Up From Sweatshops

Up From Sweatshops

For decades, economists have promoted low-wage textile industry as the best way for poor countries to build a manufacturing base. In East Africa, the promised trickle-down effects of foreign investment have not materialized.

Workers at a textile factory in Addis Ababa, Ethiopia, in 2017 (Kay Nietfeld/picture alliance via Getty Images)

In 2017, supermodel Barbara Meier visited Addis Ababa with Gerd Müller, Germany’s Federal Minister of Economic Cooperation and Development, to tour a complex of export-oriented clothing factories. One of the factories, Jay Jay Textiles, is the size of six football fields and supplies brands like H&M, Gerber Childrenswear, and the Children’s Place. Meier asked workers there how they were doing. Their answer: “It’s going.” “They were not really that euphoric,” she told reporters for a German public broadcasting channel, “but I think if you compare that with factories in Bangladesh or something like that, the rules are being followed.”

For decades, economists have promoted sweatshops as the best way for very low-income countries to build a manufacturing base. Today, a number of East African countries, including Ethiopia and Kenya, are attempting to follow that path. Images of industrial progress come to us from Kigali to Naivasha to Hawassa: politicians visiting cavernous warehouses, with rows of workers hunched over textile manufacturing equipment. The development that has long eluded the continent, these photographs suggest, is not too far off.

Meier’s comparison of Ethiopian manufacturers to those in Bangladesh marks how far policymakers are willing to go to trade human dignity and well-being for development. The Bangladeshi textile sector is still haunted by the April 2013 collapse of the Rana Plaza factory, which supplied clothing for brands like Benetton and Primark. A wall on the third floor of the building split the day before the collapse. The engineer who inspected it called for it to be condemned, but factory owners told workers, who feared losing up to a month’s wages, to return the next day. Hours into the workday, vibrations from the generators brought the building crumbling down, killing over 1,100 people and injuring about 2,500 more.

The Ethiopian government sees itself competing with Bangladesh for a place in the global clothing supply chain. And Bangladesh isn’t a floor to build on—it’s a ceiling. The Ethiopian Investment Commission markets the country’s wages as “1/7 of China and 1/2 of Bangladesh,” the lowest garment worker pay in the world. From these paltry wages, Ethiopian industry has grown from 11 percent of the country’s GDP in 2013 to 25 percent today. That growth is held up as a local success story. Applauding the country for “building Africa’s manufacturing strength,” the African Development Bank highlighted Ethiopia’s goal of generating $30 billion in exports from the textile and apparel sector between now and 2030.

All this development is sold on creating jobs that will reduce poverty. So how are Ethiopian workers faring? Studies have shown that an Ethiopian garment worker needs about $146 a month to survive. Only 7.5 percent of garment workers make that much. Ethiopia’s garment sector has no statutory minimum wage; instead, the working minimum is tied to the lowest wages for government employees. As a report from NYU’s Center for Business and Human Rights notes, “The fact that government-paid floor sweepers earn so little doesn’t make $26 a fair base wage for sewing-machine operators employed by foreign manufacturers.” The Worker Rights Consortium found that in addition to being paid the lowest wages in the world (as low as 12 cents an hour), workers were facing the same abuses that plague sweatshops in Asian countries, including harassment, unsafe conditions, forced overtime, and pay deductions for lateness or missing work (on top of wages missed), “despite such practice being barred by international and domestic law, as well as applicable codes of conduct.” The dream of industrial growth comes at a high price.

 

Colonial-era governments in Africa focused on producing raw materials, which were exported to the metropole and re-imported as finished goods. Shortages during the world wars, and volatility in commodity prices that made it more expensive to import manufactured goods, forced colonial managers to invest in domestic industries. With the decolonization wave beginning in the 1950s came an even greater effort to develop light industry, producing electrical machines and goods like clothing, shoes, paper, and leather.

Part of the plan, then as now, was to attract foreign firms that had both the capital and technological know-how to develop industrial capacity. To secure these investments, governments implemented policies like tax exemptions, low customs duties, favorable exchange rates for investors, and duty-free import of capital goods. But global competition was steep, and without railroads and other transportation infrastructure, it was difficult to export goods. Neither was there enough domestic demand to support factory production, in part because workers were paid so poorly. Faced with these challenges, many postcolonial experiments in industrialization in Africa ended in failure.

The current development efforts in East Africa have been shaped with knowledge of this checkered history. Kenya’s government plans to develop horizontal industrial clusters that build on local strengths, with investments in tanneries and meat, dairy, and leather processing plants. The country is also undertaking efforts to train more engineers to raise the ratio of skilled workers to unskilled ones.

