, Hong Kong, Togo, Benin, Singapore, and Zaire. The
Missing countries may have had net imports but may have reported data based on an earlier revision of
the SITC code (SITC1), or may not have reported data up to the UN’s standards, or may not have
reported at all. There are also undoubtedly inaccuracies regarding the existing data in this and many of
the other tables herein, due both to unreported, illegally-traded goods, and to under-valued goods; the
magnitude of these inaccuracies would of course be difficult to measure.
No 1990 data was found for the following countries or territories: Anguilla, Bhutan, British Virgin Islands,
Christmas Island, Cook Islands, Falkland Islands, Iraq, Maldives, Marshall Islands, Micronesia, Mongolia,
North Mariana Islands, Palau, St. Kitts-Nevis, Taiwan, Tokelau, Turks & Caicos, and Western Sahara;
the absence of a listing does not necessarily mean that no trade occurred.
Report of a study for Sida
U.S. was in 30
place, and Sweden in 53
place (US$1,997,000). By weight (not
ranked on a separate table), Pakistan was in first place, followed by the Netherlands,
both with much lower average import prices than Belgium-Luxembourg or France, which
came next; Tunisia was again in fifth place, but Italy and India had joined Singapore,
Hong Kong and Zaire in rounding out the top ten.
Djibouti had the highest imports per capita with 11.1 kgs (see Table A12 in Appendix 2),
followed by Singapore, Equatorial Guinea, Belgium-Luxembourg, Netherlands, St.
Helena, Togo, Benin, Tunisia, São Tomé & Príncipe, Hong Kong, Jordan, Lebanon,
Gabon, Belize, Macau, and Niue, all with at least one kilogram per person. De Valk
(1992) reported that total annual textile “demand per capita [in Kenya] can be taken as
approximately 0.9 kgs, corresponding with about 4.5 square meters.” All of the countries
listed immediately above imported more than that quantity of used clothes alone in 1990
(re-exports may account for some of the unexpectedly high figures, of course).
Haggblade (1990) reported that “at 0.13 kilograms per capita in 1980, Sub-Saharan
Africa imported approximately one used garment for every third citizen.” In 1990, 78 of
the 181 reported importing countries or territories imported at that level or higher.
Sweden was in 101
place with 0.056 kgs, and the U.S. was 137
with 0.008 kgs.
In the previous chapter we noted the extreme variation in used-clothes import and
export prices; in 1990, Bahrain had the highest import price (US$30, see Table A13 in
Appendix 2), twice as high as Oman ($15) and three times as high as third place
Gibraltar ($10.50). Japan ($9.43), Guadeloupe ($9.09), Suriname ($7.42), Bahamas,
New Caledonia, Reunion, and Panama rounded out the top ten. Sweden was in 18
place (US$4.14), while the U.S. was in 32
place ($2.84). At the low end were
Bangladesh (US$0.41), Netherlands ($0.40), Pakistan (which imported the most weight)
and Nepal (both at $0.38), Morocco ($0.35), and Macau ($0.33).
How are all these used clothes distributed once they are imported into (mostly) less-
developed countries? Both economist Haggblade (regarding Rwanda before its recent
civil war) and anthropologist Karen Tranberg Hansen (regarding Zambia) provide
fascinating glimpses of the process.
Haggblade (1990) reported
that in Rwanda the process “begins with the country’s 14
used clothing importers, who order their merchandise in 45 kilogram bales, requesting
the garments and fabric they believe will sell most readily at each time of year. They
then sell the bales, unopened, to one of 40 wholesalers who stock them around the
country. The wholesalers operate substantial businesses, commonly holding inventories
on the order of 300 to 500 bales at any one time. They in turn sell their bales, still
unbroken, to distributors.”
Haggblade continued: “Distributors buy one to five bales at a time, immediately
transporting the bales, by wheelbarrow or truck, to the outdoor public markets where
used clothing is retailed. Shortly after daybreak, they break open the bales in one
section of the market reserved for that purpose. They then referee a wild mêlée in which
prospective retailers swarm over the merchandise to select the prime articles for resale.
Requiring considerable time and vigilance, the sorting involves lengthy haggling
between distributors and retailers. Distributors, about 700 nation-wide, often retail the
unsold residual directly to consumers.
“Before displaying their wares, retailers must prepare the used clothing for sale. They
contract with market tailors to effect any necessary repair work or fashion-induced
Used Clothes As Development Aid
alterations that would improve the value of their merchandise. The retailers then clean
and iron their new stock or hire others to perform these services. This activity attracts a
phalanx of push-pedal sewing machines, coal-fired clothes irons and washing basins
which align the perimeter of the large used clothing markets.
“When their merchandise is presentable, retailers display it in outdoor markets run by
local authorities. In the largest markets, used clothing retailers often specialize—in
shirts, pants or dresses—which they peddle from cement booths shaded by corrugated
metal roofs. While middle-sized markets offer raised wooden platforms on which
clothing can be displayed up off the ground, retailers in the smallest markets display
their used clothing stock on the ground on top of the heavy canvas bale covers. In the
medium and small markets, individual vendors offer a department-store range of
garments which they bundle in canvas bale covers and haul by bicycle or public
transport from one market to another. In all settings, retailing demands assiduous
attention because of the potential for theft and because of customers’ propensity to sift
carefully through merchandise at many establishments before committing to a
purchase. Approximately 4,700 enterprises retail used clothing in Rwanda’s public
With reference to Zambia, Hansen (1994) reported
that “most of the used clothing
currently sold in local markets is imported by fifteen to twenty trading firms and their up-
country outlets. Charitable organizations also import used clothing and are exempt from
customs and duties if their goods are not sold for profit. The volume of second-hand
clothing imported by charitable organizations, and the extent to which donated clothing
is sold for profit, are difficult to estimate.”
Referring to the importers, Hansen said that “some have established links with the
textile manufacturing, dry goods, and transport businesses. These importers purchase
used apparel from dealers in the U.S., Canada, the United Kingdom and several
countries in Europe which includes not only garments but also shoes, handbags, towels,
sheets, blankets and draperies. A small proportion is new, mostly factory overruns and
canceled orders, but most of it is used clothing, bought by textile salvagers at bulk rates
from charities in the West. A good deal of clothing that does not sell in charity shops is
purchased cheaply by dealers, fumigated, sorted, packed into bales and shipped to
Third World destinations.
“Used clothing is exported in standard containers which hold 200 or 400 bales weighing
45 kgs. Most dealers used 45 kg bales, but some prefer 150 kg or 300 kg bales. The
containers are shipped to Zambia via Dar es Salaam [Tanzania], Durban [South Africa]
and Beira [Mozambique]. Importers and clearing agents complain of pilferage at Dar,
the red tape involved in port clearance, and port storage charges. In 1992, Durban was
the preferred port of entry. Used clothing is competitively priced. The figures vary from
US$0.44 per pound
c.i.f. (cost, insurance, freight) to a designated port from a
Canadian dealer (May 1991) to US$2.77 per kg c.i.f. to a designated port from an
Australian dealer (July 1992). Port clearance fees, port storage, transportation charges,
a variety of fees, sales tax, and customs duties considerably increase the cost.
“Although importers of used clothing complain of rising costs and uneven quality of
merchandise, they recognize that demand and competition are increasing. Several
At 2.2 pounds per kilogram, $0.44 per pound equals $0.97/kg.
Report of a study for Sida
importers hope to find new suppliers of quality goods and complain about uneven
quality, especially of the U.S. merchandise—particularly faded, torn, and cut jeans.
They also noted that the West’s cold-weather clothing only sells well during June and
July, the cold months in Zambia. Some considered Australia a potential source of
clothing suitable for a warm climate.
“Importers pass their risks on to local buyers, who have no guarantee of the quality of
the bale’s contents. When purchasing a bale from an importer’s warehouse outlet, the
buyer selects the type of fabric (cotton, polyester, or ‘wool’)
and clothing: for example,
FKDQJD FKDQJD (mixed children’s wear); girl’s or women’s dresses, skirts, jackets, or
trousers. There are also bales with mixed fabrics, as well as bales with assorted items,
e.g., women’s wear. The bales are sold unopened, but some dealers allow buyers to
inspect the plastic wrap and the metal straps to determine if the bale has been
tampered with. Looking through the plastic wrap at the variety of colors and prints, the
buyer makes a selection. After the buyer has decided, some dealers open the plastic
cover to allow the buyer a closer look and feel. Of course this does not guarantee
quality, and buyers complain of the many damaged, torn, faded and worn clothes in the
“The price of a 45 kg bale in 1992 ranged between K15,000 (jerseys), K30,000
(blouses) and K45,000 (jackets), depending on the type of garment and fabric.
increase steadily as importers adjust their prices in response to higher costs and
Zambia’s rapid inflation. Toward the end of June, for instance, a 45 kg bale of women’s
‘silk’ (polyester) blouses cost K34,000. It soon increased to K36,000 and then to
K40,000, and by mid-August the same importer charged K42,000 for a 45 kg bale of
women’s ‘silk’ blouses.
