WOVIN

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WHY I STARTED WOVIN

 What I learned from my time in Africa

It’s January 2008 and it’s my first time in Africa. I’m traveling with a close friend Garang Akau, one of the Lost Boys of Sudan, and we’re about to land at Kenyatta International Airport after spending four cold days in London due to a freak snow storm that shut down the runways. It was a test in patience for sure, but nothing compared to what was about to happen.


The next 48 hours held some of the most scary, enlightening and rewarding moments of my life. Twenty eight of them were spent in a dangerously overloaded bus careening down the worst dirt roads you can imagine with Somali and Sudanese refugees on their way to Kakuma, at one point the largest refugee camp in the world, to renew their ration cards so they wouldn’t lose their right to food. Let’s just say Sudanese and Somali’s don’t get along under normal circumstances, let alone hot dusty buses that turn even the most seasoned sailors motion sick.

Garang and I were in Kenya to kickstart New Scholars, the non-profit we started to empower young African entrepreneurs--primarily Sudanese refugees. My time in Africa would reshape my life forever.

 

AFRICA

What a place.

It's huge (the US fits into it 3 times), diverse and intense. It's like nothing I've experience before. And I travel a lot.

Here is what I learned:

  • Africa is the fastest growing population center in the world. It currently has 1.1 billion people. That numbers nearly quadruples to 4.1billion by 2100.
  • The continent has the highest unemployment rates in the world in spite of having six of the worlds fastest growing economies. Youth unemployment approaches 40% and accounts for 60% of all unemployment.
  • Everyone wears second-hand clothes. And they're all from the developed world! Shirts, pants, jackets, suits, shoes, you name it. "Probably 90% of the clothing people are buying in the whole country are second-hand clothes." Sylvia Owori, Ugandan fashion designer.

 

 

SECOND-HAND CLOTHES IN AFRICA

 

At first I didn't think anything of it. Like most, I figured NGOs and religious organizations were handing out clothes to those in need--and they do in some cases. But when you see familiar brands at the scale I saw in places you'd never expect you start to reconsider. There's no way all these people are getting clothing handouts…

That is when I started noticing roadside markets specializing in second-hand clothes (think outdoor flea markets). There is a big one in Nairobi, Kenya as you approach downtown from the Kenyatta International Airport.

Everyday before sunrise vendors line up to get first dibs on the huge pallets of compressed clothes as they come off trucks. They have absolutely no idea what's inside. Like scenes depicted in Storage Wars these vendors bid on what they can see, hoping there are items inside the bundles they can resell:  name brand designers, clothing branded with famous western celebrities and flashy details like rhinestones. And they pay a premium.

 

BUYING THEMSELVES POOR

 

How much do you think someone living in Africa (the poorest continent on Earth) pays for a pair of second-hand jeans?

Places where over 80% of people make less than $2 a day (the UN global poverty benchmark). $1? $2? $3, more than a days wage? Guess again: 

$5 to $7. Over two or three times what they earn in a day. But wait, there's more.

All but a fraction of that money leaves the continent. Why? Because vendors purchase these bundles from international "clothing recyclers" that buy 97% the clothes you and I donate to charities like Goodwill, The Salvation Army and The Cancer Society. Vendors in the developing world pay up to a 1,000% markup for bundled clothes, lining these international companies pockets with huge profits--$3 billion a year huge--and none of that money supports the causes we thought we were.

What's worse is you and I can buy the exact same clothes from our local Goodwill for $2 (or < $0.50 if we buy in bulk). Clothing recyclers are buying for closer to $0.10.

[SIDE NOTE:  This isn’t to blame the charities we donated to. In all honesty they do their best and if they could sell more donated clothes locally they would--they’d make more money that way. The truth is people don’t want to buy second-hand clothes in the developed world and charities that accept clothes have no other choice but to sell clothes they can’t sell locally to clothing recyclers.]

 

 

THE POOR GET POORER

 

All that hard earned money and what do the people and countries have to show for it? A bunch of stuff we don't want. Precious dollars pulled out of their fragile economies for items that you and I discard everyday. Little do they know each purchase makes them poorer, locking themselves, their families and their countries in a cycle of poverty and dependence.

The impact is devastating:  50% loss in jobs and a 40% decline in industry over two decades.

