AGOA Uncertain Future: The future of Kenya’s garment trade, and many livelihoods, now rests in the hands of the U.S. Congress. At the heart of this concern is the African Growth and Opportunity Act (AGOA), which is set to expire in 2025. While AGOA has historically enjoyed bipartisan support as a vital African trade initiative to counter China’s influence, it faces challenges due to dysfunction within Capitol Hill and debates about the need for updates.
For the apparel industry, AGOA has been a remarkable success story. Launched in 2000, it aimed to stimulate African economies and promote democracy. One of its standout achievements has been in the apparel sector, with African apparel exports under AGOA reaching nearly $1.4 billion last year, doubling the pre-AGOA figures.
This trade initiative, with its duty-free access to the world’s largest consumer marketthe U.S., has been the backbone of companies like Kenya’s largest garment producer, UAL. Pankaj Bedi, the chairman of UAL, states, “Almost 100% of what we are exporting goes to the U.S.”
There’s an opportunity for Africa to build on this success, particularly as companies look to diversify their supply chains away from China due to the pandemic’s impact. South African Trade Minister Ebrahim Patel sees this opportunity as open, as nearly 80% of companies surveyed in July planned to reduce their sourcing from China in the next two years, with Africa becoming a viable alternative.
Also Read: Banned Chinese Cotton Detected: US Customs Uncovers Forced Labor Links in Garments
However, this potential transformation for Africa’s apparel industry hinges on AGOA’s renewal and the certainty it provides. Lack of clarity on the future of AGOA has already impacted current investments. The United States Fashion Industry Association (USFIA) reported that 45% of respondents had already reduced their sourcing from AGOA countries due to renewal uncertainty. Another 45% plan to cut their sourcing from the continent if AGOA is not reauthorized by June 2024.
African governments are pushing for a reauthorization similar to the 10-year extension that Congress approved in 2015 with bipartisan support. However, the current political climate in the U.S. makes this increasingly unlikely.
Deep divisions and polarization in Washington, along with issues on the international stage, have made AGOA’s future uncertain. More than a dozen U.S. senators are advocating for a swift AGOA renewal as a means to counter the influence of China, Russia, and other foreign actors.
But the House of Representatives, plagued by infighting over its speakership, faces a backlog of critical legislation. Moreover, there’s a well-intentioned desire to improve AGOA, which has been highlighted by the U.S. International Trade Commission (USITC).
They have pointed out that the benefits of AGOA are not distributed evenly among African countries. A major overhaul of AGOA could risk creating a similar legislative quagmire that has hindered the renewal of the Generalized System of Preferences (GSP).
If AGOA is not renewed or if drastic changes create gridlock, the consequences for Africa’s apparel industry could be dire. The USITC has warned that AGOA benefits are crucial for many countries to maintain their apparel exports to the United States. Without AGOA, African nations could lose tens of thousands of jobs, as seen in previous suspensions of AGOA benefits in Madagascar and Ethiopia.
In Kenya, Pankaj Bedi, the chairman of UAL, remains hopeful but acknowledges that without AGOA, the industry would collapse. The fate of Africa’s garment trade hangs in the balance as the U.S. Congress grapples with renewing this vital trade initiative, leaving millions of workers like Norah Nasimiyu worried about their future.
The apparel industry, a standout success story of AGOA, faces an uncertain future. As the U.S. Congress debates the renewal of the African Growth and Opportunity Act, Africa’s garment trade is at risk. If AGOA is not reauthorized, a significant number of jobs and businesses are in jeopardy, potentially resulting in a shift away from Chinese manufacturing without Africa benefiting.
Industry insiders and policymakers see an opportunity to capture business as companies reduce their reliance on China, but the lack of clarity on AGOA’s future has hampered new investments and may lead to a collapse of the industry.
Our Reader’s Queries
Is AGOA effective?
AGOA has been instrumental in boosting economic growth, promoting political and economic reform, and strengthening U.S. economic ties in the region by opening up new market opportunities. Its impact has been significant, and it has helped to create a more stable and prosperous future for the countries involved.
What countries are suspended from the AGOA?
On October 30th, the US Government declared that the Central African Republic (CAR), Gabon, Niger, and Uganda will no longer be included in the list of 35 sub-Saharan African (SSA) countries that can benefit from market access under the African Growth and Opportunity Act (AGOA).
Is AGOA still in effect?
Eligible African countries can export most agricultural and manufactured products to the U.S. market without paying duties thanks to AGOA. This agreement has been renewed twice and is set to expire in September 2025.
What are the conditions for AGOA?
The President has the power to identify countries that qualify for AGOA benefits. These countries must demonstrate their commitment to developing market-based economies, upholding the rule of law and political pluralism, and removing barriers to U.S. trade. Continual progress towards these goals is also taken into consideration.