Used Clothes as Development Aid: The Political Economy of Rags (SIDA) Part I: The used-clothes trade Chapter 1: Used-clothes exports Worldwide textile and clothing trade, including Third World exports Worldwide gross and net used-clothes exports, 1984-'93 Twenty-four net used-clothes exporting countries, 1984-'93 Gross exports of 127 countries or trading territories in 1990 Commercial used-clothes exporters: the ''rag merchants'' Charitable used-clothes (and other) exports Sweden's used-clothes collections, exports, and imports Summary and conclusions Chapter 2: Used-Clothes Imports (introduction...) Ninety net used-clothes importing countries, 1984-'93 Gross imports of 181 countries or trading territories in 1990 Distribution of used clothes in Rwanda Distribution of used clothes in Zambia Summary and conclusions Chapter 3: The general context of the used-clothes trade (introduction...) Popular images: producer organizations, labor unions, and the mass media A possibly more balanced, African media view National government used-clothes trade policies and practices Summary and conclusions Chapter 4: NGO attitudes and involvement in the used-clothes trade (introduction...) The naked truth (1988): PS and UFF used-clothes exports to Mozambique Another slightly out-of-date example: the Swedish Red Cross (1992) Combining commercial used-clothes sales with development projects (UFF) Non-Swedish and international NGO attitudes towards used-clothes exports Commercial ''for-profit'' involvement in used-clothes collection and distribution Summary and conclusions

Used Clothes as Development Aid: The Political Economy of Rags (SIDA)

Part I: The used-clothes trade

Chapter 1: Used-clothes exports

Worldwide textile and clothing trade, including Third World exports

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 clothing.

Table 1: Leading traders in textiles and clothing, 1993 (US$billions)

textile exporters	value	textile importers	value	clothing exporters	value	clothing importers	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 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.

Table 2: 1984 world textile and clothing exports, including those to and from LDCs (US$billions)

Economies	exports of industrial market economies	exports of LDC market economies	exports of centrally planned	total world exports	industrial country exports to LDCs	LDC exports to industrial 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.

Table 3: Index numbers of textile and clothing production, 1973-'85 (1980=100)

textile production of:	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

wearing apparel production of:	1973	1975	1982	1983	1984	1985
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.

Worldwide gross and net used-clothes exports, 1984-'93

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 US$782,834,000.

Table 4: Worldwide gross and net used-clothes exports, 1984'93

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 internationally. 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 used-clothes exporting countries, 1984-'93

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^th 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. 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^th 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^nd 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 exports of 127 countries or trading territories in 1990

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 imports). 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^th place of gross exports in 1990 (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 3. The U.S. was in 11^th place with 0.55 kgs in 1990, and Sweden was in 13^th 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^th place (US$1.42), and the U.S. was in 82^nd place ($0.91).

Commercial used-clothes exporters: the ''rag merchants''

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 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.

Table 5: U.S. exports and imports of used clothes and rags, 1984-'93 (US$1000s)

We have just seen evidence of the same discrimination of quality and potential use within 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 country.

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 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.

Charitable used-clothes (and other) exports

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.

Table 6: U.S. private charitable exports, including food, wearing apparel, pharmaceuticals, and all other goods, 1990-'94 (US$1000s)

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 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.

Sweden's used-clothes collections, exports, and imports

In 1992, Sweden imported 77,000 metric tons of new clothing (see Table 7, below), and almost as much fiber, yarn, and fabric (combined).

Table 7: Sweden's 1992 production, import, export, and net supply, of fiber, yarn, fabric, and clothing (1000 kgs)

	wool fiber	cotton fiber	yarn	fabric	clothing	homemade 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. In 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 exported.

Table 8: Sweden's 1994 used-clothes collections, resales, and exports (1000 kgs)

	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 required.

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.

Table 9: Sweden's used-clothes exports, 1984-'94

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 procedures.

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).

Summary and conclusions

Well-functioning international commercial markets; stable and growing supply; Sweden plays a small role in worldwide exports

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.

Chapter 2: Used-Clothes Imports

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 Rwanda."

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 used-clothes importing countries, 1984-'93

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.

Gross imports of 181 countries or trading territories in 1990

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 U.S. was in 30^th place, and Sweden in 53^rd 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^st place with 0.056 kgs, and the U.S. was 137^th 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^th place (US$4.14), while the U.S. was in 32^nd 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.

Distribution of used clothes in Rwanda

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 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 markets."

Distribution of used clothes in Zambia

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 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, changa changa (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 bales.

"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. Prices 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 men...

"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 areas...

"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 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 clothing.

"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 chilubas...

"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 chilubas. Emblematic of changes following president Frederick Chiluba's take-over from Kenneth Kaunda, the chiluba 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..."

Summary and conclusions

Imports primarily to LDCs; well-functioning domestic used-clothes markets; lots of employment generated

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 quality and purpose (and price) within the general category of "used clothes", and it is apparent that they are not just 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.

Chapter 3: The general context of the used-clothes trade

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.

Table 10: Qualitative effects of used-clothes imports, and of subsidies thereon

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.

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 industries".

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 relevant."

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 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. 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.

Popular images: producer organizations, labor unions, and the mass media

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;

"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... [A] 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'."

A possibly more balanced, African media view

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 that:

"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 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..."

National government used-clothes trade policies and practices

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 and other used goods), 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.

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.

Summary and conclusions

Very strong negative feelings towards the used-clothes trade; images often seem exaggerated and arguments weak; nevertheless, caution may be advised; only a few countries worldwide have exceptional restrictions on used-clothes imports; they often allow imports in practice, and many are themselves used-clothes exporters

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 believed 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 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.

Chapter 4: NGO attitudes and involvement in the used-clothes trade

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), 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 naked truth (1988): PS and UFF used-clothes exports to Mozambique

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 clothes.

9. Clothes aid is very effective aid, and the receivers give a high priority to this 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 market." 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 quality." 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 (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.

Table 11: 1986 and 1987 used-clothes exports to Mozambique, by price

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."

Another slightly out-of-date example: the Swedish Red Cross (1992)

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 (IFRC).

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 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.

Combining commercial used-clothes sales with development projects (UFF)

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 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 conclusions.

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 case, 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: "The 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."

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 issues:

"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: not 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'."

"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 new clothes 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.

Non-Swedish and international NGO attitudes towards used-clothes exports

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 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)."

Commercial ''for-profit'' involvement in used-clothes collection and distribution

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 this:

"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:

"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.

The second type of shop is controlled entirely by a nonprofit organization, but exists strictly as a fund raiser, not as a program service.

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 money", 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 if 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..."

Summary and conclusions

Many used clothes sold on the market, not given to the very poor; NGOs may lack poverty understanding and market analysis; some doubt about utilizing second-hand clothes even for emergency relief; "for-profit" involvement may be beneficial in some situations

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 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 poor.