Economics A level. When is charity not?

Economics A Level

Development Economics.

 

Economics A Level Clothes for charity

Clothes for charity

“All my old clothes go to charity. Of course. If they’re not sold in the charity shops they go to help Africans in need”.

Does it really help? Our old clothes are certainly not helping Ugandans.

Why not?

They are certainly cheaper than locally made clothes. Made in the vast low-cost factories of Asia (China is the world’s largest producer of cheap clothing, Bangladesh the second largest) they were cheap to begin with. Now used, they are cheaper still.

Economics A Level Asian clothing factory

Asian clothing factory

 

Great, so poorer Ugandans can afford them. In Economics A Level we learn about aid from the developed world as a benefit. What’s wrong with cheaper charity clothes?

Just a moment.

‘Cheaper’? So do people in Uganda pay for them.? That’s not why I gave my old clothes to charity. But I suppose there are the costs of getting them from here to Uganda. Is that why they are sold and not given away?“

Nope, the charity pays those costs. But someone in Uganda has to distribute and sell them. It’s a brilliant opportunity to make a lot of money, if you have the right contacts in Government to get the permits you need to import and sell this stuff. Economics A Level includes the problems caused by corruption and bureaucracy. Where there is money to be made, prices will rise.

Okay, they might not be as cheap as we would like but they still sell because they’re cheap. That’s good for poor people. Anything else?

Yes, the quality.

Used or not, they are still viewed as high-quality in the market in Kampala, Uganda. Are they actually higher quality than traditional clothes made by traditional producers in a backroom of their homes? No. but they are a lot cheaper.

 

Economics A Level Kampala tailor

Kampala tailor

Ironically those traditional clothes are the kind of products we in the developed world pay much higher prices for. If we could get them, that is. At a reasonable price. But that is not so easy either, given the high tariffs imposed on these products arriving in the EU, so won’t help Uganda’s Terms of Trade –  there is another concept in Economics A level.

I still don’t get it

“But I still don’t see why getting cheap, good clothes from charity is bad for Ugandans”

Economics A-level tells us that sub-Saharan Africa needs to develop its industries. Clothes made in modern Ugandan factories built with finance from outside Uganda using excellent Ugandan cotton – second only in quality to the Egyptian product.

 

Economics A Level Ugandan clothes factory

Ugandan clothes factory

So why are these new factories  only producing half as much as they are capable of. Perhaps because the “charity” goods are so much cheaper?

And if the new industries aren’t making a profit, they will not last, so they will not employ people, who won’t then have incomes to better themselves or pay taxes so the Government won’t build up income to develop the country as it would like to. And so it goes on.

NOW I get it!

Sometimes charity is not quite charity. Remember this for your Economics A Level – it could be a useful example.