TRALAC - Trade Law Centre

Kenya: Shivers ahead of AGOA (textile) deadline

Monday, 19 September 2011

Source: Daily Nation (Kenya)

The apparel and textile sub-sectors are fearful of the September 2012 deadline by which they should source raw materials locally.

Matters are not made any better by America's silence on pleas for extension of the Africa Growth and Opportunities Act provisions related to the industry.

African states, including Kenya are expected to comply with the provisions of Agoa IV, which require that they source raw materials from within or from other developing countries. They want this provision extended to 2015 to enable the struggling cotton industry to build capacity to meet local demand.

Manufacturers want the US Government to settle the matter urgently to avoid cancellation of orders.

"The US apparel buyers typically place their orders up to nine months in advance; the third-country fabric provision should be renewed before the end of 2011 or else there will be an immediate and dramatic drop in orders due to uncertainty over whether duty free status will be renewed," they say in a memorandum.

They add; "now is not the time for delays or uncertainty. Rather, time is of the essence to prevent the collapse of the Agoa apparel industry, loss of hundreds of thousands of direct jobs and the livelihoods of millions of Africans that are dependent on Agoa."

The Agoa initiative was a brainchild of former American president Bill Clinton meant to provide affirmative action to African states to access his country's market as a way of alleviating poverty.

Mr Jaswider Bedi, a textile manufacturer based in Nakuru, said that should the extension not be confirmed by the end of the year, firms could experience massive loss of business due to uncertainly.

The third-country fabric provision is currently authorised only until September 30, 2012. It demands that African countries source raw materials like cotton lint and yarn locally.

Kenya's export processing zones rely on raw materials from their competitors in China, India, Bangladesh and Malaysia.

Experts say this has denied the local textile industry the vital backward linkage with local farmers, which would have had more impact on the livelihood of people.

Despite government initiatives to improve cotton production in recent years, including creation of the Cotton Development Authority and higher producer prices, not much has been achieved.

According to 2011 Economic Survey, cotton production has shown little response to various government initiatives, with its value remaining at Sh 2 million over the past five years. The government early in the year doubled producer prices to Sh65 to encourage farmers to increase production.

Textile manufacturers want the period extended to at least September 30, 2015. The recommendations came out of a meeting held by African states in Zambia in August to deliberate on the future of Agoa.

Players warn that Kenya is unlikely to benefit from Agoa IV if revival of cotton farming is not stepped up. Worse, the textile and apparel industry could collapse, though it is just recovering from a downturn experienced in the 1990s.

According to a report released by the government policy think tank, Institute of Policy Analysis and Research, in 2009, the country faces the challenge of increasing cotton production to tap new opportunities offered by Agoa.

"With the implementation of Agoa Phase IV, it is imperative that Kenya takes some remedial action, otherwise the country will no longer be eligible for Agoa-type preferences by September 2012," it warned.

Ipar recommended that Kenya grows its cotton and stops relying on its neighbours, mainly Uganda and Tanzania.

The report, which was a comparative analysis of Mauritius and Kenya EPZ textile firms, noted that while the latter had improved its trade performance in clothing and textiles, it had no stronghold in the global market.

It noted that while Kenya would find the years leading to the Agoa IV challenging, Mauritius, which had diversified and entrenched its position in the international market, would not suffer much.

The textile sub-sector is the fourth largest in the country, accounting for 11 per cent of the manufacturing sector. It employs over 60 per cent of workers within the export processing zones.



“ 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.




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