Kenya has largely tapped the apparel and garment products lines under Agoa, in addition to small-scale exports of macadamia nuts
Manufacturers have listed new products which will help sustain growth in exports to the United States under tariff-free deals in the wake of earnings falling by double-digit rates for the first time in 14 years.
Data collated by the Kenya National Bureau of Statistics (KNBS) showed that earnings from exports to the US under duty- and quota-free African Growth and Opportunity Act (Agoa) declined by 10.42 percent to Sh50.8 billion.
The double-digit drop was the first since 2009 when the US, just like the rest of developed countries, was battling the wracking effects of global financial meltdown.
At the time, earnings from exports under the deal contracted by 19.68 percent to Sh12.70 billion.
The fall came on the back of the Kenya Association of Manufacturers (KAM) warning that investments in the Agoa sectors, largely garment and apparel, was showing signs of slowing down due to uncertainty over renewal of the nearly two-and-a-half decade trade deal.
Kenya has largely tapped the apparel and garment products lines under Agoa, in addition to small-scale exports of macadamia nuts.
Growing optimism over renewal of the deal on expiry next year has lifted confidence amongst investors to inject money into other product lines, according to KAM.
Mr Job Wanjohi, the head of Policy, Research and Advocacy at KAM, says investors are positioning themselves to pump cash into footwear and agro-products such as tea, coffee, nuts and spices for exports under Agoa upon renewal.
This is in addition to scaling up investments in textile and apparel industries.
“The diversification of our exports will also support the country in enhancing backward integration in diverse value chains such as leather, textiles and food, among others,” Mr Wanjohi said.
“This will be crucial in positioning the country as in the region on value chain integration,” he added.
US Senators Chris Coons of Delaware and James Risch of Idaho last month proposed the Agoa deal be extended for another 16 years from 2025 through a bipartisan Agoa Renewal and Improvement Act of 2024.
They argue this will create certainty for American firms to invest in Africa.
This has come at a time US manufacturers operating in China are said to be escalating decade-long plans to relocate production lines after being rattled by recent supply chain disruptions which peaked during the Covid-19 curbs amidst on-and-off trade tensions between the two world’s largest economies.
Rising cost of wages and on-and-off trade tiffs between Washington and Beijing have seen US manufacturers in labour-intensive sectors such as textiles and furniture migrate production lines to other countries like Indonesia and Bangladesh over the last decade.
“President Biden and his entire administration are deeply committed to a partnership with Africa which has the fastest-growing population, largest free trade area and a diverse ecosystem,” US Commerce Secretary Gina Raimondo said in Nairobi on April 24.
“We see Kenya as a leader in these efforts: a leader in business, technology, digitization, policy innovation and a model for engagement across sub-Saharan Africa.”
The Agoa treaty was initially intended to last for 15 years from the year 2000 before being extended for a further 10 years in June 2015.
The deal allows sub-Saharan African countries to export thousands of products to the expansive US market without tariffs.
President William Ruto last week asked the US to “hasten renewal” of the Agoa Act to provide new markets for Kenyan products.
Some of the changes proposed in the Agoa Renewal and Improvement Act of 2024 are extending the pact to the rest of Africa by including North Africa in line with African Continental Free Trade Agreement (AfCFTA) and eliminating “textile visas” clearance by the US Customs and Border Protection (CBP).
“This bipartisan Bill aims to refine Agoa’s eligibility criteria, increase transparency, and hold US agencies accountable for their advice to the president,” the Bill reads in part.