Textile and clothing employment along with other support work offer valuable entry level jobs in fledgling economies. Ghana and Nigeria are among the hardest hit losing 80% and over 95% of their textile employment respectively. And with a decline in industry also comes a loss in tax revenue that would otherwise help end these countries dependency on foreign aid.  

African's appetite for Western hand-me-downs, the huge profits companies are making and corruption have driven investments in factories elsewhere. Our clothes are making it harder for poor families to break the cycle of poverty and encouraging young people to enter lives of violence and black market economies to earn a living.

 

 

TURKEY, WHAT?

 

Back to New Scholars. One of the Sudanese entrepreneurs I worked with wanted to form a business around an opportunity presenting itself in his newly forming country--South Sudan, the world's newest country after voting itself away from Sudan in 2011. Turns out South Sudan's new government needed to supply school uniforms to all its schools. Easy right? Nothing is easy in Africa.

When this entrepreneur told me he needed money to fly to Turkey to have uniforms made, uniforms that he would then import back to South Sudan I thought he was joking. Surely he could buy fabric and get them made in Kenya, the second largest African economy and a neighbor to the south, right?

It turns out you can't. At least not cheaper than going to Turkey. How is this possible?

Again, money and desperately needed jobs leave the continent.

 

 

WHAT ABOUT CHEAP CHINESE IMPORTS?

 

Yes, cheap Chinese imports exist in Africa too. And they are made from even cheaper materials and more harmful dyes that wear out faster than the money can switch hands.

And you know what, even the poorest people on earth understand the difference in quality and value of cheaply made clothes. This is part of the reason why Africans end up purchasing second-hand clothes.

Worst of all these imports still mean money leaves the continent with every purchase.

 

TEXTILES:  END OF LIFE IS JUST AS IMPORTANT AS MANUFACTURING

 

Most people understand what's happening on the production side of the textile industry (i.e. sweatshops, etc) but few realize what's happens to their clothes at the end of life when they donate them and they think they are doing some good.

Before I started looking into this I thought that clothes I donated were helping people in my local community by providing affordable clothes to less fortunate families. I was shocked to learn that only 3% of the clothes donated are ever resold locally. That's three items for every 100 donated.

I was even more shocked to hear that the nonprofit I donate my clothes to only earns between $0.10 and $0.25 per pound. That's about $0.20 to $0.50 for a pair of jeans.

Then I was outraged to learn that for-profit companies buying my donated clothes from charities were:

  • Earning huge profits:  80%-90% of the money earned at the end of life goes to these companies and we don't even know their names
  • Throwing clothes away (directly and indirectly):  clothes they can't do anything with end up in landfill and the others are sent to the developing world where chances are they also end up in landfill
  • Making the poor poorer (which we covered above), and worst of all
  • Not giving back to the causes we thought we were supporting

The last one bugs me the most.

 

HELP END THIS HARMFUL PRACTICE 

    I hope you'll join me on this quest. Please spread the word, engage with us online and support us by purchasing a product for you and/or someone that would appreciate the cause.

     

     

    DARIUS GOLKAR

    WOVIN Founder

    9 comments

    Nov 04, 2013 • Posted by Darius at WOVIN

    Hello again Ben. Thanks for your response.

    I’d like to direct you to Dan Pollotta’s TED Talk — http://goo.gl/s8IOS. Dan does an excellent job covering the issues surrounding the non-profit sector, issues that should answer your questions as to why we choose a for profit model.

    It’s not that for-profits (FP) are definitively better than non-profits (NP). And it’s not that profits are essential to a mission. The answer to which model is better needs to be addressed on a case by case basis according to an organization’s goal(s) and the strategies it wants to use to achieve them.

    NP models work well for social issues that are not addressed by the market. It goes like this: to get the market to participate the government gives NPs tools in the form of laws that incentivize donations for tax breaks to fund missions the government deems important. But as Dan explains, NP models come with social (and legal) consequences. Consequences that can kill organizations or at best severely limit their ability to operate and grow, especially in relation to FPs. In other words, all things equal NPs are at a disadvantage compared to FPs focusing on the same goal.

    You rightly point out that profits are not essential to any particular mission. Profits are, however, essential for growth — even for NPs, though they call them contributions.

