Textiles manufacturers seek government intervention following exit of MFA

04 Jun '05

3 min read

The textiles sector has incurred huge losses following the WTO elimination of quotas consequent to the winding up of the Multifibre Agreement in December last year.

The MFA, negotiated under the WTO agreements prescribed quotas of textile products originating from several countries and entering the US and European Market.

Until December 31 last year, growth in the sector was driven by the existence of the MFA which gave Kenyan producers a 20% preference in addition to duty advantage ranging from 17% to 32% depending on type of fibre.

Following removal of the quotas, Chinese textile imports are reported to have increased tremendously in Europe and America over the past months to the point where textile associations in these countries are calling for curbs on volume.

Reports from China indicate in January and February alone, exports of major apparel products to the USA increased by at least 486%, with some products increasing by 2,100%. At the same time, exports to Europe increased by 82% in the first two months.

“Now that the quota is no more, it is important to take steps to reduce the cost of doing business in Kenya by 20% to ensure that there are enough firms located in Kenya to attract buyers from the US,” asserts KAM chief executive, Ms. Betty Maina.

Singling out labour as the highest production cost, the sector is asking the government to freeze ceremonial wage increases announced on Labour Day and be allowed to introduce performance-based piece-rate wages. The cost of labour in the EPZs is estimated at US$ 65 for unskilled workers, compared to US$ 35 in other competing countries.

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