The Ethiopian government, meanwhile, in rebuke of the dictates of the Washington Consensus, has embraced state intervention to protect infant industries, prioritizing sectors that will “maximize linkage effects” and lead to investments in connected industries, as Arkebe Oqubay, a special adviser to the prime minister, puts it in Made in Africa: Industrial Policy in Ethiopia. In his study of experiments in the cement, floriculture, and leather industries from 1991 to 2013, Oqubay argues that low-income African countries such as Ethiopia cannot develop their natural advantages without the strong hand of the state. This doesn’t mean creating an inflexible command economy, but instead “reserving the right to make mistakes and, in the process, to learn from them.”

Related to these national development plans are the transnational efforts of the African Union. The AU’s African Continental Free Trade Area, which went into effect at the beginning of 2021, removes trade barriers for goods and services among countries on the continent, giving infant industries more access to friendly export markets. The additional income from opening trade, plus savings from eliminating tariffs, is estimated to reach $450 billion by 2035.

 

Earlier growth strategies in Africa have been handicapped by a relatively underdeveloped workforce skill base. Training has to be a cornerstone of development policies, and the best bet is to build off where workers currently are. In East Africa, that means farming. Despite its much-touted manufacturing growth, more than 70 percent of Ethiopia’s workforce is still in agriculture.

Jacob Omolo, a labor economist at Kenyatta University in Kenya, remembers coming home from school in the 1970s and going out into the cotton fields. “My school fees were paid from cotton picking,” he said.

In those days, cotton farmers, ginneries, and textiles manufacturers were all linked by government-run cooperative structures that provided some security from volatile commodity prices and seasonal changes. But these institutions were mismanaged, Omolo said. With their focus on the new manufacturing industries, many governments ignored the agricultural sector. Farmers weren’t getting the credit or machinery they needed, even though their yields would have strengthened the supply of raw materials for their countries’ industrial efforts. And in pursuit of a stronger currency to make capital imports cheaper, governments made agricultural exports too expensive to compete in the international market, discouraging local production. Negligence of farming also undermined state capacity to feed growing urban populations.

For new development efforts to avoid these pitfalls, Omolo argues that domestic inputs must be integrated into the industrial process in order to add some value downstream. While light industry is often depicted as an alternative to low-wage farming, a comprehensive development plan would see them both as part of a singular effort and prioritize education and training of both farmers and industrial laborers. Farmers in Kenya, for example, could grow the cotton again to supply the textiles industry.

Unfortunately, despite some efforts in Kenya and Ethiopia to avoid the errors of the past, the bulk of development efforts are still devoted to attracting foreign business investment, creating an all too familiar race to the bottom. The Tax Justice Network-Africa estimates that Kenya loses a billion dollars a year in tax incentives and exemptions. Export processing zones, a key part of the country’s industrial policy, give companies a ten-year corporate income tax holiday and exemptions from import duties on machinery, raw materials, and inputs. What reason do foreign companies have to invest in linkages with domestic ones, or to train workers, Omolo wondered, if they are planning to leave the moment the tax holiday is up? “Why is it that after many attempts,” he asked, “we are not able to achieve the expected levels of industrial and economic growth?”

These dynamics are an important reminder of the people whose ideas are often neglected in economic conversations that center on multinational corporations, international institutions, and national governments: the workers whose lives development is supposed to improve. No one has sounded a louder call to invest in workers and their training than unions and labor activists in Ethiopia and Kenya. Unsurprisingly, they’ve been met with resistance from the textile companies. The Industrial Federation of Textile, Leather and Garment Workers Trade Union, which represents textile workers in Ethiopia, looks to the example of the Southern African Clothing and Textile Workers’ Union, which has undertaken sectoral bargaining rather than negotiating union presence and conditions at the factory level.

Omolo describes the Kenyan state as caught between standing by the “principles and rights” of Kenyan citizens “versus their desire for investments.” As part of its charm offensive to attract foreign capital, the state has been reluctant to enforce labor and union regulations. Pervasive high unemployment, particularly among those under age thirty-five, also leaves workers in a vulnerable position, while the minimum wage—by some estimates, $123 per month—is half a living wage of roughly $240 per month. The promised trickle-down effects of foreign investment have not materialized.

To Omolo, the decision to neglect labor protections has been the “weakest link” in state development blueprints. African governments that fail to support workers, build on existing skills and improve them, and support sectors that create local wealth and diminish the power of foreign capital will have little hope of growing past the sweatshop floor.


Anakwa Dwamena is a contributing editor for Africa Is a Country.


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