Bangladesh's garment industry generates roughly 400,000 to 577,000 tonnes of pre-consumer textile waste each year, known in the trade as "jhut" (from the Urdu jhuta, meaning waste). According to field research by Reed Consultancy Bangladesh and Circle Economy across 12 districts, this informal trade chain supports some 18,400 to 22,000 micro and small enterprises and sustains about 195,000 to 214,000 workers, roughly 70 percent of whom are women sorters, most working by hand.

The Daily Star of Dhaka visited processing sites in Gazipur, where workers are mainly women aged 20 to 50, with five to 20 years in the trade. Their work rarely appears in official statistics and struggles even more to enter climate action discourse, yet what they actually do is exactly what the global circular economy now prizes so highly — keeping materials in circulation.

The arithmetic of lost value

Less than 5 percent of Bangladesh's textile waste is recycled domestically; more than half is exported for recycling and other processing abroad. A 2024 study by GIZ and H&M estimated that a stronger circular textile industry could generate an additional $4 billion to $5 billion a year for Bangladesh. A vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said in 2026 that recycling the country's garment waste could support a circular economy worth nearly $8 billion in annual output. These are still projections, not realized revenue, but they point to one fact: the offcuts on the cutting-room floor are raw material — overlooked cash.

An informal "Mithunba-style" chain

For decades this informal jhut economy has been doing circular economy work without calling it that. Traders buy the waste, workers sort, grade and resell it, and recyclers turn part of it into new materials; larger fabric pieces are reused or remanufactured, while smaller cotton scraps become recycled fiber or yarn. The system is chaotic, fragmented and often exploitative, yet remarkably resilient.

Research by Lone Riisgaard published in Circular Economy and Sustainability describes Bangladesh's informal textile waste system as an already-formed circular model: existing networks already recover and reuse large volumes of garment production leftovers, while formal recycling capacity remains limited. This creates an awkward paradox — the formal circular economy Bangladesh is preparing to build is one that informal workers have long been running; the difference is that the new version comes with traceability, certification, investment, international buyers and potentially billions of dollars. The question thus shifts from "does waste have value" to "who gets to capture that value."

The blind spot of formalization

Global brands increasingly demand that textile waste be traceable, measurable and verifiable, giving large recyclers more incentive to buy cleaner, higher-value waste directly from factories rather than through the traditional fragmented network. From an industry perspective this is understandable: direct sourcing improves traceability, formal recycling raises environmental standards, and better technology yields higher-quality recycled fiber. But formalization has a blind spot: what happens to the workers and small businesses who make their living from the informal chain? A 2026 study warned of "green value capture" — that the transition to a formal circular economy could let large players in global value chains capture new sustainability-related economic value while existing informal workers lose the material sources they depend on.

Factories can become greener while sorters become poorer; recycled yarn can carry sustainability certification while the hands that separated its original fibers remain unprotected. The danger is not that formal recycling is inherently harmful, but that formalization is mistaken for progress: the industry closes the material loop while opening a social divide.

Who owns the next life

Bangladesh does need better recycling infrastructure, investment, technology and policy to make domestic recycling economically viable. But it also needs to recognize the economy that already exists, to see informal waste workers as participants in modernization rather than obstacles, to bring occupational safety, social protection and fairer working conditions into the circular economy agenda, and to design formal systems that connect existing workers and enterprises to new markets rather than bypassing them.

Otherwise the transition merely repeats the old pattern: materials stay, value shifts, and the people doing the work are left behind. A piece of fabric does not become valuable because a policy document calls it a resource; it was valuable all along, it just needs someone to see it — and for decades, someone has. Bangladesh's real question is not whether it has a circular economy (it does), but what happens when this economy, built by invisible workers, becomes valuable enough that everyone wants to pay attention. If Bangladesh counts only recycled yarn and not the hands that sort the waste, it may succeed in closing the material loop while leaving the people who built that loop outside it.

Source: The $5 billion opportunity Bangladesh is failing to see · Originally published 2026-09-17