Kenyan manufacturers eye US market in growth plan
Manufactures in Kenya are banking on the pending trade deal with the US to grow the sectors’ contribution to the GDP and create jobs.
The sector targets a 20 per cent contribution to economy by 2030.
This will be driven by an increase in production of high quality products that will help expand supply and grow exports, the Kenya Association of Manufactures (KAM) has said.
“AGOA has provided a significant market for Kenya’s textiles and apparels sector over the years, and we look forward to sustained preferential market access post 2025 either in an extended AGOA or strategic partnership with the US,” KAM chief executive Anthony Mwangi said.
A trade deal between Kenya and the US, currently at the negotiation stage, is expected to drive more textile and apparel products, increasing Kenya's earnings.
IT will replace the African Growth and Opportunity Act (AGOA) which has been in place since 2000 and comes to an end in September 2025.
AGOA eliminates import tariffs on goods from eligible African nations and with its coming to an end this puts countries under pressure to secure a pact that will see them continue to enjoy preferential trade terms.
The AGOA program gives Kenya and 40 other sub-Saharan African countries duty-free access to the US market for over 6,000 products.
More than 70 percent of Kenya's exports to the US are duty-free under AGOA.
Some of the sub-sectors targeted for growth is the textile industry with the US remaining a key market.
In 2021, the textiles sub sector recorded a growth of 1.6 per cent mainly on account of an increase in woven fabrics, knitting yarn and sacks and bags-Economic Survey 2022 indicates.
The target however remains ambitious as the manufacturing sector is yet to record anything above 15 per cent, which was a target by the former regime.
It was part of former President Uhuru Kenyatta's Big Four Agenda, which also included food security, universal health, and affordable housing.
The Economic Survey shows manufacturing contributed 7.5 per cent in 2021, having recorded a slight growth from 6.9 per cent the previous year.
According to Mwangi, there is need to focus on enhanced productivity and efficiency to increase the intensity of the country’s exports.
This is however, driven by AGOA, with exports of about $550 million (about Sh 66.9 billion) in 2021. The largest exports to this market are apparels.