“Your help is hurting” – More unintended consequences

“The world is complicated.”

In a video from PovertyCure, Peter Greer tells the story I mentioned earlier of how in just one summer help from a U.S. church destroyed the egg market in a small Rwandan village.

Second hand clothes sent to Kenya destroyed the textile manufacturing industry and the cotton farms. Sad unintended consequences.

 

 

Superb quote from the video:

Christians have a natural commitment to fighting poverty. That comes from the foundation of Christian beliefs. But that motivation must be allied with being smart and the world is complicated. And so the actions we take, we must be confident they they are going to help and not makes things worse.

Paul Collier

That is the challenge – how do we make sure our faith driven desire to help others doesn’t cause a problem we didn’t expect.

3 Responses to “Your help is hurting” – More unintended consequences

  1. Leif says:

    One of the questions to ask is, where did the second had clothes come from? It’s likely not where you think. The images in the video give the impression that the second hand clothes are being handed out for free, and that’s what’s destroying the market. But that’s not the case. Instead, second hand clothes are collected in the US and Europe, bundled onto pallets and sold to exports. Those exporters sell them to local merchants in developing countries who then sell them in the local markets (anyone who’s been to a marketplace in a developing country can attest to the large amount of second had goods for sale). In the business transactions around second hand clothing, not the charities giving away clothes, that are destroying markets. I believe this is the report that details this: http://policy-practice.oxfam.org.uk/publications/the-impact-of-the-second-hand-clothing-trade-on-developing-countries-112464

    • Jim Ulvog says:

      Hi Leif:

      Thanks for your comment.

      The executive summary of the Oxfam report suggests the second hand clothing has had a serious adverse impact on the local markets:
      “SHC imports are likely to have played a role in undermining industrial textile/clothing production and employment in West Africa, which experienced a serious decline in the 1980s and 1990s. However, such imports have not been the only cause. Increasingly cheap imports from Asia are competing with local production, while supply-side constraints undermine the efficiency of the domestic industry.”

      At what point there is first an economic exchange I didn’t know before – 100% of the reading I’ve done suggested the clothes are gathered as donations and moved overseas by charities. It was my impression the sales took place well after leaving the U.S., probably somewhere in-country, but very well could be further upstream, as you have indicated. Page 7 of the Oxfam report has a good diagram showing where the reclamation companies enter the picture. That is consistent with what you said but is not in the least bit inconsistent with the above video or anything else I’ve read indicating there is harm from importing donated clothes.

      I don’t think the video is suggesting the clothes are being given away in the local markets.

      The world is complicated. The economics of donating second hand clothes is very complicated, as the SWEDOW conversations over the last few years have indicated. The huge volume of discussions of the economic value of Super Bowl t-shirts about 2 or 3 years ago shows how difficult the economics are to understand. How much harm is caused by the donated clothes, I don’t know. It is not the only factor damaging the texile sections in Africa (the world is complicated), but it sure looks to me like it is a material factor. SHC are small factor in the global clothing trade, but are 26.8% of the import into sub-sahara africa (p 5).

      Thanks again for your comment and the link to the Oxfam report.

      Jim

      • Jim Ulvog says:

        Just two more quick thoughts.

        First, valuation – if the donated clothes are sold to reclamation merchants, that would make it exquisitely easy to value the GIK. Just vouch the transactions. Those transactions would also provide some indication of value for items that were not sold.

        Second, indicator of the amount of economic value. If donated clothes are sold to a reclamation merchant, then shipped, then imported, then sold to local traders who sell the goods, that would put the U.S. charity 2 or 3 steps removed from the market where the clothes are actually sold. This also enters into the valuation discussion in terms of overall values.

        Good learning exercise. Thanks.

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