“Trade in used clothing is large and growing in local markets, village shops, and with
itinerant traders on bicycles. The salaula section
in markets is many times larger than
the food section in Lusaka and provincial towns. Every township in Lusaka has its
salaula market; the busiest are at Kamwala and Soweto. Each of these markets has an
inside and an outside salaula section. The inside section consists of covered stalls or
small shops; the outside section consists of demarcated plots on which traders build
intricate displays for their goods, or sell them from a pile on the ground. The outside
section is the larger and busier place.
“Salaula traders are young and old, women and men, with different educational and
employment histories and from many ethnic groups. Women slightly outnumber
Hansen footnotes as follows: “‘Wool’, ‘silk’, and ‘crimplene’ are among the categories into which textile
salvagers sort used clothing. ‘Wool’ includes garments with a mixture of wool and artificial fiber.
Garments of pure wool are sorted for export to Italy, a chief recycler of wool products in today’s textile
world economy. ‘Silk’ refers to garments made mainly of polyester and other man-made fibers, and
‘crimplene’ refers to polyester knits.”
Hansen footnotes that “the NZDFKD equivalents of one U.S. dollar changed during the duration of this
research from K155 in June of 1992, to K174 in July, and K186 in September.” Using an average of 170
kwacha per dollar, jerseys thus cost $1.96 per kg, blouses $3.92, and jackets $5.88, at this stage of the
distribution process.
6DODXOD “means ‘to select from a pile’ in Bemba”; another term used isNDXQMLN D which means ‘to pick’ in
Nyanja”—Hansen 1994, p. 506.
Hansen continues here with a detailed description of individual traders and trader categories.
Used Clothes As Development Aid
“Earnings from salaula sales differ widely and depend on factors such as location,
volume, type of clothing, business practices and competing demands on the trader’s
time and labor…
“People from all walks of life explore salaula markets. Some come with a view to buy in
order to resell; others are on the lookout for that special item to complement their
wardrobe. But the majority come to purchase the bulk of their household’s clothing.
Buying for the purpose of reselling occurs in at least two ways. The method of ‘one-one’
involves selecting individual items that are priced separately, usually after a bale has
been opened. At that point a crowd of customers fight for the best items, and some
select particular garments to resell.
“Buying with a view to reselling is also done ‘on order’, especially by rural visitors who
subsequently sell their goods in the villages. Buying ‘on-order’ means buying several
garments at a reduced rate. Often these are items that do not sell well in town. During
the winter season Zimbabwean women and men travel to Lusaka to purchase cold-
weather clothing—coats, jackets, ‘wool’ skirts, and jerseys. To finance their trips and
obtain Zambian currency, they bring Zimbabwean products that are of better quality or
scarce in Zambia, such as blankets, bath soap, tennis shoes, and fashion knitwear.
They sell their Zimbabwean goods to traders in Kamwala and Soweto markets and
purchase salaula with the Zambian currency earned by these sales. Or they exchange
their goods directly for salaula without any cash transaction.
“Items that do not sell well in the city are brought by rural people or taken to the
countryside by urban traders for sale or exchange. Such items include crimplene
(polyester knit) garments, men’s trousers in bright colors like red, green, and yellow,
men’s trousers and jackets of fabrics with large checks, and faded, torn and damaged
items. Some traders make occasional rural trips and bring back chickens, fish, or
produce… [while] villagers go to town particularly to purchase salaula for resale in rural
“Customers evaluate their merchandise when purchasing a bale from a dealer by
scrutinizing the plastic wrap and the metal straps to ensure that the bale has not been
tampered with. Dealers who import bales larger than the standard ones open, sort and
rebale items into 45 kg bales. Some Indian dealers are said to remove choice items in
the process of rebaling; clothing presorted in this way is said to end up in shops. The
customer’s scrutiny in the dealer’s warehouse reflects the preference for bales whose
contents are fresh from their western source, untouched by dealer interference, and
thus offering a range of ‘new’ items.
“The concern with ‘newness’ is particularly evident on ‘opening day’, when a bale is
broken up for resale. At this point, it is important that garments have not been meddled
with, and traders and customers prefer to open a bale publicly, enabling customers to
select on the spot. A bale that is opened in the market is considered to contain new
Rona Alexander of Oxfam notes: “Employment is created by the second-hand clothes industry as well as
damaged by it—so who are the winners and losers? Preliminary indications are that in some countries
the trade creates employment opportunities for women”—personal communication, May 1995.
Here Hansen describes why it is difficult to make “profits” in this business, because, among other things,
“other claims on the earnings make it difficult…” There seems to be a confusion of the lack of profits (or
the lack of retained earnings for investment) with the fact that the profits—or, indeed, returns to labor
have been spent for other purposes—which she also recognizes: “Many explained that there is ‘no use in
keeping books because we don’t see the money,’ which is to say that earnings from salaula readily
disappear into the daily consumption budget.”
Report of a study for Sida
clothes. If it is opened privately, the trader might put aside choice items, causing
customers to suspect that they are being presented with a second cut, and not new
“Both traders and customers are concerned with quality and style. These concerns
prompt extensive recycling. Items made of fabrics that do not sell easily, for example
crimplene, are turned into a variety of new garments. Crimplene trousers are remade
into boys’ shorts and girls’ dresses. Sweaters are unraveled and the yarn re-used to
crochet or knit baby blankets, jerseys, and rugs. Curtain material with colorful prints is
made into women’s dresses and suits, draperies with metallic sheen become men’s
trousers, and curtain lace ends up as trains of wedding gowns. The small-scale tailors
who used to sew everyday garments have recouped lost business by repairing and
altering salaula. Traders and customers bring men’s trousers in large sizes to the tailor
to alter and restyle with pleats at the waist, back pockets, and pegged bottoms. Tailors
also sew up vents on men’s jackets and turn single-breasted jackets into double-
breasted FKLOXEDV«
“Some salaula is sold in more exclusive shops, such as the Caroussel Botique [sic]…
[which] advertises its line of ‘imported cloths’ in styles of ‘London Wise’… Their shop
features cleaned, pressed and restyled clothing at prices slightly higher than elsewhere
in the market. According to the owners, everyone knows this shop, and customers come
from all over town to buy ‘the latest’, especially nicely restyled FKLOXEDV Emblematic of
changes following president Frederick Chiluba’s take-over from Kenneth Kaunda, the
FKLOXED suit’s replacement of Kaunda’s rigid Mao-inspired uniform tells a story of the
opening up of society, of new opportunities, and above all, of the common man’s
access. ‘The common man’ was the previous regime’s term for the masses. In short,
salaula implies choice and possibility, of better lives being with reach…”
Although most used-clothes exports go to LDCs (in 1990, about 70% by value, much
more by weight), and perhaps most tend to go to the poorest countries among them, still
the trade is extremely diverse, with many major importers among the industrial nations.
That most exports go to LDCs is no surprise; it is totally consistent with micro-data
reported in Haggblade’s study
—which we will review shortly—supporting the notion of
used clothes as a generally inferior good: That is, as incomes go up (beyond a rather
low threshold), people tend to buy less used clothes, rather than more. But it is
somewhat surprising that there are such voluminous used-clothes imports into industrial
countries, though the major instances may be accounted for largely by re-exporting and
recycling. Nevertheless, as we noted in the previous chapter, there is great variation of
The extent of “restyling” in less-developed countries is also attested to by Tom De Herdt of the University
of Antwerp, based on his research on the textile sector in Bukavu-Zaire: “‘Used clothes’ are not
necessarily used as clothes in the third world; many used clothes coming from abroad are ‘deconstructed’
by local artisans, in order to use the components in ‘new’ clothes… These [small] enterprises appear to
be the most efficient in the sector…” And Ben Blevins-Salic says regarding Guatemala: “[Used clothing]
creates a cottage industry for many Guatemalans, like [his] wife’s family. They make alterations in the
clothes and sell them on the local market, or cut up used clothes for material, which is much less
expensive than buying new material for making new clothes. The trade in used clothes is to-scale for the
locals, and they can raise sufficient capital to fund such an operation. To produce clothes from new
materials and put together a distribution network is only for the very small elite with access to much more
capital.”—personal communications, April 1995.
Used Clothes As Development Aid
quality and purpose (and price) within the general category of “used clothes”, and it is
apparent that they are not MXVW an inferior good, but can also be a fashion statement, for
instance—and this is just as true in LDCs as in industrial countries.
According to widespread evidence, there seem to be very well-functioning domestic
used-clothes markets in most LDCs, and lots of employment generated. The sorting
which is first carried out by NGOs or commercial exporters in industrial countries is
carried many steps further in less-developed countries, and in the process used clothes
are cleaned, repaired, restyled, and distributed hither and yon, according to highest
market value and, presumably, best purpose.
Report of a study for Sida
Used Clothes As Development Aid
This chapter deals with popular (producer, labor union and mass media) and
governmental attitudes to the voluminous used-clothes trade we have just looked at,
pointing out that there are some very strong negative feelings towards used-clothes
markets in some parts of the Third World (and elsewhere); but also showing that
national governments have not generally succumbed to pressure to restrict imports in
any extraordinary way, and in fact the trend seems to be the other way, towards
opening markets. While we believe it is important to understand this context for world
used-clothes trade, none of this chapter is essential for understanding our specific
conclusions regarding subsidies for used-clothes exports. (The parts describing
producer, labor union and mass media attitudes should certainly put up a warning flag
about such subsidies, however.) The next chapter deals with NGO attitudes towards
and involvement in the used-clothes trade, and may thus be the most directly relevant to
our final conclusions.