    In WOVINs case we don’t need tax deductibility to attract customers to fund our work and the causes they care about. Furthermore, if we want to raise money from capital markets we have more flexibility as a FP — grants from foundations are given on a project-by-project basis, limiting the gift to a specific time period and stipulating what the money can and cannot be used for.

    Why limit ourselves?

    Oct 27, 2013 • Posted by Ben Spielberg

    Hi Darius,

    Thanks for the reply. What about New Scholars convinced you that for-profits are better than non-profits? There are countless examples of poorly run for-profit businesses and well-run non-profits. I don’t see how keeping 50% of the profits “keep[s] the doors open” – organizations don’t necessarily need profits to stay afloat.

    None of that is to say I don’t appreciate your commitment to this issue – I certainly do, and you’re doing a lot more than most companies would consider. Working Assets, for example, doesn’t donate nearly as much as you do to the causes they support, and I still use their products (though I would ideally like to find options where my dollars have a greater social benefit). I think it’s perfectly reasonable to care deeply about a cause and simultaneously want to make money. If that’s the case, though, I think that purpose should be explicitly stated. I would otherwise fail to see how making a profit is essential to your mission.

    Thanks again for your reply and the work you’re doing. I look forward to hearing your thoughts.

    Ben

    Oct 25, 2013 • Posted by WOVIN

    Thank you Majak. How special to hear this coming from you, as you’re the one we should be applauding!

    Oct 24, 2013 • Posted by Majak

    Thank Darius for the good work ..you keep inspiring us all

    Oct 21, 2013 • Posted by WOVIN

    Hi Ben. Thanks for your comment and support. The best way to make sure we address this problem is to make sure we’re around to do so. That said, profits are necessary to make sure we achieve our mission and maximize the good in donated clothes.

    Sure we could donate more than half (50%), but donating more than 50% starts getting closer to a non-profit which we are not interested in (after New Scholars we believe the best way to have a positive impact is through for profit businesses—after all, based on our experience the most successful nonprofits are run like for profits).

    We think giving away 50% strikes a nice balance between showing our commitment to raising money for good causes and making enough money to keep the doors open.

    Curious, what were your thoughts? This is something we want to get right, so your input is very valuable to us.

    Oct 17, 2013 • Posted by Ben Spielberg

    I was unaware of this issue and I love the idea of fixing it. I am curious, however, about why you only donate 50% of your profits – couldn’t you donate more?

    Oct 03, 2013 • Posted by Darius

    Hi Paul. Thank you for your thoughtful comments. We’re thinking of all options here, so keep the ideas coming.

    Bottom line, there are way too many clothes to make a huge dent at the start. Our napkin calculations show that over 1 million truckloads of donated clothes are sent to the developing world ever year (literally billions of pounds of clothes).

    There are so many clothes even if WOVIN scaled we’d only touch a tiny percentage. Because of this we decided to start out by leveraging local clothing. By turning 1 pair of jeans into +/- 5 wallets we can donate up to $50 to good causes—that’s about a 100x increase in the amount of good that comes from that pair. You’re right that the number of clothes we’re diverting from the developing world is small. You’re also right that by manufacturing in the US we’re not providing the jobs in Africa. But by focusing on the actual dollar amount that we can reinvest we feel we can maximize the impact and let other organizations do what they do best. Samasource, for example, does a great job of providing meaningful work.

    And wallets are just the start. We’ve already developed other products, so stay tuned.

    Darius

    Sep 21, 2013 • Posted by Paul

    I applaud you actually doing something about a problem, but I wonder what kind of dent you’re going to put into this by selling wallets. If you really want to have a big impact, why not start up a competitor to the companies dumping clothes into Africa? Undercut the prices for which they are selling in Africa, and then … using the clothing you send to Africa, but that does not sell, make wallets, etc., right there in factories employing local people. Sell the wallets back to the first world, and in Africa. Just my armchair quarterbacking. Maybe you’ve thought of this, or are even planning something similar. In any case, I really wish you luck. Our family donates so much clothing every year (fast-growing kids, you know), and we would be happy to go the extra mile to make sure they don’t end up contributing to African poverty.

    Sep 11, 2013 • Posted by Meg Kendel

    So proud of you!!!

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