Every morning, Mary Wanjiru wakes up early and heads to her place of work at a garment factory in Nairobi. This has been her daily routine for the past nine years, having learned embroidery and garment making at a local technical training college. Wanjiru is one among thousands of workers who got a lifeline after the U.S. government entered into a partnership with sub-Saharan African nations through the Africa Growth and Opportunity Act (AGOA). But now, their future in the textile industry is no longer assured.
With AGOA set to expire on September 30, 2015, the single mother of two boys may soon have to find an alternative source of livelihood. With life in the sprawling Kitengela informal settlements already difficult, Wanjiru does not know what will become of her if she loses her source of income.
This bleak outlook is shared by the hundreds of investors in the Export Processing Zones (EPZs). With the deadline fast approaching, the possibility of a non-extension is raising anxiety among stakeholders.
Lobbying has already begun in earnest. According to Jas Bedi, the chairman of the African Cotton and Textile Industries Federation (ACTIF), industry players are confident the extension will be forthcoming following U.S. President Barack Obama’s encouraging comments during his recent African tour. ACTIF is the umbrella body for the cotton textile industry in Africa.
The organization has already appointed a lobbyist in Washington, D.C.
“I will also be traveling to Washington, D.C., in October to meet various Congress committees to lobby for extension,” Bedi said.
Stakeholders in the textile industry hope to persuade the U.S. government to extend the AGOA arrangement for a minimum 15 years.
Apart from workers and investors, cotton farmers also stand to lose their livelihoods if AGOA is not renewed. The government, of course, stands to lose revenue as well. The impact of increased joblessness will be likely to worsen the already bad security situation.
“Our jobs are never secure. Without AGOA, things will only get worse,” said Irene Muthoni, who works on-and-off for Nairobi’s Apex Apparels.
Wanjiru agrees: “If the EPZs close shop, my future and that of my sons is doomed.”
During a recent visit to Cape Town, U.S. President Obama expressed optimism that Congress will approve AGOA’s extension. The AGOA agreement — created to initially cover eight years from October 2000 to September 2008 — was signed into law by former U.S. president Bill Clinton in 2000. In July 2004, amendments were made to the law and signed by former U.S. president George W. Bush. The agreement was extended to September 2015 under the amended law. Now, a total of 39 African countries benefit from the initiative.
The purpose of AGOA is to expand U.S. trade and investment in sub-Saharan Africa so as to stimulate economic growth. The agreement also seeks to integrate sub-Saharan Africa into the global economy. Under the law, all marketable goods and services from AGOA-eligible countries would enter the American market duty-free and quota-free. The U.S. Congress was to approve the agreement based on the president’s annual report. The report would be aimed at determining whether a particular sub-Saharan country was eligible for AGOA benefits.
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.
“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.