We noted in the Introduction that there are four possible sets of answers to the
questions whether used-clothes imports generally, and subsidies thereon specifically,
were good or bad (Table 0 from the Introduction is repeated as Table 10, below). There
are strong intuitive arguments for both extreme positions (columns 1 and 4). On the one
hand, sending surplus used clothes to less-developed countries may provide a low-cost
income-transfer which actually contributes to building productive capacity, by increasing
the stock of human capital in the form of better-clothed workers (this might be the
position represented by column 1, especially the bottom half). Other used goods which
may be donated, such as used agricultural or medical equipment, bicycles, computers
or books, may even more obviously contribute to capital accumulation, and thus to the
development of productive capacity.
effects of: 1 2 3 4
used-clothes imports good good bad bad
subsidies thereon better bad good worse
(not the best) (in catastrophes)
If supplies are consistent and not wildly fluctuating (especially for any necessary goods),
so that dependence does not lead to disruption and further hardship, then one could
consider used clothes like any other goods, assuming that countries should produce
their products of comparative advantage, and import the rest (this position is
represented by the top of columns 1 and 2). Of course there may be social costs as
established industries adjust to cheaper imports, but in the long-run these costs should
be more than compensated for by increased productivity and income. And, assuming
that freight and transaction costs are properly accounted for, there would certainly seem
to be some environmental benefits from using still-serviceable goods (including surplus
used clothes), rather than disposing of them, and manufacturing more elsewhere on our
ecologically-strained planet.
Indeed, this goes to the heart of our understanding of economics itself: Is it better to produce and
consume more, or to have wealth? For instance, would it be better to have clothes which wore out daily,
thus requiring more production and consumption, or to have wealth in the form of clothes which lasted
Report of a study for Sida
However, others point out the disincentive effects on production, in which workers lose
jobs and income when cheap imports suddenly become widely available. Thus they
would argue against subsidization of exports, and perhaps in favor of tariffs or outright
bans on imports (this would be column 4). Still others might argue that, although there
may currently be no local textile or clothing industry to protect, development of such
industries is a necessary first step in industrial development—or is one of the most
convenient and beneficial industries to begin with, given that it requires relatively little
capital to enter, and that clothing may claim a major share of the household budget in
economies where incomes are low—and that there may be extra advantages in the
form of skills and experience gained. Thus they might argue that imports must be
banned (and certainly not subsidized), in order to promote the development of “infant
A further range of controversy concerns the commercial export of used clothes which
have been initially donated to charities in industrial countries. Donors may not realize
that their donated clothes are being sold on the market, rather than being given away
free to the poorest of the poor. To state it simply, the question is whether there is a
place for market-based, profit-motivated businesses in the distribution of donated used
clothes, or whether all steps in the process should be on a nonprofit basis. Although this
question does not seem very closely related to the most specific question we have been
asked to address, whether exports of used clothes directly by charitable NGOs should
be subsidized by Sida, the issues it raises may prove enlightening as well, and we will
investigate them further below. A philosophical note on the origin of markets, and their
social and political context, is included in Appendix 4.
Because used-clothes exports arouse such strong feelings and contradictory
arguments, this report may be of interest not only to Sida, but perhaps to Swedish
NGOs, and possibly even to LDC governments and textile and clothing producers
(including labor unions) as well. Consequently, within the basic framework of our terms
of reference, we will attempt a fairly full exploration of the broad context of used-clothes
exports and, throughout, will attempt to explain economic terms, theory and
methodology somewhat thoroughly.
This is an economic study but, although we have specifically been asked to consider
“effects on income distribution, employment, institutional structure, environment, etc.”,
including “effects on supply and demand, growth effects, and other long-term effects on
production and the production structure”, we have also been asked to consider “other
questions that might come up during the course of the work and that might seem
Thus we will also try to identify and categorize some of the more important non-market
factors—such as social and political factors—which should also concern us. For
instance, one motivation for NGO and Sida involvement in used-clothes exports may be
a feeling of solidarity (social bonds or identity), on the part of the Swedish people, with
people in less-developed countries. On the other hand, particular countries may choose
to ban used-clothes imports (legally and politically; or to impose high tariffs on used-
clothes imports), possibly because of their effects on particular power groups in those
countries, regardless of any overall economic benefits that might be possible from
imports. Or, although not limiting used-clothes imports, powerful groups in some
longer and were consumed more slowly, thus allowing effort to be expended on other goods and
services? Upon reflection, the answer to this question, at least, seems clear.
Used Clothes As Development Aid
countries might be offended by them for various cultural reasons, especially if they were
to be subsidized as part of “development assistance”.
We have just seen (in Chapters 1 and 2, above) that there are very substantial
worldwide flows of used clothes, and that lots of them are ending up in less-developed
countries. Although over time those flows seem to constitute a fairly constant share of
total worldwide trade in textiles and clothing, they nevertheless have been increasing
dramatically in absolute terms, more than doubling over the past decade, for instance.
Flows of new textiles and clothing in the opposite direction, from LDCs to industrial
countries, have been increasing equally dramatically over the same period. Still, we can
understand that there might be protectionist sentiment aimed against used-clothes
imports in less-developed countries, just as there is a history of protectionist sentiment
aimed against new-clothes imports in industrial countries (witness the history of the
Multi-Fiber Arrangement
Whether based on thorough, accurate, in-depth economic analysis or not, it is important
that we understand these protectionist sentiments: They constitute one of the most
important ingredients in the overall context of used-clothes imports into less-developed
countries. Naturally enough, it is textile and clothing producers in LDCs, primarily
represented by their producer organizations and labor unions, who believe that there is
net economic damage from used-clothes imports. Consequently, we will begin this
chapter with a review of some producer-organization damage estimates and some
union and labor organization documents. This point of view (which we have associated
with column 4 of Table 10, above) has occasionally been strongly represented in the
mass media as well, and we will take a look at some Western examples, as well as
looking briefly at an example of what may be a more balanced, African media view.
Protectionist sentiment focuses primarily on getting LDC governments to impose high
tariffs on used-clothes imports, or to ban such imports altogether. Consequently, in the
second half of this chapter we will review the recent history and current state of trade
regulations regarding used-clothes imports. We will see that there seems to be no
current trend in favor of increased protection against used-clothes imports, but rather a
trend towards increased openness, as part of general global trade liberalization. Thus,
leaving aside the more specific question of subsidies, we will find that most LDC
governments take positions associated with the top half of the first two columns in Table
10, which we characterized simply as “trade is good”.
The other major players in the used-clothes business (besides the commercial
exporters and importers, whom we might expect to favor free trade) are the non-
governmental organizations (NGOs) which collect used-clothes in industrial countries
and which are involved in humanitarian and development work worldwide. In the next
chapter we will examine the attitudes and practices of a number of NGOs, both
international organizations, and specifically Swedish ones. We will see that some of the
NGOs recently espoused the position represented by column 1 (used-clothes as a
development tool directly), but that, partly for reasons represented in the top halves of
columns 3 and 4 (the concern that commercial trade is damaging to local producers),
many of them now essentially agree with the conclusions to which this report comes
(represented by a combination of columns 2 and 3: the effects of trade are not totally
clear; but subsidies are generally not the best, although necessary in catastrophes).
To begin with, we want to look at and be aware of some popular images (especially
negative images) of the used-clothes trade. Because several labor union and mass
media documents we wish to review are rather lengthy, they are found in Appendix 5.
Report of a study for Sida
While we will note (both here and in Appendix 5) some weaknesses in the arguments
and rhetoric presented, our main point is that many people in Third World countries,
and some of their sympathizers elsewhere, have very strong negative feelings about the
used-clothes trade. Given that Sida and the various Swedish NGOs have no desire to
offend those people, it would be well to be aware of their feelings.
The Zimbabwe Clothing Council—a producer organization—is very aware of the
increasing level of used-clothes imports in that country, and believes that there has
been very significant damage to their industry because of it.
Assuming garment-for-
garment displacement,
the Council concludes that the 55 twenty-foot-long containers of
used clothes which were imported illegally or by charitable organizations in 1994, each
containing roughly 40,000 garments, resulted in at least 5,300 lost jobs in textile and
garment production,
or, considering families, a loss of subsistence for 34,450 people.
This is not insignificant, and when generalized across the Third World, one can imagine
widespread hardship and permanent damage resulting from what used-clothes donors
in industrial countries take to be charitable giving.
