Abstract

This research, commissioned by Humana People to People and Sympany +, examines the socioeconomic impact of the second-hand clothes (SHC) industry in the EU27 + and three African countries (Ghana, Kenya, and Mozambique). The study utilizes a comprehensive multi-method approach to analyze the SHC value chain, trade patterns, and associated policies. Results show significant economic contributions and employment opportunities in both regions, along with environmental implications and policy considerations.

1. Introduction

1.1 Background and Motivation

The global focus on sustainable development has led to increased attention on the textile and clothing industry’s environmental impact. The SHC industry plays a crucial role in promoting sustainable consumption and production by extending the lifespan of garments and reducing waste. However, its socioeconomic impact has been less explored. This study aims to fill this gap by analyzing the SHC industry’s role in the EU27 + and selected African countries.

1.2 Research Methodology

A multi-method approach was employed, including literature reviews, expert interviews, quantitative surveys, trade data analysis, and qualitative fieldwork. These methods were used to understand the SHC value chain, assess its socioeconomic impacts, and analyze relevant policies.

2. The SHC Value Chain

2.1 Overview

The SHC value chain involves multiple stages, starting from collection to retail and consumption. In the Global North, individuals discard clothes at various collection points managed by SHC companies. These collected clothes are then sorted based on their potential for reuse, recycling, or disposal. In the EU27 +, sorted clothes are either sold in retail outlets or shipped to the Global South. In Africa, wholesalers import and distribute the clothes, which are then sold in formal and informal retail markets.

2.2 Collection

In the Global North, collection of used clothing occurs through multiple channels such as bring banks, charity shops, and containers. Municipal waste companies, non-profit, and commercial collectors are involved. The supply of used clothes is driven by consumption patterns in the Global North, and prices paid for collected clothes vary depending on location and quality.

2.3 Sorting

Sorting is a crucial step in the SHC value chain. It transforms collected clothes into valuable products for different markets. Sorting centers, either non-profit or private, categorize clothes based on various factors such as quality, value, and purpose. The process is labor-intensive and requires skilled staff. The composition of collected textiles and the destination market determine the sorting process and prices of sorted clothes.

2.4 Retail in the EU27 +

Retailers in the EU27 + play a central role in distributing SHC to consumers. They include both non-profit and commercial organizations, offering a wide range of clothing suitable for different preferences and price points. Retail operations involve activities such as pricing, displaying, and promoting SHC. The demand for SHC in the EU27 + is growing, influenced by factors like sustainability awareness and changing consumer preferences.

2.5 Import and Wholesale in Africa

Wholesalers in Africa act as importers and distributors of SHC. They may perform a second-round categorization of imported clothes to meet local market demands and regulatory requirements. Wholesalers maintain relationships with sorting centers globally and play a crucial role in ensuring the flow of clothing to various retailers in Africa. The supply of imported SHC comes from multiple sources, and prices are affected by factors such as purchase price, import duties, and market conditions.

2.6 Formal Retail in Africa

Formal retail stores in Africa are involved in distributing SHC to end-users. They participate in activities such as opening bales, categorizing clothes, pricing, and promoting sales. These stores are distributed across urban, suburban, and rural areas, reaching a wide demographic. The demand for SHC in formal retail stores is influenced by factors like cost-effectiveness, quality, and durability.

2.7 Informal Retail and Market Trade in Africa

The informal retail market in Africa is a significant part of the SHC industry. It involves various stakeholders such as informal retailers, street sellers, and pickers. These actors perform value-adding activities like washing, ironing, and restyling clothes. The informal market provides employment opportunities and caters to a diverse customer base, especially in rural areas. The supply of clothes in the informal market mainly comes from domestic wholesalers, and prices are determined by factors such as quality and market conditions.

3. SHC Trade between Africa and the EU27 +

3.1 Global Trade Patterns

SHC trade typically flows from the Global North to the Global South. The EU27 + is a leading exporter of SHC, along with North America and Asia-Pacific. Africa is a major importer, with some countries relying heavily on SHC imports. In 2022, trade data showed different trade balances among countries, and in 2023, the EU27 + exported 2.2 million tonnes of SHC valued at $2.2 billion.

