The AGOA Act was announced by the US in October 2000 with a validity period of 15 years. The Act also allowed third country sourcing of raw materials till September 2012 in order that these African countries have enough time in hand to develop their own raw material sources. This provision has now been extended till the lifetime of AGOA which expires in September 2015.
“This development means that close to 300,000 jobs have been saved due to the extension of the provision, since 95 percent of the raw materials are imported which in turn are converted in to apparel products meant for exports to the US”, Mr Rajeev Arora, Executive Director of Kenya-based African Cotton & Textile Industries Federation (ACTIF) told fibre2fashion.
When asked if this grace period will help the sub-Saharan African countries set up backward linkages in the textile sector, he replied by saying, “It takes a minimum of 7-8 years to amortize investments in the textile sector, so I do not expect new investments flowing in to the spinning or weaving sector in the short-term.
He adds, “However, if AGOA is extended for an additional 10 years, well before its expiry, then we could attract the much needed investments to set up backward linkages. We are very positive about AGOA being given an extension. We are also speaking to various African governments on the possibility of atleast using the locally produced fibres to convert in to yarns and fabrics”.
Fibre2fashion News Desk - India
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