Naturally, labor unions representing Third World clothing-industry workers also feel
strongly about the issue, and have lobbied for international action against the used-
clothes trade. In 1992 the International Textile, Garment, and Leather Workers’
Federation (ITGLWF) adopted the following resolution against the used-clothes trade:
“NOTING that massive imports of used clothing have created unemployment for textile
and clothing workers in many countries of the world;
“CONCERNED at the fraud practised by unscrupulous companies trading in used
clothing, who import it as illegal contraband by mixing it with new clothing
“DEPLORES the trade in charitable contributions of used clothing which results in the
export of used clothing at such low prices that the wages and conditions of textile and
clothing workers are undermined and many jobs are lost;
“DEPLORES the attitude of governments who close their eyes to this deplorable
situation, thus creating unemployment and health risks for consumers, given that the
origin of the clothing and the physical health of the previous owner are not known;
In Chapter 4 we will review a study (Denconsult 1993) which came to a different conclusion, namely, that
recent damage to the Zimbabwean clothing industry was primarily caused by trade problems with South
Africa and low domestic demand due to drought, combined with competition by low-cost new garments
from Asian producers.
This means that, if cheap used-clothes had not been available, an equal number of much more expensive
domestically-produced new clothes would have been purchased, which is a highly unrealistic assumption,
leaving aside completely, as it does, the question of ability to pay. A more realistic assumption might have
been that roughly one-fourth that number of new garments would have been purchased, since they
probably cost (on average) about four times as much.
A more thorough analysis would also consider both employment generated in the used-clothes sector and
possible employment generated in other sectors, due to growth made possible by the increased real
income provided by cheap imports—in other words, if people would have spent money on new clothes
but now did not do so, what did they spend their money on instead?
Some countries levy a higher rate of duty on used clothes than on new clothes, apparently providing an
incentive for importers to disguise used clothes by mixing them in with new clothes.
We have not studied the health risks of used-clothes imports, but we will see in the next chapter that only
a very few countries require such health certifications—even including the industrial countries, many of
which, as we have already seen, are very active used-clothes importers themselves.
Used Clothes As Development Aid
“AWARE that most of this used clothing is donated by people in the United States and
other countries to charities such as Goodwill and the Salvation Army,
with the intention
that it will be used to assist people in need when in reality it is sold for profit;
“URGES that used clothing donated for the poor should be used for that purpose and
distributed free of charge, thus avoiding the trade in used clothing which has been
occurring; …”
The position above was further elaborated in a draft resolution submitted by the
Workers’ Group to the February 1995 International Labour Organization (ILO) Technical
Meeting for the Clothing Industry, and reproduced in Appendix 5 (with some perhaps
contradictory passages italicized for emphasis).
Given such strong producer organization and labor union opposition to the used-clothes
trade, it is not surprising that similar themes occasionally have been picked up in the
mass media. Our first example (also found in Appendix 5), much more rhetorical than
the somewhat dry resolutions above, is actually from a union newspaper, Free Labour
World, dated June 1993, and the author is Neil Kearney, general secretary of the
ITGLWF, whom we also quoted briefly in the Introduction. Other examples (in Appendix
5) come from the Canadian media (Ottawa Citizen, 1993). We will reproduce here only
one short example, from the Latin American media:
“The used-goods merchants are netting huge profits… Earnings on used shirts and
dresses are high, with intermediaries averaging profits of 200%… Used car dealers
earn up to 600% profit…
Economists say Latin America has entered an era of
backdoor imports and they describe this as a spinoff of recession and neoliberalism…
Experts such as [a sociologist]… said it is no longer a question of importing goods and
technology but of making do with obsolete, discarded material and garbage…
political scientist… said Latin Americans ‘can no longer dream of wealth, but only of the
crumbs of opulence. The most we can hope for is to be secondhand rich’.”
Under intense pressure from local producers (and presumably from the workers’ union
as well), the government of Zimbabwe has just recently (summer 1995) introduced a
very substantial (perhaps, theoretically, prohibitive) import-duty on used clothes. But
The Financial Gazette, published in Harare, reported
“Last week’s introduction of import duty on second-hand clothing will not change the
fortunes of the clothing and textile industry, which is currently in the doldrums due to an
Why the U.S. and its two chief used-clothes collecting charities are singled out for attention is unclear; it is
true that the U.S. provides almost 40% of world net exports of used clothes (see Table 5, above), but
Europe provides over 50%.
This overlooks what is done with the funds gained from “selling for profit”, which may in fact be used “to
assist people in need”. “Selling for profit” which provides consumers with cheap but usable goods may
also “assist people in need”, namely, the poor people who mostly buy used clothes.
For further discussion of this issue, see the second “philosophical note” in Appendix 4.
In much of this literature there seems to be a fundamental misunderstanding of business accounting (let
alone economic accounting) and of commerce, of the function and activities of “middlemen”: Quite apart
from the question of distinguishing between business profits and economic profits, a business is normally
allowed to deduct its costs—including, for instance, the reasonable labor cost of the owner—before
declaring the remainder “profits”. As for “middlemen”, if they were serving no real distributional function,
would they not have been circumvented long ago, to increase the “profits” of all the other parties?
Or good quality stuff, hardly worn—the image seems to change at will.
Report of a study for Sida
assortment of problems, sources within the industry have said. There is general
consensus within the sector that the introduction of import duty on second-hand clothing
is a short-term measure, likely to benefit clothing and textile retailers who service the
domestic market, more than manufacturers who need to export… [One major textile
company executive said the measure] would not in any way help resuscitate the sector,
which needs exports to break even. He said large quantities of textile and clothing
products would continue to be smuggled into the country, willy nilly, despite the new
import duty… [T]he only permanent solution to the industry’s woes was the signing of a
trade agreement with South Africa and the reduction of interest rates, which currently
stand at over 30%… High interest rates, withdrawal of tariff protection, coupled with the
scrapping of the 9% export incentive scheme last year, contributed to the poor
performance of the local industry…”
Given the horror stories that we have just reviewed (including those in Appendix 5), it
would not be surprising if many other countries besides Zimbabwe had recently
clamped down on used-clothes imports, with high tariffs or outright bans. In fact a few
do ban used-clothes imports, or impose prohibitive tariffs or impossible licensing
procedures. But most are relatively open to imports—that is, with tariffs in the same
range as for other clothing and textile products—and the worldwide trend generally
seems to be towards greater liberalization.
Spain and some former Spanish colonies seem to present a bit of an anomaly from this
trend, so we will look at their import practices first, followed by those of other industrial,
transitional, and new industrial economies, and finally those of other less-developed
countries. Details are provided in Appendix 6; only a brief summary is provided here.
Appendix 6 concludes with an illustrative look at the textile industry in Senegal, which is
interesting in the context of the larger question in our Terms of Reference (regarding
used clothes DQG RWKHU XVHG JRRGV because of Senegal’s current and historical
reliance on second-hand textile factories. More to the immediate point, it illustrates the
complex context in which the textile industry seems to operate in many African
countries, under various forms of government protection and mismanagement, and now
beset by the increasing tide of used-clothes imports.
As we saw in Chapter 2, most industrial countries have significant used-clothes imports
as well as exports. Spain seems to be the only industrial country with unusual (virtually
prohibitory) restrictions on used-clothes imports, but it nevertheless does import
substantial amounts of used clothes, and is also a significant used-clothes exporter.
Worldwide, several former Spanish colonies also either still have or have recently lifted
unusual restrictions on used-clothes imports, including Mexico, Chile, Venezuela,
Colombia, Ecuador, Peru, and the Philippines. Even those which maintain unusual
restrictions still import substantial amounts of used clothes, and many are themselves
significant used-clothes exporters as well. Several have recently relaxed unusual
restrictions, or removed them entirely, and many other former Spanish colonies seem
not to have ever imposed them, or at least not to have had them recently.
Among transitional economies, only Bulgaria and Hungary seem to have unusual
restrictions on used-clothes imports, though Bulgaria’s is not very severe, and
Hungary’s (a quota system) is directed at all consumer goods, not just at used clothes.
Poland and Russia have both had large used-clothes imports recently.
Used Clothes As Development Aid
None of the new industrial economies of East and Southeast Asia impose any unusual
restrictions on used-clothes imports, although tariffs may be quite high on apparel and
related products generally.
Egypt bans most textile and garment imports including used clothes, although partner
data for 1990 indicates that Egypt imported a large amount (and also exported a small
amount) of used clothes in that year. Despite the fact that Israel has free trade
agreements with the EU, EFTA, and the U.S., it also bans used-clothes imports, but
again, partner data shows both imports and exports.
Despite strongly growing used-clothes imports in Sub-Saharan Africa, there seems to
be a trend towards greater liberalization of the trade. South Africa seems to allow
imports only for charitable purposes (that is, to be given away, not sold). Nigeria bans
import of all textiles and apparel, but nevertheless tolerates significant smuggling, of
used-clothes in particular. Cameroon lifted a ban on used-clothes imports in 1991; Chad
and Cote D’Ivoire in 1992; Tanzania liberalized in the 1980s. Other African countries
seem to have normal tariffs on used clothes, in the range of 45-90%, and trade is brisk,
as we have seen.
Many of the arguments and much of the rhetoric used against the used-clothes trade
seem wildly exaggerated and, upon analysis, many of the points made seem rather
weak or fallacious. Nevertheless, the overriding impression must be of very strong
negative feelings, attached to very strong perceptions of very severe damage being
done. This is something that Sida and relevant Swedish NGOs should be aware of (and
may in fact be the main reason why this study was requested).
