TRALAC - Trade Law Centre

US Throws Lifeline to Kenyan Textile Industry

Thursday, 05 May 2005

Source: East African Standard (Kenya)

America’s African Growth and Opportunity Act (AGOA) that gives African exporters duty free access to the US market is under threat.

Four months after the World Trade Organisation phased out the international agreement that assigned quarters in the global trade in textiles, it is emerging that increased competition has eroded most of the benefits that exporters enjoyed under Agoa.

A number of textile-manufacturing companies in the Export Processing Zones (EPZ) have closed shop leaving 6,000 people jobless.

Kenyan exporters have particularly suffered due to increased domination of the US market by Chinese and Indian textile exports since January.

The threat has forced the US government, through the Agency for International Development (USAID), to formulate a rescue programme to save Agoa from paralysis.

Through the US-Africa Trade and Link Corporation (UATALCO), the US government plans to build a Sh2.6 billion model-manufacturing center in Nairobi to support the region’s exporters.

"We fully support this initiative and have identified a 25-acre plot in Athi River to host the center," Dr Mukhisa Kituyi, the Trade and Industry minister told US investors in Nairobi last week.

US officials led by Mr Greg Howe, the USAID regional private sector advisor, unveiled a feasibility study for the Regional Model Manufacturing and Training Center that will help textile manufactures in the Common Market for Easter and Southern Africa (Comesa) region to fine tune their products in order to meet the requirements of the US market.

The initiative comes in the wake of revelations that the country is losing 2,000 textile sub-sector jobs every month due to cancellation and reduction of orders by US buyers.

"We are facing a crisis in the sub-sector and the government is holding crisis meetings with industry players to identify avenues of intervention," Kituyi said.

The minister confirmed that six textile-manufacturing firms have left the EPZ for India and China.

The US-sponsored feasibility study indicates that increased trade between Africa and the US through Agoa and a renewed focus on light industries remains the most viable engine of economic growth for the region.

"A model manufacturing center will provide training and career development for thousands of workers in an atmosphere of best manufacturing practices to produce quality, competitive African products for the global market," said Dr Trevor Little, a textile expert from North Carolina State University.

Exports to the US under Agoa have helped expand production in the Export Processing Zones where over 30,000 jobs have been created in the last four years.

The value of exports to the US market also increased from Sh4 billion in 2001 to Sh17 billion last year.

Little, however said, the Comesa region’s textile industry supply chain was inefficient and exposed the region to attacks from the more advanced players such as China and India.

"The eight Agoa eligible countries are currently unable to produce technical, fashionable and high quality garments due to the low level of expertise," he said.

He said the exporters also lacked knowledge of the US market, and operate undeveloped, textile and apparel infrastructure.

The US government said that despite decades of development work, Africa had continued to lag behind in all indicators of prosperity and economic growth.

"Countries remain tied to subsistence agriculture that barely keeps most families alive. This has been worsened by the HIV/Aids pandemic."

Little said the model center would address the supply and production problems including high under and unemployment, marginalisation of women, and lack of expertise in production and exporting of African products.

"This project will help Africa to reduce its dependence on subsistence agriculture where approximately three-quarters of the trainable workforce are now occupied with ever-diminishing returns," he said.

Though AGOA allows duty free access for more than 6,000 items from Africa, exporters have only managed to exploit opportunities in the textile and apparel trade.



“AGOA Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Kenya’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.