3.2 Exports from the EU27 +

In 2023, a significant portion of SHC exported from the EU27 + remained within continental boundaries, with some countries acting as intermediaries for sorting and re-exporting. Major exporters within the EU27 + include Germany, the Netherlands, Poland, and Italy. The EU27 + also exports to other regions globally, with the UAE and Pakistan being important trading partners.

3.3 Clothing Imports in Ghana, Kenya, and Mozambique

In 2023, Ghana, Kenya, and Mozambique imported clothing worth different amounts, with SHC contributing varying percentages to the total imports. Ghana is a leading importer of SHC globally, while in Kenya and Mozambique, the proportion of SHC imports has changed over the past decade. The sources of imports for these countries include the EU27 +, China, and other countries.

3.4 Impact on Local Economies

Trade Restrictions: Many African countries have imposed trade restrictions on SHC to protect local textile industries. However, these restrictions have had limited success as local production often fails to meet domestic demand, and consumers may turn to other cheap clothing imports.
Effect on Local Textile Industries: The SHC trade has been criticized for undermining local textile industries in Africa. However, these industries have faced challenges due to globalization and competition from cheap imports long before the growth of SHC trade. In some cases, countries like Kenya have benefited from SHC trade while also trying to develop their local textile sectors.

4. Socioeconomic Impact of SHC Trade

4.1 Impact in the EU27 +

Direct Impact: In 2023, the SHC industry directly contributed €3.0 billion to the GDP of the EU27 +, with profits of €700 million and employee compensation of €2.3 billion. The retail sector accounted for 62% of the GVA, followed by sorting and collection companies. The industry also created 110,000 jobs, mainly in retail, sorting, and collection.
Indirect and Induced Impact: Through supply chain spending and employee consumption spending, the industry supported a total contribution of €7.0 billion to GDP and an additional 40,000 jobs. The industry also provided employment opportunities for different educational backgrounds and genders, with a relatively high proportion of women. It contributed to social equality by creating jobs in less economically developed regions and increased subjective well-being among employees.

4.2 Impact in Three Selected African Countries

Direct Impact: In Ghana, Kenya, and Mozambique, the SHC industry directly contributed to GDP ( $35 million, $9.2 million, and $2.7 million respectively) and created formal jobs (14,000, 3,600, and 1,000 respectively). It also generated a significant number of informal jobs (43,000 in Ghana, 68,000 in Kenya, and 15,000 in Mozambique).
Indirect and Induced Impact: The industry stimulated economic activity through supply chain and wage-funded consumption spending, resulting in GDP multiplier effects in each country. It also contributed to tax revenues, with import duties and VAT collections being significant. The industry provided employment opportunities for women and youth, and improved access to affordable clothing for consumers.

4.3 Environmental Impacts

In the Global North: The SHC industry reduces the consumption of new clothing, thereby decreasing environmental pressure. Reused clothes require less water and emit less CO₂ compared to new ones.
In the Global South: While the industry promotes clothing reuse, it also faces challenges such as waste management. The proportion of waste in SHC imports varies according to different studies, and local waste management infrastructure is often insufficient. Consumers in the Global South have different disposal methods for used clothes, some of which have environmental implications.

5. Policy Space for SHC

5.1 Policies in the EU

Relevant Policies: The EU has policies such as the European Green Deal, Circular Economy Action Plan, and European Industrial Strategy that aim to promote sustainable consumption and production. These policies affect the SHC industry in terms of collection, sorting, and sales.
Contribution of SHC to EU Policies: The SHC industry contributes to EU policies by reducing waste, conserving resources, and promoting sustainable development. It aligns with the goals of reducing greenhouse gas emissions and decoupling economic growth from resource use.

5.2 Policies in the Global South

Relevant Policies: African countries have policies such as those related to sustainable development, waste management, and circular economy. These policies aim to address environmental and economic challenges and have implications for the SHC industry.
Contribution of SHC to Global South Policies: The SHC industry in the Global South contributes to local policies by creating employment, promoting economic development, and reducing environmental impact. It supports informal employment and entrepreneurship and helps meet the demand for affordable clothing.

