The US Senate has voted to extend the African Growth and Opportunity Act to 2015, giving a new lease of life to Kenya's garment exporters.

Trade and Industry minister Mukhisa Kituyi yesterday announced that the Bill only awaited the signing into law by President George W. Bush who, he said, was expected to do so by next week.

"Agoa's extension will boost investors' confidence in Kenya, especially in the Export Processing Zones, and will allow the country to build capacity in the cotton and textile industry," he added.

Agoa became law in 2000 and was initially expected to expire in 2008. Kenya and other benefiting African countries will win a major concession for the sourcing of raw materials for garment manufacturing.

Kenya was the first country to be granted Agoa accreditation, and currently 23 countries export goods to the US under its terms.

Kenya's exports to the US under Agoa have increased more than threefold since 2001 from $150 billion (Sh1.2 trillion) to $445 billion (Sh36 trillion) at the end of 2003.

Agoa preferential trading terms are divided into phases that overlap. Agoa I expires this year, to be followed by Agoa II, which was scheduled to run till 2008, but has now been extended to 2015.

A key requirement in the second phase was that the beneficiaries source the raw materials for garment manufacturing locally, which put some manufacturers in a fix because the local cotton industry is yet to be revived.

This is one of the reasons why local suppliers to the US market wanted the extension for foreign sourcing of materials extended. The textile special provision was scheduled to expire this September, but it will now expire in 2008, while the whole Agoa initiative has been extended to 2015.

The initiative will even have a third phase running from 2008 to 2020, giving 12 more years of access to lucrative US market.

It is estimated that about 85 per cent of the garment exports to the US under Agoa by the 37 eligible African states depend on third countries for raw materials.

In Kenya most of the yarn and fabric is from India, South Korea, Taiwan, China and the US itself.

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