Anxiety in Kenya’s Textile Industry as AGOA Fate Hangs in the Balance

Anxiety in Kenya’s Textile Industry as AGOA Fate Hangs in the Balance

The measuring yard for this eligibility would be: the progress of efforts to combat corruption; the economic policies of the given country aimed at reducing poverty; and the country’s efforts to protect internationally-recognized workers’ rights. President Obama would also give his recommendations based on the adherence of the given country to the rule of law and its progress in establishing a market-based economy.

Political analyst James Maina says the possibility of a non-extension is real.

“Several factors could come into play. The recent collaborative arrangements and trade dealings between Kenya and China have seen Chinese companies get huge contracts to undertake various infrastructure projects at the expense of American companies. This could play an important role in the decision of whether to extend the AGOA agreement or not.”

One such project — completed last year — was the recent construction of the 31-mile Thika Super Highway at a cost of $364.7 million. Numerous projects for construction of housing schemes, shopping malls and other infrastructure by Chinese companies are underway. This trend, Maina says, could negatively affect trade arrangements between Kenya and the West.

The International Criminal Court cases facing Kenyan President Uhuru Kenyatta and Deputy President William Ruto could also contribute to a decision regarding AGOA. It is because of these complications that some analysts think the U.S. government could decide to shut the door on textiles from Kenya.

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“Currently, there is a diplomatic tiff between Kenya and the U.S. This is why although President Obama has ancestral ties with Kenya, he failed to visit the country during his recent African tour,” explained Maina.

Also during his African tour, Obama said that he felt it was not the right time to visit due to the crimes against humanity charges facing the Kenyan leaders. However, he promised come back before the end of his second term.

“There is no shortage of textile products around the world; the U.S. may decide to obtain such goods from trade partners with whom it shares similar values,” Muthoni added.

As one of the requirements for a nation to qualify for AGOA benefits is its efforts to fight corruption, Kenya has not fared well. In fact, a report released this year by Transparency International, a human rights watchdog, ranks Kenya at fourth position worldwide in the list of most corrupt countries.

One possible solution for Kenya’s garment makers and exporters is to seek alternative markets. Seeking new markets in the Far East and the Middle East, within Africa, and the East African region are options that businessmen are actively exploring.

“Even as investors lobby the U.S. government for extension of the agreement, they should pursue other markets and also aim to add value to their products,” said Maina.

“To spur further economic growth and sustain the job creation momentum in the country, we need AGOA,” said Bedi.

For many, it is a wait-and-see scenario.