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

US boosts Kenya apparel industry with $55m in new trade deals
Published date:
Saturday, 29 April 2023

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 Prosper Africa – a US government initiative to increase trade and investment between African nations and America –  and will mostly target women-led organisations as well as the export processing zones (EPZs), where a majority of employees are young women.

 “It is a pleasure to partner with the Prosper Africa initiative to drive investment in Kenya and countries across the African continent,” said US Ambassador to Kenya Meg Whitman.

New co-investments

The funding involves six new co-investments with American and Kenyan apparel companies, which will connect American buyers with Kenyan manufacturers, creating jobs.

In 2022, the US became Kenya’s largest export market, edging ahead of Uganda.  Kenya exported about $890 million in goods to the US against imports of around $600 million.

Ambassador Whitman said US-Kenya trade is expected to increase by a $1.5 billion as the two countries negotiate the Strategic Trade and Investment Partnership.

Model agreement

“This agreement will be a model for the rest of the continent once signed,” said Whitman.

“Many US tech companies have already figured this out and decided that they need to be in Kenya.”

The companies include Copia Global, Semiconductor Technologies Ltd, Twiga Foods, Market Force, Power Financial Wellness, and electric vehicle start-ups.

“I’ve met these companies, visited their operations, and what I see happening here has many of the critical components that make Silicon Savannah a reality,” she added.

Kenya’s Cabinet secretary for Investments, Trade and Industry Moses Kuria pledged to reduce taxes, electricity costs and other trade barriers to investment.

“We are providing an environment that is conducive to investment, starting with the Strategic Trade and Investment Partnership (STIP),” said Kuria.

Beneficiary firms

Scott Cameron, acting chief operating officer at Prosper Africa, said the six new co-investment partnerships include UAL and MAS Intimates, which is already at the Athi River EPZ, and which will create jobs in the formal sector and provide training for Kenyan workers to increase production of high-quality Kenyan-made apparel.

“UAL will increase apparel exports to the US market by building a one-stop shop in Kenya that harmonises all steps in the production process from farm to fashion,” said Cameron.

The funds will also be channelled to Mega to expand the company’s production capacity.

The other beneficiary is Coast Apparel, which will buy machinery to increase production and export capacity, creating new jobs for women and youth.

Funding to Best Lifestyle will help to hire and train new employees as it expands its manufacturing in Kenya.

Build factory in Kenya

NexGen is expected to set up a factory in Kenya to manufacture tags and labels for branding products in apparel and footwear for sale within and outside Africa.

These new co-investments build on the 14 deals announced by President William Ruto at the American Chamber of Commerce Summit in Nairobi in March.

Kenya has been a beneficiary of the Africa Growth and Opportunity Act (Agoa), a preferential trade programme that will expire in 2025. It also qualifies for textile and apparel benefits.

The trade volumes between Kenya and the US have been skewed in favour of the US but Minister Kuria has pledged to address the inequality through proposals to lower the cost of doing business in Kenya.

“To ensure that we attract more investment and more buyers into the market, we’ve identified several areas, which we are working on. One of them is the availability of industrial spaces for investors. We are looking at Eldoret and Busia, which are on the border of Kenya and Uganda,” he said.

Cost of energy

The minister added that the government is addressing the cost of energy as well as reviewing the tax regime and gaps in the legal framework on doing business.

Kenya exports to the US are chiefly apparel, macadamia nuts, coffee, tea and titanium ores while it imports mainly aircraft, plastics, machinery and wheat.

US Secretary of State Antony Blinken and Kenyan Cabinet Secretary for Foreign and Diaspora Affairs Alfred Mutua discussed strengthening bilateral relations across all five pillars of the Strategic Partnership and advancing peace and prosperity.

“Kenya is open for business,” said Mutua. “We are saying we want more trade, not aid.  Kenya is well placed on the African continent to be a hub for American investors.”

Free trade area

“We now have the African Continental Free Trade Area, with a population of 1.3 billion people.  When you come and invest in Kenya, it means you’re investing on the continent of Africa.” 

Blinken noted that the US is supporting Kenyan-led vaccine production, including through Moderna’s $500 million investment in a new manufacturing facility near Nairobi, which will produce mRNA vaccines to tackle viruses such as Covid-19, Ebola, respiratory syncytial virus and HIV.

“We’re committed to supporting US investment in Kenya, particularly in key sectors like information and communications technologies, agriculture, and renewable energy, which will help Kenya achieve its goal of reaching upper-middle income status by 2030, while creating jobs and opportunity for people in both our countries,” Blinken said.

Share this article

View related news articles

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

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

Kenya: Farmers tapping into lucrative silk farming for export

Sericulture or silk farming is practised in many countries, with China and India dominating the global market, accounting for over 60 per cent of the yield. An acre of land can produce silk worth Ksh1,800,000 annually and the product is considered to have a sustainable market in the European Union (EU), the African Growth and Opportunity Act (AGOA - United States)  and Far East Markets. Kenya has a favourable climate for silk farming,...

07 November 2022

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...

07 November 2022