Kenya 'reaps Sh10 billion after Ethiopia's ban from AGOA deal'

Kenya 'reaps Sh10 billion after Ethiopia's ban from AGOA deal'
Published date:
Tuesday, 24 May 2022

Kenya earned an additional Sh10.2 billion from its exports to the US as Nairobi reaped big from Ethiopia’s suspension from a duty-free trade pact.

Last year, Kenya’s exports to the US — mostly apparel were valued at Sh59.6 billion, a jump of more than a fifth from Sh49.4 billion in 2020 as Kenyan traders sold more goods through the African Growth and Opportunity Act (Agoa), a free trade agreement between Washington and select African countries.

This saw the US overtake Pakistan to become Kenya’s third-largest export market behind Uganda and Netherlands.

Besides the recovery of the US economy, which saw consumers’ demand for Kenyan-made clothes and shoes surge, the increased uptake of Kenyan apparel in the US was also due to the reduced supply of Ethiopian goods due to the Tigrayan war and the subsequent suspension of Addis Ababa from Agoa.

“A lot of exports to the US that used to come from Ethiopia have been disrupted by the war,” said Industrialisation, Trade and Enterprise Development Cabinet Secretary Betty Maina.

Ms Maina added that the government, which had given itself to increasing exports to the US by 25 per cent, was also sending the right “signals for negotiation” next year.

In 2021, Agoa exports were valued at Sh50.7 billion, an increase of 20 per cent from Sh42.3 billion in the previous year.

There was also increased capital investment and the number of employees working for firms at the export processing zones, which produce apparel and garments for export to the US under Agoa.

In November last year, US authorities said Ethiopia had breached the eligibility requirements of Agoa because of what they termed “gross violations of internationally recognised human rights.” Agoa apparel benefits for Rwanda were also suspended by former US President Donald Trump in July 2018, after Kigali banned second-hand clothes from the US.

Kenya continued to reap the benefits of Ethiopia’s ineligibility from Agoa well into 2022, with the country’s exports to the US in the first three months of this year jumping by Sh1.4 billion to Sh14.8 billion.

In the same period last year, exports to the US were valued at Sh13.4 billion. In August 2020, Kenya and the US began talks on a new trade pact between the two countries.

Other than coffee and nuts, Kenya exports mostly textiles to the US, including non-knit women’s and men’s suits, non-knit and knit men’s shirts, knit sweaters and t-shirts.

A 2019 report by the World Bank painted a bleak picture of Kenya’s attempt at upstaging Ethiopia in creating over 600,000 jobs in the textile and apparel value chain.

Titled “Jobs in Global Value Chain” (GVC), the report showed that from 14 years to 2014, Kenya’s growth of jobs produced by firms engaged in manufacturing activities linked to the global supply chains such as textile and car assembly or food production had been “mediocre.”

During this period, the report found that the fastest growth in GVC jobs was in Bangladesh and Vietnam followed by Ethiopia and India. “GVC job growth in Kenya was mediocre and comparable to China and Indonesia,” noted the report.

Kenya’s poor performance in job creation was due to a decline in market share that led to depressed GVC job growth. “Kenya, Senegal and South Africa all lost market share, depressing GVC job growth,” read part of the report.

 

Share this article

View related news articles

US boosts Kenya apparel industry with $55m in new trade deals

The US is giving Kenya $55 million for expansion of export processing zones in a move that will boost Nairobi’s apparel exports. US initiative Prosper Africa and the US Embassy announced the funding at the launch of the US-Kenya Business Roadshow held on April 25 in New York. The announcement was part of the commitments made by President Joe Biden at the US-Africa Leaders’ Summit last year. The funds will be channelled under USAid and...

29 April 2023

Why Africa, why Kenya? Remarks by US Ambassador to Kenya

Thank you, Scott, for the kind introduction. It is a pleasure to partner with the Prosper Africa initiative to drive investment in Kenya and countries across the African continent. I am happy to kick off our U.S.-Kenya Business Roadshow with all of you today, and to announce that we will be partnering with Prosper Africa throughout the year to engage businesses and investors in cities across the United States. Our next stops include San...

