Donated clothes, do they really help?

From the journal of an Australian who travelled around the world and was a volunteer in Africa:

..."My understanding of what actually happens is that the shirts arrive by the container load and are given to the government at the port. The government has no means to distribute them, so they sell them bulk to local merchants for next to nothing. The merchants then distribute them to markets around the country, mark up the price and sell them to Africans. A free shirt at port ends up being about 1,500 shillings at the market, which is about $1.50US. This doesn’t look so bad. In the end a local person can get a good quality shirt, with a whacky print on the front, about an average days work.

The impact that this story doesn’t tell is that Tanzania used to have quite a good textiles industry. Globally it is an industry with high competition, high volume and low margins. Tanzania found it difficult to compete with next to free second hand clothes, and then impossible to compete when cheap Asian textiles hit the market. I was stunned by this, and equally stunned when I bought a bright purple Kanga for my mum in the local market and it had a sticker on it saying that it was made in India. I just couldn’t believe that a traditional African fabric with Swahili quotes on it, gets imported."

It is really shoking, if to think about it. That means that thousands of people who donate clothes are actually not helping, but creating more problems in the long run?