The Impact of the Second-hand Clothing Trade on Developing Countries | Clothing | Cotton

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The global trade in second-hand clothing (SHC) is worth more than $1 billion each year. Supporters of the SHC industry point out that the trade creates employment in the receiving countries (transporting, cleaning, repairing, restyling, etc.). It also provides low-cost clothing for people living in poverty. At the same time, however, there are concerns that the trade may be undermining local textile and garment industries, and livelihoods in some developing countries.This review was initiated to consider the evidence of the impact of the SHC trade on developing country producers and consumers. It focuses particularly on West Africa, as Oxfam International is active in promoting the livelihoods of cotton farmers in the region and consequently has an interest in the regional textile and clothing sectors.
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   The impact of the second-hand clothing trade on developing countries Sally Baden and Catherine Barber September 2005  Contents Executive Summary............................................................................................................1 Context............................................................................................................................1 Recommendations...........................................................................................................2 Introduction.........................................................................................................................4 The global context for the SHC trade.............................................................................5 Where is SHC likely to have the greatest impact?..........................................................5 The value chain for global SHC trade.............................................................................6 1. Existing literature..........................................................................................................10 Impact on consumers....................................................................................................10 Impact on employment.................................................................................................11 Employment in the SHC sector.....................................................................................12 2. Regional study: West Africa.........................................................................................14 Production and employment trends..............................................................................14 Challenges for the regional industry.............................................................................16 Prospects for regional production.................................................................................17 3. Country study: Senegal.................................................................................................19 Textiles and clothing production in Senegal.................................................................19 Significance of used clothing imports in Senegal.........................................................20 Consumption trends......................................................................................................21 Economic and social consequences of used clothing imports in Senegal....................22 Job creation in the SHC distribution network...............................................................22 Effect on local textile/clothing production...................................................................23 The impact of SHC on third country exporters.............................................................25 Conclusions.......................................................................................................................27 The SHC trade:.............................................................................................................27 Recommendations.............................................................................................................28  Northern NGOs active in the export sector:.................................................................28 References.........................................................................................................................30 Annex A........................................................................................................................33 Annex B........................................................................................................................34 Senegal’s SHC trade: Summary of survey results........................................................34 Figure: Geographical distribution of traders in the study zones in Senegal.................34    Executive Summary Context The global trade in second-hand clothing (SHC) is worth more than $1 billion each year. Supporters of the SHC industry point out that the trade creates employment in the receiving countries (transporting, cleaning, repairing, restyling, etc.). It also provides low-cost clothing for people living in poverty. At the same time, however, there are concerns that the trade may  be undermining local textile and garment industries, and livelihoods in some developing countries. This review was initiated to consider the evidence of the impact of the SHC trade on developing country producers and consumers. It focuses particularly on West Africa, as Oxfam International is active in promoting the livelihoods of cotton farmers in the region and consequently has an interest in the regional textile and clothing sectors. Methodology The review draws upon three sources of information to explore the impact of SHC: 1. Existing literature on SHC, which provides country case studies of the impacts of SHC in Zimbabwe, Zambia, Kenya, Rwanda, Ghana, and Tunisia; 2. Industry studies of new textile and clothing production in West Africa, covering both the formal and informal sectors; 3. A detailed country case study of the SHC, and textile and clothing sectors in Senegal, which draws upon new research commissioned by Oxfam for this review. Findings The SHC trade represents a small proportion of the total global trade in clothing (less than 0.5  per cent of total value), but for many sub-Saharan African countries it is a dominant feature of the clothing market (more than 30 per cent of the total value of imports, and much more than 50 per cent in volume terms). In most of these countries, SHC is declining as a share of total clothing imports, due to the increase in new imports from Asia, but nonetheless it remains highly significant. The trade has clear consumer benefits. This is especially true in countries with low  purchasing power, and for poorer consumers, though in many sub-Saharan African countries it seems that almost all socio-economic groups are choosing to buy SHC. For example, over 90 per cent of Ghanaians purchase SHC. Affordability is the key reason why people buy these goods. Fashion and consumer preferences also seem to be shifting away from traditional, ‘African’-style to more ‘Western’-style clothing. The trade supports hundreds of thousands of livelihoods in developing countries. These include jobs in trading, distributing, repairing, restyling, and washing clothes. Oxfam’s research in Senegal estimates that 24,000 people are active in the sector in that country. It is not possible to make exact comparisons with employment generated by domestic production, The impact of the SHC trade on developing countries, Sally Baden and Catherine Barber September 2005 1    but it is known that around 1,355 people work in formal sector textile/clothing industries in Senegal, and an estimated 62,000 in informal textile/clothing production. 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. These constraints include unreliable and expensive infrastructure; the cost and availability of materials; outdated capital stock and lack of access to credit; and inadequate training and management skills. In several West African countries it is not clear that, even in the absence of SHC, local textile/garment production and employment would recover, as new imports from East Asia are cheaper than locally produced goods and there are serious supply-side constraints. With the exception of Nigeria, formal employment in the sector has declined to very low levels in most countries. While initial data suggest a limited direct impact of SHC trade on informal sector production, as this is the largest informal employment sector in many West African countries — these impacts need to be closely analysed and monitored over the long term. It is likely that SHC displaces exports from third countries, particularly from Asia. It is hard to estimate precisely, but if all SHC trade were replaced by new imports, rather than by  production in destination countries, then the number of jobs created in exporting countries would be around 100,000. (This number is only an estimate, however, and it is likely that SHC would be replaced by at least some domestic production). This number does not take into account the number of jobs that would be lost in the importing countries due to the disappearance of the SHC trade. Finally, the SHC trade in recipient countries is mainly informal and is poorly regulated. In some instances it has facilitated considerable customs fraud, as new clothing imports have  been passed off as used clothing. This has led to reduced government revenue and, arguably, higher levels of imports and greater competition for domestic production, as new imports enter without the full tariff duty being paid. Recommendations  Northern NGOs active in the export sector: ã Are unlikely to significantly influence world price or supply either by exporting or not exporting (each comprises only a small proportion of global supply); ã Can make their trading practices more ethical by extending their involvement further along the supply chain. This may include one or more of:   A. Exporting to countries that best fulfill certain criteria: 1. Low purchasing power 2. Small proportion of population involved in textile/clothing production and/or no sign of decline in the sector 3. Not likely to be used as a re-export base to vulnerable or protected markets 4. Viability from a trading perspective The impact of the SHC trade on developing countries, Sally Baden and Catherine Barber September 2005 2
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