If one believed that exports of used clothes to less-developed countries resulted mainly
in jobs lost in those countries, one might consider that to be a strong argument against
subsidizing such exports. But also, if one thought that many people in those countries
EHOLHYHG there were such net losses—even if one did not believe it oneself—one might
still consider that to be a strong argument against subsidizing such exports. Thus, given
the extreme hostility of most of the images of the used-clothes trade we have just
reviewed, one might want to be somewhat cautious about subsidizing used-clothes
exports for that reason alone. Given the potential for contributing to a destructive or
wasteful effect—or at least to the perception of a destructive effect by industries which
lose sales and employees who lose jobs—it might not seem prudent for Sida to be seen
as subsidizing used-clothes exports by NGOs.
While we have not attempted to do an exhaustive search of the popular media on the
subject of used-clothes collection and redistribution, there seem to be two general
themes in most of what we have just reviewed: One is that used-clothes exports to less-
developed countries have a disincentive effect on local production, putting local
garment-producers out of work; the other is that individual clothes-donors (and the
general public) in industrial countries are sometimes shocked to discover that used
clothes are being sold “for profit”, rather than being given away free to “the poorest of
the poor”. An even broader expression of this issue is the question whether it is proper
Report of a study for Sida
for commercial “for-profit” companies to have any involvement at all in the redistribution
of used clothes which were originally donated by individuals to charities—not just in
selling surplus used clothes overseas, but even in running commercial for-profit second-
hand shops in industrial countries, and actually conducting the used-clothes collections
themselves. In the next chapter we will take a brief look at this issue.
Trying to solve the former problem (lost jobs) as the ITGLWF urges, by catering to the
second concern (only giving clothes away free to the poorest of the poor) probably does
not solve the disincentive problem, as we discuss at some length in the second part of
Appendix 4. Given our own analysis in later chapters, it is encouraging to find that an
influential African voice does not seem to share in the complete demonization of the
used-clothes trade like most of the other examples above.
At least so far, most governments worldwide do not seem convinced by producer
organization, labor union, and media images of—and arguments against—the used-
clothes trade. Most seem to take the general view that trade is positive, not just when
their producers can export to foreign markets, but also when their consumers can get
cheaper goods from foreign sources. There are high tariffs on used-clothes in many
countries, just as there are on textiles and garments generally, to protect domestic
industries; but it is primarily some former Spanish colonies (and Spain itself), plus a
scattering of other countries, that have exceptional restrictions on used-clothes. Even
the countries which impose exceptional restrictions often seem to have substantial
used-clothes imports anyway and, when we look at the trade data in Appendix 2, we
see that they are usually exporters as well.
Used Clothes As Development Aid
In the previous chapter we saw that there are very strong producer, union, and media
pressures aiming to ban or severely restrict the used-clothes trade, and yet most
national trade policies are as open to trade in used-clothes as they are to trade in
textiles and new clothes. To conclude this section on the used-clothes trade and its
general context, and before we begin our own analysis of the economic effects of that
trade, we want to review Swedish and international NGO attitudes and practices
towards used-clothes exports in general, and more specifically towards used clothes as
emergency or development aid. We want to have some idea of how NGOs utilize used
clothes, and we would like to know to what extent they effectively reach and help “the
poorest of the poor” with clothes aid.
In Appendix 7 we review and discuss at greater length a recent study entitled Promoting
Development by Proxy: The Development Impact of Government Support to Swedish
NGOs (Riddell, 1994) which analyzes the development impact of Swedish NGOs in
general. The spirit of the Riddell report is well expressed in the following quote: “To the
extent that Swedish taxpayers’ money is not being put to its best use, it is ultimately the
poor people in developing countries who are the losers. The recommendations given
here are made with the express purpose of trying to ensure that these state funds,
channelled through Swedish NGOs, are used to the maximum advantage of the poor.
To the extent that efforts are not made to enhance efficiency, it is not the Swedish
NGOs which will be the ultimate losers, it will be the poor themselves.”
One of the most frequent claims made on behalf of NGO development activities is that
NGOs are most innovative and know best how to target the very poor. It is also often
asserted more specifically that subsidized used-clothes exports do not damage local
textile or clothing production because they go only (or primarily) to the poorest of the
poor. In Appendix 4 we discuss the likelihood that, even if used-clothes were actually
distributed only to the very poor—who perhaps could not otherwise afford to enter the
market for clothing—probably a large percentage of the used clothes would find their
way onto the market anyway, so that the assertion of lack of damage is probably
fallacious. Now, however, we want to look at the assumption that the clothes actually
get to “the poorest of the poor” in the first place.
The Riddell report concludes that Swedish NGOs are not generally effective at reaching
and helping the poorest of the poor, largely because they have an inadequate
understanding of poverty, and lack an in-depth understanding of markets: “The staff and
experience of Swedish NGOs do not equip them well, nor predispose them, to focus on
analytic issues related to income and employment generation, or markets and market
analysis… The challenge of generating income and employment in stagnant economies
where markets are weak or absent surpasses the resources and capacities of many
Swedish NGOs.”
Thus we will review not only the specific question of the extent to
which used clothes exported by Swedish NGOs reach the very poor, but also the more
general question of their understanding of poverty and markets, as revealed in recent
studies of their activities with used clothes.
As we saw in Chapter 1, the four major Swedish organizations exporting used clothes
are UFF (Utlandshjälp från Folk till Folk, or Development Aid from People to People
Sometimes referred to in English as DAPP, but for consistency we will stick to the Swedish acronym UFF.
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PS (Praktisk Solidaritet, or Practical Solidarity), Myrorna (an agency of
Frälsningsarmén, the Salvation Army), and SRC (Svenska Röda Korset, the Swedish
Red Cross). Individual studies have reviewed the used-clothes export practices of both
UFF (Interconsult, 1990a; and Denconsult, 1993) and the Swedish Red Cross (SRC,
April and May, 1992); and another earlier study reviewed used-clothes exports
specifically to Mozambique of both UFF and PS (Abrahamsson, 1988). In addition,
another Interconsult study (1990b) reviewed the dependence of PS on Sida funding for
used-clothes collection and related activities in Sweden, after which PS cut costs and
increased sales of used-clothes in Sweden to reduce that dependence.
We have reviewed the above studies and have also discussed the issues involved in
the current study with each of the organizations covered. The previous studies are
almost all a little out of date now because of historical and organization changes since
they were done, but they provide some glimpse of how the organizations have operated
in the recent past. We will summarize and discuss them below, noting subsequent
changes in policies and practices where we are aware of them.
We will also briefly review the attitudes and policies of some non-Swedish and
international NGOs, and we will conclude with a review of some issues surrounding “for-
profit” firms’ involvement in NGO activities.
The 1988 study Den Nakna Sanningen (The Naked Truth) recommended increased
shipment of used clothes to Mozambique by Swedish charitable organizations
(specifically PS and UFF), as well as development of increased sorting and handling
capacity in Mozambique—and it recommended increased Sida aid for those purposes—
for the following 10 reasons:
1. Clothes are a basic need; if the need is met, significant economic effects can result.
Swedish clothes aid to Mozambique is a good example: The clothes reach the
target groups and, through their use, contribute to increased employment in the
countryside and to improved production of food for sale.
2. Clothes are scarce in Mozambique, where domestic production can barely supply
10% of the need. Aid recipients will need support—at a much increased level—for
the next 5-10 years.
3. Used clothes are a surplus item in Sweden, and thus resources will be wasted if
they are not utilized.
4. The clothes which are sent are of high quality, with an average remaining life of 2/3
of the original. The cost for transporting the clothes (SEK 7/kg)
is low in relation to
the clothes’ value to the receivers.
5. In general, Swedish clothing aid has no negative effect on local textile production.
6. The alternative cost for import of new fabric or new clothes from competitive
suppliers on the world market would be 4-5 times higher.
7. Swedish clothing aid constitutes a very important complement to other Swedish aid.
8. The sending organizations have a well-functioning relationship with the receiving
organizations, and both have capacity to handle increased quantities of used
9. Clothes aid is very effective aid, and the receivers give a high priority to this aid.
SEK is the designation for Swedish kronor: Over the last decade, the exchange rate has generally
fluctuated between SEK 5-8 per U.S. dollar.
Used Clothes As Development Aid
10. Clothes aid strengthens the interest of the Swedish people in development issues,
and thus their willingness to give aid.
The reasons given in this study for increased used-clothes exports, and subsidies
thereon, can perhaps be summarized more briefly as follows: People need clothes to
work. Used clothes have value and should not be wasted. The receivers like receiving
subsidized used-clothes. People in Sweden like to help others by donating their used
clothes. The sending and receiving organizations work well together. Because there is
insufficient production in Mozambique, there is no effect on the market. To import new
clothes would cost much more. Sending used clothes helps in a way that other Swedish
aid does not.
We would not disagree with any of these reasons, except to point out that, even if there
is insufficient production at any given time, subsidizing used-clothes imports might
reduce the incentive to increase domestic production later, as we will discuss further in
Chapter 8. But this view of the situation seems to rely exclusively on social and political
remedies, and in analyzing alternatives, overlooks markets almost entirely. It overlooks
alternative uses of the used clothes, as well as alternative sources of used clothes. In
addition, it overlooks alternative uses of the funds used for subsidies, such as for
employment- and income-generating projects. Thus, in the specific context of used-
clothes exports, it seems to confirm the characterization of Swedish NGOs—as given in
the Riddell report—as lacking an adequate conceptualization of poverty and
understanding of markets.