26 April 2023

Kenya-USA: Joint Statement on the third US-Kenya bilateral strategic dialogue [incl. VIDEO]

The text of the following statement was released by the Governments of the United States of America and the Kenya on the occasion of U.S.-Kenya Bilateral Strategic Dialogue in Washington, D.C. on April 24, 2023. Begin Text: The Governments of the United States of America and the Republic of Kenya held the third iteration of the U.S.-Kenya Bilateral Strategic Dialogue in Washington, D.C. on April 24, 2023.  The U.S.-Kenya Strategic...

24 April 2023

State Secretary Blinken praises Ethiopia on Tigray peace, no return to trade programme yet

U.S. Secretary of State Antony Blinken praised Ethiopia on Wednesday for its progress in implementing a peace deal to end the Tigray conflict, but stopped short of ushering the country back into a U.S. trade programme. Visiting Ethiopia to repair relations that were strained by the two-year war in the northern region, Blinken met with Prime Minister Abiy Ahmed and discussed ongoing efforts to solidify peace, restore basic services and address...

13 March 2023

Ethiopia asks US to reinstate AGOA trade benefits as US Secretary of State Blinken heads to Addis, Niger

Ethiopia is asking the Joe Biden administration to reinstate its duty-free access to the US market, arguing that “exceptional circumstances” warrant an immediate re-examination of its suspension just as Secretary of State Antony Blinken heads to Addis Ababa to discuss the cessation of hostilities in Tigray. The Office of the US Trade Representative (USTR) terminated Ethiopia’s participation in the African Growth and Opportunity Act...

09 March 2023

Kenya: Manufacturers push for 15-year AGOA extension

Kenyan manufacturers have asked the Trade ministry to request Washington to extend the existing duty- and quota-free access to the expansive US market window for another 15 years as the two countries prepare for talks over a long-term bilateral trade deal. The Kenya Association of Manufacturers, the sector lobby, argues that uncertainty over the more than two decades-Growth and Opportunity Act (AGOA) deal, which expires in two years, is...

02 March 2023

Kenya and US complete first round of trade talks

Kenya and the United States have concluded the first round of Strategic Trade and Investment Partnership (STIP) that will form a basis for future bilateral engagements. The Kenyan delegation, led by Trade Principal Secretary Alfred K’Ombudo, hope that the five-day talks on the free trade agreement will bear fruits. The government has been scouting for areas of collaboration that will increase foreign direct investment, promote sustainable...

13 February 2023

Transparent, participatory process needed for US-Kenya Strategic Trade and Investment Partnership

U.S. and Kenyan officials are meeting this week in Washington for the first negotiating round of the U.S.-Kenya Strategic Trade and Investment Partnership (STIP). Public Citizen submitted recommendations for the U.S.-Kenya negotiations to USTR as part of its public comment process last year. Melinda St. Louis, Global Trade Watch director at Public Citizen, issued the following statement: “The U.S. and Kenyan governments...

08 February 2023

Kenyan and US officials to hold discussions on Strategic Trade and Investment Partnership

Trade representatives from Kenya and the US are set to hold an in-person first round of conceptual discussions under the Strategic Trade and Investment Partnership (STIP) in Washington, DC, from February 6th to 10th. The US delegation will be led by Assistant Trade Representative Connie Hamilton and will include representatives from several other government agencies, the Office of the US Trade Representative said in a press release. The two...

06 February 2023

US and Kenya to hold first round under their Strategic Trade and Investment Partnership (STIP)

The United States and Kenya will hold an in-person round of conceptual discussions under their Strategic Trade and Investment Partnership (STIP) in Washington, DC, from February 6-10, 2023.   The United States delegation will be led by Assistant United States Trade Representative Connie Hamilton, and will include representatives from several other government agencies. United States Trade Representative Katherine Tai and then-Kenyan...

04 February 2023

Africa seeks bigger US trade slice for AGOA to make sense

African countries may need more trade privileges with the US even as Washington reviews the African Growth and Opportunity Act (Agoa) meant to expand what the continent will export. At the end of the US-Africa summit in December, Washington pledged to renew Agoa, bringing clarity to uncertainties that had befell exporters from countries such as Kenya. But now experts say the narrow view of Agoa should be expanded to allow them to export more...

11 January 2023