5.3 International Policy Goals

Sustainable Development Goals (SDGs): The SHC industry is related to several SDGs, including poverty reduction, gender equality, decent work and economic growth, responsible consumption and production, and climate action. The industry contributes to these goals through its activities such as providing affordable clothing, creating jobs, and promoting clothing reuse.
International Cooperation: International cooperation is needed to promote the sustainable development of the SHC industry and avoid negative impacts on local textile industries.

6. SWOT Analysis

6.1 SHC Industry in the Global North

Strengths: Sustainable and circular business model, well-established network, adaptability to market and regulatory changes, creation of green jobs, accessible employment opportunities, competent sorting practices, broad market, better affordability than new clothes, and financial sustainability.
Weaknesses: Lack of automated sorting infrastructure, labor-intensive sorting process, transport-intensive industry, risk of exporting poor-quality clothing as waste, high dependency on third actors, and small profit margins for sorting centers.
Opportunities: Growing market demand, ongoing image change, advancing technologies in sorting and recycling, integrated networks, alignment with EU policies, continuous supply of quality clothing, high job security, and offshoring potential.
Threats: Regulatory risks, price sensitivity of demand, ill-defined end-of-waste criteria, economic volatility, geopolitical tensions, increased competition from fast fashion, and insufficient collection infrastructure and awareness in some regions.

6.2 SHC Industry in the Global South

Strengths: Properly paid employment opportunities, low-threshold business opportunities for local entrepreneurs, provision of affordable quality clothing, reduction of demand for new clothes, contribution to social causes, long-standing partnerships with the Global North, high adaptability to supply changes, and a variety of value-adding activities.
Weaknesses: Highly import-dependent industry, asymmetries in market/bargaining power for informal sector, lack of adequate waste management infrastructure, insufficient knowledge of recycling options, less developed retail networks in rural areas, and reports of precarious working conditions.
Opportunities: Introduction of domestic sorting centers, continuous demand due to affordability, job creation and skill development through sorting, potential for growth-stimulating collaborations with local industries, supportive legislation, formalization of the industry, and leveraging value-adding activities.
Threats: Influx of inexpensive fast fashion imports, economic fluctuations, higher costs due to import tariffs, geopolitical tensions, regulatory changes, lack of infrastructure and market for textile waste, and lack of an agreed-upon definition of textile waste.

7. Policy Recommendations

7.1 Policymakers

In the Global North: Implement and enforce EPR schemes for new textiles, develop clear end-of-waste criteria for textiles, consider the consequences of waste shipment regulations on employment and poverty alleviation in the Global South, support research and development in sorting and recycling technologies, incentivize the reuse of clothes, recognize the SHC industry as a driver of green jobs, and engage with stakeholders in both the Global North and South.
In the Global South: Introduce supportive legislation to relax import regulations for SHC, encourage the establishment of local sorting and processing facilities, create incentives for businesses to enter the formalized sector, increase investments in textile recycling infrastructure, and develop effective waste management infrastructure.

7.2 Businesses/Not-for-Profit Organizations

In the Global North: Develop integrated partnerships within the supply chain, set up e-commerce platforms, engage in public awareness campaigns, educate the public on the right to adequate clothing, and invest in modern sorting technologies.
In the Global South: Invest in local sorting and processing facilities, establish associations for informal market retailers, provide vocational training programs for workers, promote eco-friendly practices including textile recycling, and explore options to extend trade and retail networks to rural areas.

8. Conclusion

The SHC industry has significant socioeconomic impacts in both the EU27 + and selected African countries. It contributes to economic growth, employment, and environmental sustainability. However, it also faces challenges such as trade restrictions and waste management issues. Policy recommendations for policymakers and actions for businesses and not-for-profit organizations can help enhance the industry’s positive impacts and address its challenges, promoting a more sustainable future for the SHC industry.

View the original report: https://www.humana-spain.org/uploads/archivos/otros/oxecon_shc-socioeconomic-impact-study-final_v1-0.pdf

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Socioeconomic Impact of Second-Hand Clothes in Africa and the EU: A Research Study