A more detailed look at this study indicates that markets were in fact playing a big role
in NGO thinking even in 1988. “The aim of clothing support is to motivate the rural
population to increase surplus production for marketing purposes… Recipient
[organizations] sell the major part of the… clothing to intended target groups, in
exchange for either agricultural products or money… The income which results from
these sales is in part used to create so-called development funds. The objective of
these funds is to provide the means for locally-based development projects (for
example, garment-sewing, road maintenance, warehouses, etc.).”
Nevertheless, “it is true that the clothing support does not always match local
consumption patterns. This is so mostly for women in rural areas. The traditional
‘capulanas’ are especially in great demand. Due to a lack of availability, women cut up
dresses and skirts and turn them into capulanas. Even men partly adjust clothing to
local requirements. This is especially true for trousers which are cut into shorts more
suitable for agricultural work.”
While we have seen similar “restyling” behavior in
descriptions of the commercial markets in Rwanda and Zambia, in the current case this
may also indicate that markets have been by-passed at one or more stages in the
distribution process, with resulting inefficiency.
It is asserted with apparent approval that “the [collecting] organizations have ‘eliminated’
competition from commercial enterprises which collect clothing for sale on the world
There is also the following somewhat limited discussion of alternative
sources: “Another alternative to Swedish clothing support is the importation of second-
hand clothing from the USA on a commercial basis. This alternative is, however, more
expensive. Commercially imported second-hand clothing is also of somewhat lower
But in fact, data reported to the UN (shown in Table 11, below) shows that,
during the period in question, there were a great number of used-clothes suppliers to
Mozambique, at a great range of prices. While it is true that reported values (and thus
calculated prices) may have been assigned somewhat arbitrarily in some cases
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(assuming that some of the clothes were donated, not sold), we nevertheless have to
assume that there is a wide variety of actual market values indicated as well. It is not
clear that equal value could not have been gotten for similar (or less) cost elsewhere.
reported reported average reported reported average
to Mozambique value weight price to Mozambique value weight price
ranked by price (US dollars) (kilograms) (US$/kg) ranked by price (US dollars) (kilograms) (US$/kg)
Finland $142,000 42,000 $3.38 United Kingdom $295,000 57,000 $5.18
W. Germany $164,000 65,000 $2.52 Portugal $60,000 19,000 $3.16
Netherlands $164,000 154,000 $1.06 W. Germany $179,000 59,000 $3.03
Zimbabwe $1,000 1,000 $1.00 Denmark $662,000 261,000 $2.54
Italy $18,000 21,000 $0.86 Finland $252,000 106,000 $2.38
USA $346,000 405,000 $0.85 USA $2,145,000 1,020,000 $2.10
Sweden $119,000 148,000 $0.80 Austria $11,000 8,000 $1.38
United Kingdom $6,000 11,000 $0.55 Belgium-Luxembourg $48,000 36,000 $1.33
Denmark $7,000 75,000 $0.09 Netherlands $175,000 166,000 $1.05
1986 total $967,000 922,000 $1.05 Sweden $408,000 439,000 $0.93
Italy $36,000 68,000 $0.53
France, Monaco $2,000 7,000 $0.29
Norway $2,000 10,000 $0.20
Australia $1,000 8,000 $0.13
1987 total $4,276,000 2,264,000 $1.89
Source: Derived from SITC1 data obtained from the United Nations Statistical Division, International Trade Statistics Branch.
Notes: This is partner data, which reports f.o.b. values not including freight and insurance. The weights reported here for Swedish
exports do not correlate well with the data reported in the study under discussion, which reported 800 tons of used clothes
exported to Mozambique from Sweden in 1985/86, 930 tons in 1986/87, and 1230 tons in 1987/88 (English version, p. 5).
It is recognized that “Women prefer traditional, brightly colored so-called capulanas.
Another step must be… complementing the clothing support with purchase of
capulanas. This would reduce the rural areas’ need for dresses and skirts, which could
advantageously be sold to urban populations. In order to improve sorting and to tailor it
to each target group, the Swedish NGOs should… examine conditions for establishing
local sorting centres in Mozambique… In order to avoid negative competition for
domestic textile production in the cities, the recipient [organizations] should make the
selling of second-hand clothing more selective and directly aimed at intended groups.
This could be done by making sales at places of work and in residential areas… The
recipients should generally make a thorough analysis of the current pricing system…
[because] the very low prices of second-hand clothing can in the long run create
expectations and patterns regarding consumption which would aggravate the future
sales and development of domestic textile production. Despite low prices, profit margins
for businessmen are currently also considerable, which may negatively influence the
sound distribution of income.”
Thus there seems to have been a mix of methods called for—sometimes using markets,
other times trying to distribute goods and income to the target groups more directly
and it is not clear that the choices were being made based on an adequate theory of
poverty and a thorough understanding of markets.
Practical Solidarity’s policy and practice have changed considerably in the years since
this study (we will consider UFF further separately, below). Apart from refugee aid such
as continues to be needed in Angola, “the clothes themselves are no longer the means
for fulfilling our goals (in Mozambique and Nicaragua), but [rather] the cash that they
can give to the projects we are supporting there.”
Used Clothes As Development Aid
Like PS, the Swedish Red Cross has also changed its used-clothes distribution
methods considerably in the last few years.
In the late 1980s the Red Cross had a
surplus of used clothes—in other words, more than were needed for refugee and other
emergency needs—and on the other hand, it wanted to assist the organization-building
processes of local Red Cross organizations in various LDCs. Consequently, the practice
developed of allowing the local organizations to sell large quantities of used clothes,
either in bulk to commercial distributors, or as individual garments in self-run thrift
shops. However, after two studies commissioned by the SRC specifically to study used-
clothes sales in LDCs (Swedish Red Cross, April and May 1992), the SRC decided that
this was essentially a bad policy, and changed its practice. Some of the reasons for the
change were:
Introducing western clothing styles via subsidized sales was not the SRC’s intention
or desire.
It was costly, as there was a risk of corruption (many bales of used clothes had
simply disappeared), and much better monitoring was required.
There was often a bigger benefit if the clothes were sold in Sweden, and the
proceeds used to support Red Cross activities in LDCs.
Thus, if used-clothes sales were to be a viable income-generating project for local
organizations, it would be better if they initiated the projects themselves without being
dependent on the SRC for supplies.
With the rising tide of refugee needs due to regional conflicts after the end of the
Cold War, the SRC’s used-clothes collections have been required elsewhere.
Only about 10% of the SRC’s assistance for LDCs is in the form of used clothes, and
nowadays only about 5% of the clothes exported are for sale. The latter amounts are
only in fulfillment of old contracts with local organizations, which are being allowed to
expire without renewal. Other than those contracts, all used clothes currently exported
are in response to emergency appeals, for disaster relief, by either the International
Committee of the Red Cross (ICRC) or the International Federation of the Red Cross
In 1992, 30-50 countries were receiving used clothes primarily for distribution to
refugees, but the two studies focused on Uganda, Zimbabwe, Mozambique, Sierra
Leone, Vietnam, and Poland, which were the countries involved in selling used clothes.
Although the reports are now somewhat out of date because policies and practices
have changed, we have reviewed and discussed them a bit more fully in Appendix 7,
because it may still be instructive, especially in view of some of the generalizations
about NGO attitudes and behavior made in the Riddell report, to understand some of
the situations and problems that were encountered with SRC used-clothes distribution
activities at that time.
The report on second-hand clothing for Uganda, Zimbabwe, Mozambique, Sierra Leone
and Vietnam pointed out that: “Clothing consignments are not used primarily for disaster
relief or disaster preparedness… Experience from disaster areas in other countries has
shown that clothes are not a priority in the event of disasters [and may even get in the
way], but… can be valuable… for relief assistance [for instance, after disaster areas
have become ‘normalized’].” The report goes on to say that: “The guidelines treat the
The Swedish Red Cross has been exceedingly helpful in the preparation of this report, and is to be
commended for commissioning and distributing the studies which brought the following problems to light.
Report of a study for Sida
sale of clothes as marginal in comparison with other use. In reality, the sale of clothes
has perhaps become the most important activity. Between 25-80% of the clothes are
sold” in those particular countries.
Thus in some countries almost all of the used clothes were being sold, but proper
monitoring and reporting was often lacking. Many entire bales of used clothes—each
worth perhaps two months’ local salary or more—were simply missing. There was rather
arbitrary pricing of and arbitrary access to used clothes, including by local Red Cross
employees, who were sometimes known to misuse the privilege of buying under-priced
used clothes on credit, including for resale. There was also organizational tax
avoidance, since clothes which were allowed to be imported without customs duty—on
condition that they be given away free—were in fact sold. Thus in apparent confirmation
of two major aspects of the Riddell study, many of the imported used clothes were not
going to the very poor, but were being sold on the market, although sound business
practices and market understanding were not much in evidence.
