Aid can be vital for development, but ultimately it’s trade which is going to banish poverty, and the way we shop will help, argues Giles Bolton, author of Poor Story.

Here’s a prediction: at some point in the 21st century, trade will make poverty history. Much of Asia is already on the way to achieving this and, if it continues to grow at anything like its current rate, the regions left behind will eventually benefit. Their advantage in cheap labour costs will become large enough to draw in major new investment, despite problems of weak infrastructure and low capacity. Africa, together with other remaining poor markets, will finally boom… with a few exceptions.

The questions are: how long poor countries will have to wait for this to happen; what can they do to speed it up; and how those of us in rich countries can help?

There’s a rather facile question often asked about ending poverty – is it about aid or trade? The answer is that both have a role to play. But they are different. Where aid can only help to provide a better platform for long-term development (including a healthier and better-educated workforce), trade more-or- less is development. Every single country that has banished mass poverty has done so by seeing its trade increase – especially foreign trade. It’s not rocket science – if you’re a farmer or shirt-maker in a developing country, there’s more money to be made in selling to rich customers abroad than being restricted to dealing only with your poorer neighbours. Meanwhile, the foreign exchange earnings that this generates help other parts of the economy to import what they need to function effectively too.

If there’s any doubt about the potential of trade to reduce poverty, consider this: the main aim of the Millennium Development Goals – to halve the proportion of people in the world living in poverty by 2015 – is actually likely to be met. The reason is nothing to do with Africa, where recent improvements are relatively minor. It’s because of China and India’s progress – largely on the back of increased trade with rich Western markets – enabling poor producers to sell to many more wealthy consumers than they’d find at home.

In other words, it has been the custom of western shoppers and businesses, that has helped hundreds of millions of Chinese and Indians out of poverty. This is not something we should take direct credit for (they did the hard work – we just bought stuff we wanted) but surely it is worth celebrating – the fastest reduction of mass poverty in the history of mankind.

The other element in this good news is that China and India offer us some clues, as individuals, about how we can also help other countries out of poverty.

What can we do to encourage Africa and other poor regions to move along the path trodden by China and India? Broadly, there are three ways western societies can help:

• We can help countries to address internal problems such as weak infrastructure or slow customs posts (‘aid for trade’ can help here, and the good news is that it’s increasing, though not yet as quickly as is needed).

• We can reform international trade rules to allow better access to our rich markets, and reduce our subsidies in the areas that hurt poorest countries most.

• We can consciously choose as consumers to buy more produce from the poorest countries, even if they currently come at a higher price.

As individuals, it’s the third area where we could have the greatest direct impact – our actions as consumers – and the one which is the least explored.

Given that trading is the only way poor countries can actually achieve the economic growth that poverty reduction requires, what many of us have been missing is that we simply ought to buy more things made in poor countries. Doing so encourages industries to develop and become more globally competitive. It persuades shops and supermarkets to stock more produce from developing countries. It creates jobs and builds skills and experience. And it’s certainly more effective at promoting growth than funding charities to run projects.

Two thousand years after the wise men made some Christmas purchases on the way to Bethlehem (see Africa’s gift below), perhaps the new holy grail is finding things to buy which aren’t just grown or mined in Africa and other poor countries, but processed and packaged there too.

Benjamin Franklin once gave some advice to entrepreneurs which nowadays we’d be wise to take on more widely as a society of consumers: “Drive thy business, or it will drive thee”. So I suggest the slogan we need for 2008 is this: Buy African – and let poor people and countries truly help themselves.

Africa’s gift

When, according to the biblical nativity story, three Wise Men visited Bethlehem around two thousand years ago, they are said to have arrived from the East. But the gifts of gold, frankincense and myrrh they brought more likely originated rather further south – from Africa. At a time when ancient Britons were still trying to master basic tools in iron, it’s likely that the Wise Men’s gold had been transported along trade routes from west Africa, while frankincense and myrrh were resins from the Boswellia and Commiphora trees common to present-day Somalia. (Such trading prowess is little surprise – this was, after all, the continent that is thought already to have taught the rest of the world how to fi sh and use fi re, not to mention giving it condoms and coffee.) Africa’s major exports today are mostly raw materials: oil, minerals and other commodities. Unlike the frankincense and myrrh refi ners of Roman times, little of the processing and packaging of today’s African goods is done in Africa – so relatively few people benefi t from the trade, leaving the gains to be more easily captured by a small elite. Even with Fairtrade produce, most of the manufacturing is still done elsewhere, meaning that as little as 5% of the fi nal price remains in the country of origin. Among the barriers to investment and growth in Africa are ineffi ciency in customs posts, badly-designed laws and poor-quality roads and ports that mean Africa’s average transport costs are twice those of Asia. Although fairer international trade rules would help, all these problems need to be addressed before Africa can attract the investment in the massemployment industries it needs – the kinds of jobs that have enabled Asia to fl ourish. The big shift in growth will come when it is competitive for things like our coffee to be roasted, refi ned and wrapped in Africa… but it’s still some way off.

Cheap, stylish and ethical?

There’s been great media coverage in recent years about cheap clothes, especially those made in Bangladesh. This is a confused and sometimes misleading debate. Why has there been a boom in cheap clothing in recent years? Mainly because the EU reduced its unfair barriers for textiles against a number of poor countries including Bangladesh, giving them a fairer chance to compete. And that’s exactly what they’ve done – bringing us more affordable clothes as a result. Many people instinctively feel that if our clothes are getting cheaper, workers must be getting more exploited. Yet there’s no logic to assuming that something we buy in an expensive store must be produced in better conditions than its cheaper copy in say, Primark. Unless the shop concerned has a clearly stated policy on their ethical sourcing standards, the likelihood is that conditions are similar for both products and the difference is only in the mark-up. The fact is that there are now more chances for employment in textile factories in Bangladesh and other countries, and people want those jobs. Many political analysts argue that Bangladeshis have suffered from ineffective government in recent years and it’s the textile industry which has kept the economy growing and poverty from deepening. Readymade garments are now Bangladesh’s main export, bringing in $9.21 billion in the year to June 2007 – or 75% of total export income. None of this is to say that many poor people in Bangladesh and elsewhere aren’t obliged, in their desire to hold on to such jobs, to work for very little pay and in sometimes poor conditions. The good news is that this provides rich-country consumers with an opportunity, not a problem. If we use our pressure as customers and insist that the clothes we buy must, for example, come from factories that pay reasonable wages and uphold decent working conditions, retailers will provide it. The cost implications are relatively small, given that the average worker might stitch hundreds of pairs of jeans or t-shirts in a single day. Levis and Nike, for example, were strongly criticised in the 1990s over labour standards, but now ensure that any factories producing for them maintain more robust conditions than many of their competitors. Of course, retailers won’t do it if customers don’t let them know it’s what they want, by choosing what they buy accordingly. Perhaps we really can have it all – still-cheap clothing, but also the creation of good jobs for poor people who desperately need them.