What’s worse than being exploited? Not being exploited

June 28, 2006

Free Market Foundation

Africa desperately needs Western help in the form of schools, clinics and sweatshops, says Nicholas Kristof of the New York Times.

Even though many people despise sweatshops, the poor see them as opportunities; therefore, anyone who cares about fighting poverty should campaign in favour of sweatshops and demand that companies set up factories in Africa, says Kristof:

Namibia was supposed to be a pioneer in Africa’s garment industry, because it’s stable, pleasant and safe, and its government has tried hard to entice foreign investors.

But the biggest factory, Ramatex Textile Factory a Malaysian investment only employs 6,000 people; owners are losing money and will pull out.

The problem is that it’s costly to manufacture in Africa; the headaches across much of the continent include red tape, corruption, political instability, unreliable electricity and ports and an inexperienced labour force that leads to low productivity and quality.

Moreover:

It already isn’t profitable to pay respectable salaries, and so this pressure to raise them becomes one more reason to avoid Africa altogether.

When Western companies do pay above-market wages, in places like Cambodia, local managers extort huge bribes in exchange for jobs; the workers never see the benefit.

One of the best U.S. initiatives in Africa is the African Growth and Opportunity Act which allows duty-free imports from Africa and thus has stimulated manufacturing there; but for continued success, one push needs to come from Africa itself: a crackdown on corruption and red tape, says Kristof.

Source: Nicholas D. Kristof, In Praise of the Maligned Sweatshop, New York Times, June 6, 2006.

For text (subscription required): http://select.nytimes.com/2006/06/06/opinion/06kristof.html

For more on Trade: http://www.ncpa.org/pd/trade/trade.html

FMF Policy Bulletin/ 20 June 2006