Whereas the Abrahamsson study reviewed above recommended increased sorting
activities to be done in the LDC (in that case, Mozambique), the SRC studies repeatedly
pointed out
that “sorting and choice of clothes can be better suited to the needs of the
recipients… [if] the Swedish Red Cross is able to gain a proper insight into the special
needs, the climate and the culture prevailing in the various countries.
Systematic and
regular monitoring of the clothing consignments make it possible to increase the degree
to which the clothes are suited to the recipients and ultimately to establish an
‘experience register’ for each country.”
Given that this was basically a commercial operation in the LDCs and showed so many
problems which had almost nothing to do directly with disaster preparedness or
response, and even relatively little to do with relief assistance or development, the SRC
was doubtful about getting further involved. It read these reports in 1992 and decided to
change policies. It prefers now to stick more closely to its core mission, which may
include selling used clothes in Sweden (possibly including bulk sales to export
wholesalers) in order to fund its activities, and sending used clothes abroad if requested
for emergency purposes by the International Red Cross, but probably not selling used
clothes in LDCs itself, nor trying to use them for development purposes directly.
UFF (known in English as Development Aid from People to People), a private
development organization associated with Humana organizations throughout much of
Europe, seems to have evolved a somewhat similar strategy, at least insofar as it
primarily does not attempt to do development work via used clothes directly,
but rather
usually sells the clothes for the maximum price obtainable on the market, and then uses
the funds for development purposes. A big difference, however, is that UFF has gone
For instance: “Some of the clothes sent are too warm (coats and winter jackets); some bales contain torn
and worn-out clothes which are unusable and have to be discarded; some bales contain underwear and
thick long johns, which are unsuitable; high-heeled shoes or winter boots are not required.”—p. 14,
regarding Uganda. Regarding Zimbabwe, the same comments, plus “trousers for women cannot be
used.”—p. 19. Regarding Sierra Leone, similar comments, plus “do not send clogs or the like, it is
impossible to sell them.”—p. 30. Regarding Mozambique and Vietnam, similar comments, but for the
latter: “Long trousers for women are appreciated;” many clothes and shoes were also too large for
Vietnamese to wear.—p. 35.
Except insofar as Africans may be trained in sales and other aspects of the business in UFF’s used-
clothes sales operations in Africa.
Used Clothes As Development Aid
into commercial selling of used clothes in LDCs in a big way; it has taken a lot of
criticism for not giving the clothes away for free, as well as for other reasons. We have
reviewed two studies of UFF’s used-clothes activities, which came to rather different
The first study (Interconsult 1990) came to the conclusion that UFF did not need Sida
freight subsidies for used clothes because it was selling the clothes commercially in any
and the commercial proceeds would cover the freight costs. Consequently, Sida
freight subsidies amounted to indirect funding of other UFF activities, which Sida had
already chosen not to fund, at least partly because UFF chose not to open its books
regarding all its international activities to Sida scrutiny, and perhaps partly to do with
management style and expense.
The second study (Denconsult 1993), addressed the effects of UFF’s used-clothes
sales. With regard to Zambia, the report says: “The total effect of [UFF’s] work—clothes
sales as well as development aid work—is actually very positive.”
It goes on:
positive effects of [UFF’s] total activities in Zimbabwe at present exceed by far the few
negative effects of the trade in second-hand clothes… The actual analysis of [UFF’s]
trade in second-hand clothes in Africa shows that the present positive effects by far
surpass the negative ones. This tendency is naturally strengthened by the fact that the
profit from [UFF’s] trade in second-hand clothes finances a large part of [UFF’s]
development aid activities in the countries…
“In spite of [UFF’s] being a rather new private development aid organization, impressive
results have already been obtained… After a learning period of about 20 years where
experiments, mistakes, and a number of corrections were made, [UFF] in Zambia and
Zimbabwe appears today as a relatively effective private aid organization capable of
reaching the poor part of the population with relatively cost-effective and viable projects
within the fields of education, health, water and sanitation, agro-forestry and tree-
planting. This assessment is shared by a number of international development aid
organizations such as the European Development Fund, the World Bank and UNICEF,
and can be derived from the fact that these organizations use [UFF] as an
implementation tool for their emergency aid and poverty programmes in Zambia as well
as in Angola.
“It is worth noting that this result has mainly been obtained through efforts of voluntary
labor from [UFF’s] permanent staff—among them a large number of young African
[UFF] employees, and a large group of solidarity workers who have spent six months
each on a development project. Unlike the main part of the other Scandinavian private
development aid organizations, [UFF] has not received large contributions financed by
the public tax-payers for its development aid work. Second-hand clothes are [UFF’s]
most important source for financing the development aid work in Africa.”
Based on 1994 figures for Angola, and confirmed by Merete Schiøler of the UFF federation, UFF seems
to give away approximately 1% of the clothes it exports, and sells the rest.
Those criticisms—and the extent to which they may or may not be valid—do not concern us here (and we
know nothing substantive about them), except to point out that the distinction between for-profit and not-
for-profit organizations can be a slim one, given that there are often no legal limits on the allowable
management costs of non-profit organizations. “For-profit” organizations exist because human beings
tend to operate a good portion of the time on a “for-profit” basis. Calling an organization “non-profit” does
not eliminate that motivation or that behavior, although it can at times contribute to less clear and efficient
Report of a study for Sida
Thus this study came to the emphatic conclusion that, on the whole, there would be
negative consequences for the African economies studied if UFF were prohibited from
collecting or exporting used clothes. And apparently large segments of the public agree:
Despite negative publicity attached, among other things, to the fact that UFF sells
almost all of its collected clothes either here in Sweden or in African LDCs, it continues
to be the single biggest collector and exporter in the Swedish used-clothes market.
The importance of involving the Swedish people in development work is frequently cited
as an important reason for subsidizing used-clothes exports, but UFF shows that it is
possible to successfully combine charitable used-clothes collection and commercial
sales with useful development projects. UFF’s Annual Report
is of course a public
relations document, so it shows how UFF would like the public to understand these
“Some of the collected clothes are sold in the UFF shops [in Denmark (and Sweden)].
The proceeds from the sale are used in full for people to people projects in Africa. After
sorting, about 60% of the collected clothes are shipped to people to people projects in
Africa. The clothes are sold in local [UFF]-shops and in market places in rural areas.
There is a great shortage of clothes in Africa. Thus the second-hand clothes meet an
important need for many poor people, who cannot afford, nor have the opportunity to
buy, new clothes. African market economy is often characterized by a scarcity of
merchandise. In this situation, the second-hand clothes function as a generator on the
market and help induce production and trade. Importing, transporting, sorting, packing
and selling second-hand clothes create many jobs in Africa… The proceeds from selling
clothes in Africa are used to start and/or operate schools, enterprises, health
programmes, AIDS-campaigns, child aid and environmental programs. The second-
hand clothes are an important source for funding the work in Africa.”
In both Europe and Africa, the UFF second-hand shops aim to produce “a good surplus
for development aid”.
Some used-clothes are also distributed free—in Angola, less
than 1% in 1994 (which was still over 11 tons).
The purposes of the “fund-raising” (used-clothes sales) activities in Africa are very clear:
“The first is to generate funds for [UFF] projects…; the second is to provide good quality
second-hand clothes, at a reasonable price [note: QRW a subsidized price], to the
population… particularly in the rural areas… It means a lot to these poor people to be
able to buy cheap, second-hand clothes and perhaps save some of their meager
income to buy other needed commodities… The selling of second-hand clothes also
stimulates the local market economy in these countries… [People] are encouraged to
produce something and/or to sell something in the market in order to make money to
buy the clothes…
The small dealers benefit from the project because, by buying and
then selling the clothes, they are able to run a small business, thereby making a living
for their families.”
In Mozambique, “By initiating a credit system, the project made it possible for many new
vendors to start selling second-hand clothing. The credits are given with preference to
those from remote areas… Many of the clients do not have the basic business
knowledge necessary to run a small business. In order to help the growth of their
enterprises, the project has started giving courses in ‘Small Business Management’.”
This point was also made strongly in Abrahamsson’s report on Mozambique; we see here that it seems to
apply equally well when the clothes are not subsidized.
Used Clothes As Development Aid
“To be a customer in an [UFF] shop means more than just buying an item of second-
hand clothing. It is an experience in how clothing, donated by people in Europe, is
transformed into a well-liked commodity and into development aid, helping children…”
“UFF and HUMANA have contributed to emergency aid programmes in various ways.
[They] have developed an emergency aid package… containing QHZ FORWKHV suited for
one person. All is packed into a bag with the size and sex marked on it. There is a pair
of solid shoes, underwear, other clothes needed and a blanket. [They] have distributed
thousands of emergency packages, in particular to refugees in war-stricken areas.”
There is a note that UFF “also distributes packages with second-hand clothing in areas
with a particular need of emergency aid”, but as we have noted, it seems to be a quite
insignificant share of total used clothes exported.
Thus UFF, a non-profit NGO, is very actively involved in commercial sale of used
clothes. We will shortly examine a slightly opposite possibility, which is that for-profit
companies can be directly involved in the collection of used clothes for NGOs. But first
we will finish our review of NGOs themselves by taking a quick look at the attitudes of
some of the major non-Swedish and international NGOs.
