AGOA extension could help quadruple African textile and apparel exports

textile1-gatesfoundation-flickrLower labour costs, coupled with abundant raw material availability makes Africa an ideal place to import from. (Image source: Gates Foundation/Flickr)Textile and apparel exports to the USA from Africa could quadruple to exceed US$4bn within the next decade, aided by the extension of the AGOA, said a trade official in the USA

AGOA or the African Growth and Opportunities Act is a non-reciprocal trade preference programme that provides duty-free treatment to USA imports of certain products from certain nations in sub-Saharan Africa.

A report in Reuters said that in 2014, USA’s clothing imports from sub-Saharan countries reached US$986mn – up nearly six per cent from 2013, as countries such as Lesotho, Kenya, Ethiopia and Tanzania participated in the programme.

Analysts have stated that Africa had lower labour costs and abundant raw materials, such as top-quality cotton from Uganda. However, congested ports, poor road networks, lack of skilled labour and use of old technology were a hindrance to progress.

“While the costs may be rising in Asia, they are still way more competitive than Africa, especially on productivity, quality and product range,” said Joseph Nyagari, an official at the Nairobi-based African Cotton and Textile Industries Federation (ACTIF).

However, the AGOA could be extended for another 10 years and could continue to benefit a large number of countries in the continent. The extension could be formalised imminently as the USA administration has already called for the Congress to renew the programme well ahead of its expiry date of 30 September 2015. Established in 2000, AGOA has already been renewed past its original 2008 expiry date.

The news of the imminent extension has led to several factories planning an expansion in Africa such as Taiwan’s New Wide Garment, which already has eight factories in Kenya, Lesotho and Ethiopia. The company’s vice-president for Africa Heman Boodia said, “Now with a ten-year extension, it means most of the investors will jump into Africa. We intend to expand more in Africa.”

Landlocked southern African nation Lesotho, which is a top exporter under the AGOA, could also greatly benefit from the extension. Kelebone Leisanyane, chief executive of the Lesotho National Development Corporation, said that they are planning to develop new fabric mills.

“I think, for Lesotho, AGOA is critical and its renewal means the survival of many families, with around 35,000 workers in the apparel and textile industry.”

Alain Charles Publishing, University House, 11-13 Lower Grosvenor Place, London, SW1W 0EX, UK
T: +44 20 7834 7676, F: +44 20 7973 0076, W: www.alaincharles.com

twn Are you sure that you want to switch to desktop version?