The United States’ African Growth & Opportunity Act (AGOA) has helped boost the apparel and textile sector in many African countries by giving them duty-free and quota-free access to the US market. And while many are keen to see the act renewed before it is due to expire on 30 September, some have benefited more than others.

Kenya’s apparel exports have certainly grown, courtesy of AGOA. Kenya has established more than 50 export processing zones (EPZ) that are heavily dominated by garment manufacturing industries, owned by investors mainly from China, Hong Kong, India, Malaysia, Pakistan, Sri Lanka and Taiwan.

According to the Kenya National Bureau of Statistics, in 2013 the EPZ export value of apparel commodities increased by 7.5%. "Direct employment generated by this sub-sector rose by 16.3% to stand at about 33,000 persons from 28,300 persons recorded in 2012," Anthony Kilele, the bureau’s director-general, told just-style.

Steven Mutoro, secretary general of the Consumers Federation of Kenya, adds that AGOA has "steadily established" new investments and job creation in the country.

Plans are underway to enact a new law to establish three special economic zones in Mombasa, Kisumu and Lamu, which will develop textile and clothing production still further.

According to Adan Mohamed, the cabinet secretary (minister) for the ministry of industrialisation and enterprise development, the new zones will be part of a broader initiative to widen the manufacturing sector. "The move is expected to increase investment through AGOA, as we intend to provide land, tax holidays, duty-free imports and waivers on value-added tax to investors," he says.

Towards this goal, the government is hoping to create over 10m jobs over the next 30 years. According to Cyrille Nabutola, CEO of the Export Processing Zones Authority, the government is targeting more textile manufacturers from Malaysia, China, Vietnam, South Africa and Taiwan to establish textile industries in Kenya.

"Expanding the manufacturing sector is a major part of the government’s economic agenda -Vision 2030 - to transform Kenya into a middle-income country," Nabutola told just-style.

Yet, the government is worried about the expiry of AGOA, with officials saying publicly they are concerned about the potential loss of direct and indirect jobs if the agreement is not renewed. Subsequently, Kenya has been proactively supporting an AGOA extension for the next 15 years, with garment manufacturing being used as a platform to expand its industrial based in general.

Another leading light
The AGOA agreement has, if anything, been even more important for another leading light in sub-Saharan Africa, the Indian Ocean island country Mauritius.

For instance, Hemraj Ramnial, director of Esquel Mauritius Ltd, the local unit of the Hong Kong-based Esquel Group, says access to the American market has been instrumental in creating marketing space for its high quality shirts.

"AGOA has helped us to establish a firm partnership with the American market. Last year, we exported 14m high quality shirts to our American clients and hope this year to register a growth of 5%. Without this market, our survival in the textile sector would be at stake," he says.

The Mauritius Export Association (MEXA) is certainly keen for AGOA to be renewed: "It is high time that Mauritius and other sub-Saharan African countries roll up their sleeves to aggressively and intensively lobby to draft the bill and to move it on the floor [of the US Congress]," says current MEXA chairman Philip Ryle.

Following AGOA’s initial approval in the year 2000, Mauritian apparel exports to the US increased significantly, growing by more than 22% from MUR7.70bn (US$209.81m) to MUR9.4bn (US$256.14m) in 2002, according to government figures.

These sales later fell back, however, as Asian competition started to bite. But when Mauritius was granted the benefit of the ‘third country fabric provision’ in 2008, allowing clothing exporters to use imported fabric and still benefit from AGOA, exports to the US picked up again and have maintained an upward trend.

Clothing exports to the US increased by nearly 95% between 2008 and 2013, from MUR3.4bn (US$92.64m) to MUR6.7bn (US$182.56m).

The US remains the second largest export market for Mauritius after the EU, with AGOA a key factor. For 2014, the export figures were higher – with clothing exports from Mauritius to the US hitting US$203m, according to international trade data.

Fabric factors
On the other hand, South Africa's clothing and textile industry has not benefitted significantly from AGOA, notably because the country has not qualified for the third country fabric provision.

The country’s clothing and textile sector has certainly struggled while Asian production has soared. Indeed, the Southern African Sustainable Textile and Apparel Cluster (SASTAC) ‘Material Issues Report’ released in November 2014 showed over 100,000 jobs were lost between 1996 and 2013 in the industry.

Dicky Coetzee, CEO at Gelvenor Textiles and SASTAC member, says AGOA’s weaker application for South Africa has diverted trade elsewhere. "While we were excited and anticipated benefits for garment manufacturers and our neighbouring countries who would benefit from the initiative, there was little joy more directly," he says.

According to US Agency for International Development (USAID) project management specialist (trade and investment) Evans Chinembiri, the challenge for South African textile companies was identifying apparel and textile tariffs to target in Washington lobbying.

Also, lobbyists should seek inclusion in the third country fabric provision for products where South Africa is not competing with manufacturers in Lesotho and Swaziland. Such products included niche-market products, such as tents, camping goods and sails.

At the time of writing a package of bills is working its way through the House and Senate. The 'Bipartisan Congressional Trade Priorities and Accountability Act of 2015' includes the reauthorisation of AGOA, with plans to extend the trade pact for ten years, simplify rules of origin, add notification and reporting requirements, and improve transparency and participation in the AGOA review process.

With additional reporting by Villen Anganan and Wachira Kigotho.

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