In the face of a decline in value of capital investment in the garment and textile industry for the second consecutive year, Kenya is seeking an at least 10-year extension of the African Growth and Opportunity Act (AGOA) that is scheduled to expire on September 30, 2015.
Kenya is also seeking an extension of the third-country fabric rule of origin for the entire period of AGOA extension.
Representatives of the Government of Kenya and the African Cotton & Textiles Industries Federation (ACTIF) participated in an AGOA strategy meeting held in Nairobi to discuss and develop a Government and private sector position ahead of the annual AGOA forum slated to be held in August this year.
Ms. Phyllis Kandie, who took charge as Cabinet Secretary for East Africa Affairs, Commerce and Tourism last month, said AGOA should be extended on a sustained, long-term and predictable basis, so as to avoid disruptions in trade between Sub-Saharan Africa and the US.
ACTIF executive director Rajeev Arora said AGOA should be extended beyond 2015 for a period of not less than 10 years, which would give African countries reasonable time for building competitive capacity in global markets.
At present, Kenya exports only about 30 product lines, including textiles and apparel, out of the total 6,400 lines on which benefits are available under the AGOA.
At the meeting, ACTIF presented a draft position report, which states that it is imperative that AGOA should be extended well in advance of its September 30, 2015 deadline to avoid the job losses and economic disruptions that are caused due to last-minute renewals.
The meeting also sought that the third country fabric rule of origin should be extended for the full term of AGOA extension. About 95 percent of US apparel imports under AGOA are due to the third country fabric rule which allows African apparel manufacturers to use yarns and fabrics imported from any region.
The annual AGOA forum brings together key US Government officials, African ministers of trade, private sector and other industry representatives.
Capital investment in Kenya’s garment and textile industry dropped from Sh6.9 billion in 2011 to Sh6.2 billion in 2012, according to the 2013 Economic Survey. The uncertainty in extension of the third-country fabric provision under AGOA, before it was scheduled to expire on September 30, 2012, was a major factor for the decline in capital investment.
The number of people employed in Kenya’s garment and textile sector too fell by around 5 percent from over 25,000 in 2011 to less than 24,000 in 2012.
AGOA offers tangible incentives for African countries to continue their efforts to open their economies and build free markets. The Act helps forge stronger commercial ties between Africa and the United States, while it helps to integrate Africa into the global economy.