Textile manufacturers in Kenya are concerned over the delay in extension of the September 2012 deadline for Africa Growth and Opportunities Act (AGOA).
They apprehend that the delay will have serious impact on their business as the uncertainty over possible extension may lead to loss of thousands of jobs.
Under AGOA, Kenyan textile and apparel companies get free access to the US market for the designated goods.
However, the third-country fabric provision under AGOA ends on September 30, 2012. After this date, Kenyan textile and apparel companies would need to source raw materials like cotton and yarn locally to avail the duty-free benefit to the US.
In view of the same, Kenyan Government has offered incentives to the cotton industry. These include creation of the Cotton Development Authority and offering higher prices to cotton farmers.
But, these initiatives have fallen short and the textile and garment manufacturers want the AGOA third-country provision to be extended till 2015 to improve local raw material availability to meet the domestic demand.
Meanwhile, Kenyan Trade Ministry has constituted a National Committee on AGOA to guide the country’s textile and garment sector. The Ministry is also working with the US to get the deadline for third-country provision under AGOA extended.
But the US Government is yet to respond to the Kenyan industry’s appeal to extend the deadline till September 2015. This has raised concern over Kenyan textile manufacturers’ ability to guarantee continued supply of goods.
Textile producers say the orders to be placed in March for supply in December may get affected if there is further delay in announcing the extension of third-country provision.
AGOA aims to provide free access for African States, including Kenya, to the American market.
Kenyan textile and apparel exports grossed US$ 292 million in 2011, which made the country the largest African supplier to the US under AGOA.
At present, export processing zones (EPZs) in Kenya depend on developing countries like India, Bangladesh, China and Malaysia for their raw material supply. According to experts, this dependence has denied the vital backward linkage with local farmers for the Kenyan textile industry.
Fibre2fashion News Desk – India