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Profiting from poverty: Do some companies benefit from twisted images of Africa?

In recent years there has been a change in thinking and narrative when it comes to Africa’s representation in western media. A good example of this is The Economist’s special report last year that referred to Africa as the “Hopeful Continent”, a mere 13 years after publishing the front cover that dubbed it the “Hopeless Continent”.

Dayo Olopade

Dayo Olopade

Today, Africa’s investment and business potential is making headlines, with McKinsey’s statistics of growing consumer spending power commonly quoted alongside the fact that the continent is home to six of the world’s 10 fastest growing economies. With this narrative shift comes the view that Africa needs trade, not aid, to prosper, as the former results in sustainable development, while the latter leads to dependency on handouts.

According to Nigerian-American journalist and author, Dayo Olopade, the perception that Africa needs western assistance to survive is often exploited by profit-seeking businesses.

Olopade is the author of The Bright Continent: Breaking Rules and Making Change in Modern Africa, a book she spent three years researching whilst travelling across the continent. She says a key goal of her work is narrative correction concerning Africa.

In a recent interview with How we made it in Africa, Olopade explains that some for-profit western companies reinforce and leverage the existence of poverty as a clever marketing tactic and brand differentiator. She uses the example of US shoe company, Toms Shoes, which has trademarked the slogan “One for One” where for every pair of shoes the company sells, a pair of new shoes is given to a needy child.

“The fact that they leverage the existence of people without shoes, or more specifically the perception that there are people without shoes, is kind of dishonest… Not only are there shoes available across many parts of sub-Saharan Africa for local purchase, there are people who are making shoes in Africa who are employing people, creating capacity, creating skills and training, and steady income and formal sector employment,” argues Olopade.

She adds that companies like Toms, which seem charitable in their donations, are actually depressing the local economy and “reinforcing the incorrect perception that people in poor countries can’t afford anything”.

The Toms ‘One for One’ model

Last year, Fast Company reported that Toms had given away their 10 millionth pair of shoes. The company was founded in 2006 by American serial entrepreneur Blake Mycoskie who was inspired during a visit to Argentina where he met a group of women who were collecting shoes for school children. In an interview with The Business of Fashion last year, Mycoskie described his motivation behind starting the company.

“I went with these women to this village [in Argentina] and saw kids and families who were so excited to get these shoes – and they weren’t even new shoes. They were used shoes. And it just hit me right in the heart. This was what I wanted to be doing. I mean business is great. Making money is fun. But making people have tears of joy? That’s what life’s about.”

Mycoskie says that his first thought was to start a charity, but he hated asking people for money. And so the idea was formed to have a business where for every pair of shoes sold, he would give one away.

“It was the birth of the ‘One for One’ model,” adds Mycoskie. “But it wasn’t like, ‘oh this is going to be the greatest tagline in the world’ or “this is the best way to connect with customers”. The easiest way to keep track of everything was simply: you sell a pair, you give a pair. It just seemed really simple.”

In 2011, the ‘One for One’ model was expanded and Toms Eyewear was launched, where for every pair of sunglasses purchased, “Toms helps restore sight to a person in need”, according to the company’s website.

While Toms did not respond to How we made it in Africa‘s request for a comment on Olopade’s views, Mycoskie did address some of the common criticism around his business model in an interview with The Huffington Post. “If you really are serious about poverty alleviation, our critics said, then you need to create jobs. At first I took that personally, but then I realised that they were right… using our model to create jobs is the next level.”

The company states that its shoes are made in China, Ethiopia and Argentina and, according to Mycoskie, by the end of 2015, Toms plans to have one-third of all shoes produced in the countries to which the company donates.

Mycoskie describes himself as a social entrepreneur and says the company remains profitable because the footwear and eyewear categories are two of the highest margin businesses in the fashion industry. This, along with using social media to reduce marketing expenses, is why Toms can carry the cost of giving away a second pair of shoes for free, says Mycoskie.

According to Olopade, the ‘One for One’ model is simply a way to differentiate the Toms Shoes brand from others.

“So for a company… that has no particular brand advantage other than the pseudo-altruistic for-profit scheme – because again, people think it’s a charity but it’s a for-profit company – I find it to be super disingenuous.”

She added that there are a number of other companies employing the same “charitable” business model, and thereby reinforcing common misconceptions about Africa and third world economies.

“People realise this gimmick works. So you have all kinds of other companies – from food to coffee to sunglasses – emulating this model… It has its own incentives, its own profit motives and is very often misaligned with the addressable needs of people who are poor.”

Aid versus trade: do charitable donations do more harm than good?

Olopade says that the common perception that Africa is waiting on western assistance is “patently false” and the impression that “people are sitting around refugee camps with flies on their eyes waiting for some handout” undermines the population’s potential.

“If you spend any time in sub-Saharan Africa, people have two jobs, three jobs, working twice as hard to get half as far. And are extremely energised and animated and motivated to solve exactly the problems that folks in Geneva, Brussels or New York are pondering in conference rooms.”

During a recent Zócalo Public Square event, a non-profit ideas exchange platform based in the US, Olopade said that many perceptions on Africa have been manipulated.

“Most images of Africa arrive from sources that are interested in making you feel bad about Africa. And I say this not to discount the important humanitarian work that can be done in situations of crisis.”

Olopade holds the view that Africa needs trade, not aid, for sustainable development and noted that charitable donations, such as second-hand clothing, can actually do more harm to an economy than good.

“Mali is always the example I use. It’s one of the biggest cotton producers in the world but it no longer makes T-shirts, in part because of the flood of donated items that come from countries like the US, and put workers out of jobs.”

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  • Thokozani

    This is a great article. My eyes are wide open now and I am going to research more about this gimmick. I now realise that the reason why Africa is not developing as fast and as sustainable as we would expect is because the reasons stated above. If Developed countries especially Western countries were willing to trade with Africa legitimately for its raw materials, Africa would be far away. We have been viewed as this continent that is so helpless but yet we have reserves of any kind of raw material you can think of. Aiding us will cause us to be lazy and depend on being spoon fed which is not good for any sustainable development. Africa is rich, its people are rich, intelligent and powerful, they just need to realise that.

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