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Obama administration expected to support AGOA

Published date:
Wednesday, 05 November 2008

Kenya expects US President elect Barrack Obama’s administration to support the current trade arrangements under the African Growth and Opportunity Act (Agoa).

Deputy Prime-Minister Uhuru Kenyatta said the Government would work closely with the new administration to expand the trade pact that has generated thousands of jobs mainly within the Export Processing Zones (EPZs).

"As the current chair of the African Consultative Group of Ministers on African Growth Opportunity Act, I look forward to a close working relationship with President-Elect Obama in pursuing a fair trade agenda for the mutual benefit of our people," he said in a congratulation message yesterday.

Agoa allows exporters from 38 countries in sub-Saharan Africa to export to the biggest world economy quota and duty free but the country is yet to reap the full benefits due to low volumes of exports.

The country exports mainly textile with raw materials sourced from China and India. The move was initially intended to revive the cotton industry that collapsed under liberalization of the late 80’s to provide the raw materials.


The country qualified for the Agoa ‘Wearing Apparel’ provisions on January 2001, being one of the first Sub-Saharan African (SSA) countries to do so.

Other exports include agricultural products, mainly tea, coffee and flowers as well as electronic products. Between January and March this year, export earnings stood at Sh1 billion ($13.2 million) while total exports stood at Sh42 billion ($526 million) and Sh46 billion in 2006 and last year.

However, petroleum products continued to account for the largest portion of Agoa exports from SSA with a 93 per cent share of overall exports. According to US trade report 2008, AGOA textiles and apparel imports remained virtually constant at $1.3 billion, minerals and metals imports increased by 34 per cent to $796.3 million, transportation equipment rose by 19 per cent to $588.5 million, and chemicals and related products increased by eight per cent to $308.9 million.


"Agricultural product imports, however, fell by 25 per cent to $271.5 million," said the report.

The top five Agoa beneficiary countries included Nigeria, Angola, South Africa, Chad, and Gabon while other leading Agoa beneficiaries included Republic of Congo Lesotho, Madagascar, Kenya, Cameroon, Swaziland, and Mauritius. US exports also increased by 19 per cent to $14.4 billion, driven by growth in vehicles and parts, parts for oil field equipment, wheat, non-crude oil, and medical equipment.

Of the top five African destinations for US products, exports to South Africa rose by 24 per cent, to Nigeria by 25 per cent, to Kenya by 11 percent, and to Gabon by 253 percent due to the large sale of platform(s) for offshore oil drilling during the first quarter of last year.

In July, Mr Kenyatta and other ministers from eligible countries attended the 7th Agoa forum in the US whee they asked for the intitiative to be made more permanent.

"There is need to make Agoa permanent and predictable to make our region more attractive to invettors," Kenyatta told the forum. "This will help us to address our long term objectives of foreign inveestments, especially from US corporate."

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