The Salvation Army in the U.S. and Canada, and Oxfam in Britain, have expressed
concern about the subsequent effects on LDC producers when they sell surplus used
clothes to wholesalers on the world market. A number of international NGOs also
express rather strong reservations even about utilizing second-hand clothes in
emergency situations.
The International Federation of Red Cross and Red Crescent Societies states that “all
used clothing distributed through Federation programs is destined for victims of natural
or man-made disasters… [and even then] only on an exceptional basis.”
As we have
just noted, the Swedish Red Cross now exports used clothes almost solely in response
to requests from the International Red Cross.
Oxfam America cautions:
“As with emergency food… it is [generally] more appropriate
for international agencies to provide funding so that products can be bought locally, or
at least within the region—[unless] local supplies are not adequate or accessible, and
imports are [thus] warranted.” (Food aid has a forty-year history and has been debated
thoroughly in the economic literature; a sampling of that debate, illustrating the issues
involved, is included as Appendix 8.
The British Overseas Development Administration also believes:
“In emergency
situations, available funds are more effectively used in support of international
coordinating agencies, such as UNHCR
, the UN Department of Humanitarian Affairs,
and the International Committee of the Red Cross. It is essential to respond in disaster
In addition to those quoted here, the Südwind Institut of Siegburg, Germany, which is itself strongly
opposed to used-clothes exports, notes that “Brot für die Welt (Bread for the World) and Caritas
International do not collect clothes at all. They say that even in the case of emergencies it is better to buy
clothes in the region than to pay all the money for transport: It is often cheaper, faster, and helps the local
Steve Juniper also notes that “Food First and others have considered the [effects] of food aid shipments.
In the real world, how it is handled is at least as important as what is handled. Food (or clothing) aid can
be disruptive, with long-term net negative results. Sensitively and wisely administered, either can be very
helpful. ‘The devil is in the details.’” Personal communication, April 1995.
The UN High Commission for Refugees.
Report of a study for Sida
situations to the precise, and sometimes changing, needs of the victims, which is done
through close coordination with these international agencies and… charities, to ensure
that the right items are supplied to the right people at the right time. There have been
instances in the past where donated goods were not suitable for the people for whom
they were directed.
There is also the danger that the recipients will resent the donation
of second-hand clothes (a practice banned in some countries).”
We have noted the involvement of several NGOs (specifically PS, the SRC, and UFF) in
commercial sales of used clothes in LDCs, and have discussed both problems and
opportunities occasioned by such practices. Another interesting possibility, which has
provoked controversy in the U.S., is the involvement of commercial “for-profit”
companies in used-clothes redistribution activities within the source (industrial) country,
including collection, sorting, and operation of second-hand “thrift shops”. It works like
“A key element in the formula is the relationship between local charities and [‘for-profit’]
thrift store chains. [For the chain], this means finding a local charity, supplying it with
trucks and teaching it how to phone bank
and collect donated items. [The chain] then
contracts to buy truckloads of merchandise that the charity collects locally… The
charities say they like the thrift store partnership because it enables them to raise a lot
of money…”
The Council of Better Business Bureaus’ Philanthropic Advisory Service (in the U.S.)
clarifies the field by distinguishing three types of charity thrift shops:
1. “One is self-contained and program-related. The charity fully controls all aspects of
the operation of the shop. Running the shop is actually part of the mission of the
organization. The shop’s secondary purpose is to raise money to pump back into the
charity’s program fund.
2. The second type of shop is controlled entirely by a nonprofit organization, but exists
strictly as a fund raiser, not as a program service.
3. The third type is a charity thrift shop with a for-profit connection. Solicitations for
second-hand goods are made on behalf of the charity, but typically a for-profit
business owns and operates the shop itself. Some of the value of the donated goods
goes to the charity, and the rest goes to the owner-operator.”
There are obvious reasons why an NGO might want to run a shop in either of the first
two modes, but why would they choose the third? They can perhaps “raise a lot of
In this regard, Mike Conroy of the Ford Foundation recalls his experience with the donation of surplus
pharmaceuticals to Nicaragua in the 1980s: “Ultimately the Ministry of Health began to discourage the
practice, for several reasons: a) The medicines were often unknown to the clinic personnel; b) they never
came with Spanish language instructions, warnings, or explanations of side effects; c) they were almost
always in lots and batches too small to manage efficiently; d) they were less valuable to a fundamentally
preventive health system than the very simple medicines more frequently prescribed, which were also in
short supply, but which did not generally come [in the] loads of medicines brought in by well-meaning
‘brigades’ from the U.S., Europe and Latin America.” Film-maker David Springbett of Asterisk
Productions, who specializes in Third World issues, also says: “The problems with imported technologies
are legion, they often do not do the job the donors intend; often the technology is inappropriate, or it is
obsolete—but the key problem is invariably maintenance. Where do the spare parts come from?”—
personal communications, April 1995.
“To phone bank” refers to the practice of having a “bank” of volunteer or paid staff make systematic
phone calls to private residences soliciting used clothes, to be picked up by appointment.
Used Clothes As Development Aid
but cannot they do that in the first two ways also? Maybe, but maybe not. If
they are well organized and have lots of volunteers, then presumably they can make
money in those modes, but even then, besides the drain on the volunteers and on the
NGO’s organizational capacity, there may also be a substantial capital investment to set
up the operation.
The Council of Better Business Bureaus notes: “Many of the charities raising money
through these arrangements argue that they are getting great returns for the use of their
name. First, they do not have to put up the capital (US$100,000-300,000, by one charity
representative’s estimation) to open the shop. ‘If you tie up that $150,000 in a thrift
shop, you will not have it for the programs you are trying to run.’” Another charity
agreed, saying: “What people do not understand is the tremendous infusion of capital
that these (for-profit) operators put into the thrift shops.” Thus, “for no financial risks and
for very few headaches, the charity can earn a sizable portion of its total yearly budget
by signing on the dotted line…”
Some people feel that the percentage that is given to the charity—often in the range of
7-10% of gross revenues—is too small. But “as a financial manager of a veterans’
organization said, even if you own and operate your own shop, ‘there is no guarantee
you can make 8% (profit or surplus) your first year. There is better return on your own
thrift shop if you own it and operate it efficiently, but that is LI you can operate it
efficiently. It is not easy to do that.’” One organization “has approximately 200 thrift
stores across the country, half run by the charity and half managed by for-profit
entrepreneurs… [An executive] said that the professionally-run stores are a better deal
for his charity. [The] wholly owned and operated stores ‘do a lot worse’ financially than
the professionally managed ones…”
The studies we have reviewed of Swedish NGO used-clothes distribution activities in
LDCs are a little out of date, because historical conditions and organizational practices
have both changed since the studies were done. Nevertheless, they seem to bear out
many of the points made in the Riddell study of Swedish NGOs in general: For instance,
at least at the time of the studies, there often seemed to be an arbitrary mix of market
and non-market methods employed; understanding of markets and of market analysis
seemed limited; and there seemed to be a tendency for concentration of power, with
resultant possibilities for corruption. Often the used clothes exported did not seem to
benefit the poorest of the poor.
However, the problems seem to have been recognized and practices changed. PS and
the SRC report rationalizing their sales operations in order to concentrate on
development or relief projects, and UFF continues to do the same.
Many non-Swedish and international NGOs seem quite cautious even about utilizing
second-hand clothes for emergency relief, and seem quite concerned about contributing
“Perhaps”, because it depends, among other things, on the nature of the specific contract agreed
between the charity and the operator.
Report of a study for Sida
to the international used-clothes trade via bulk sales of surplus used clothes to
commercial wholesalers, although many of them do it.
UFF demonstrates an apparently successful model of an NGO heavily involved in direct
commercial selling of used clothes in LDCs, while a controversial model of for-profit
involvement in the collection process has been demonstrated in the U.S. The fact that
UFF seems to continue to enjoy widespread public support, despite heavy negative
publicity, may indicate that the people of Sweden do not insist upon direct subsidized
distribution of used clothes to the very poor, but perhaps understand to some extent the
intermediating power of markets to increase the benefit provided by the clothes to the
Used Clothes As Development Aid
In Part I we saw that there is a large worldwide trade in used clothes, and that there are
strong negative feelings towards this trade, especially on the part of LDC clothing
producers and workers; that national governments for the most part are fairly tolerant of
the trade; and that many NGOs have reservations about it but also participate in it in
various ways. Now we will analyze the theoretical impact of used-clothes imports on
economic welfare in a small LDC. The theoretical analysis we will present is rather
simple, but it is important to notice carefully exactly how we do it.
To begin with, we might imagine what we take to be a fairly realistic situation in a small
less-developed country. There might be:
a) masses of people too poor to buy domestically-produced clothes; or even
b) no domestic textile production; or
c) no legal commercial import of used clothes.
There might also be:
d) poorly functioning factor markets resulting in massive unemployment;
e) and an uncompetitive industry that is unable to export domestically-produced clothes;
f ) but there might also be positive external benefits associated with actual or potential
industrial production in the early stages of industrialization—the infant industry
Basically, we want to know:
1. What would be the effects on such an economy of allowing used-clothes imports?
2. What would