The African Growth and Opportunity Act (Agoa) has proven beneficial with Kenya’s textile and apparel sectors managing monthly exports to the tune of Sh4.5 bn, or Sh150 mn per day in 2022, a research by the Institute of Economic Affairs (IEA) shows.
The programme, which provides enhanced market access to qualifying sub-Saharan African countries in the US, has had a positive impact on Kenya’s export-processing zones (EPZs), particularly in the garment and apparel sector.
It has significantly boosted Kenya’s textile and apparel industries, leading to increased exports and economic development. Kenya is the second-largest exporter of textile and apparel products to the US among Agoa-eligible countries.
The sector has experienced steady growth in capital investment, with a 7.2 per cent increase from 2018 to 2022. In 2022, 36 firms with a capital investment of Sh24.88 bn employed 66,260 people and generated exports worth Sh54.12 bn.
According to IEA researcher, Leo Kipkogei Kemboi, the textile and apparel sectors in the country benefit the most from Agoa, accounting for more than 94 per cent of total exports under the programme.
The garment and apparel sector is a vital component of Kenya’s EPZ programme. It accounts for more than 90 per cent of the country’s Agoa apparel exports and is responsible for creating 85 per cent of jobs within the EPZs.
While Agoa allows for the procurement of raw materials from other beneficiary countries, there is a lack of vertical integration and regional trade in intermediate goods. This has led to a reliance on non-originating raw materials for more than 90 per cent of textile exports.
The garment and apparel sector’s exports accounted for 7 per cent of Kenya’s total exports in 2022, highlighting its significant contribution to the country’s economy.
Enacted in May 2000, Agoa aimed at promoting economic development, exports, improved governance, and better working conditions in qualifying Sub-Saharan African countries.
It has been extended multiple times, with the latest extension scheduled until 2025. To benefit from Agoa, countries must demonstrate improvements in areas such as the rule of law, human rights, and labour standards.
The IEA research underscores the importance of safeguarding and nurturing the benefits brought about by Agoa, particularly in sectors like garment and apparel industry.
