New trade pact raises hope for Agoa extension

By NICHOLAS WAITATHU

Kenya: Traders exporting textile and apparels to the US under the African Growth Opportunity Act (Agoa) could continue  enjoying free trade market access. This follows the move by US government to make the framework a permanent trade agreement. 

The trade framework expiring September next year, will be converted into a long-term agreement to allow more trade activities between African countries and the US.  Agoa Trade Advisor Finn Holm-Olsen last week confirmed that the trade agreement will be renewed after the US Congress enacts a new legislation next year.  “There is goodwill from the US government to renew the trade framework to enable African countries expand their trade. The framework will be made permanent unlike before when it was being renewed after a certain period,” said. Finn is a contractor with the US Agency for International Development East Africa Trade Hub, a programme intended to increase food security and economic growth in East and Central Africa.

Progressive performance

 In an interview last Friday, Finn said the new thinking is informed by the progressive performance of the programme since its initiation in year 2000. This was at the sidelines of meeting, after the launch of the 2014 edition of “Origin Africa,” a global campaign to raise awareness about Africa as a preferred sourcing destination in a Nairobi hotel. “The US trade with sub-Saharan Africa has grown significantly during the past 10 years,” he added. According to the US Department of Commerce, exports from US to Africa tripled from less than $7 billion (Sh522 billion) in 2001 to more than $21 billion in 2011, while US imports hit more than $74.2 billion (Sh6.44 trillion) the same period.

Finn confirmed that Kenya, despite internal business challenges, is the leading exporter of textile and apparels in the US market. The Agoa Act enacted in 2000 was designed to increase exports from 39 accredited Sub-Saharan African countries. Export processing zones authority (EPZA) Chief Executive Cyrille Nabutola said Agoa has led to creation of jobs and sound investments in the last 14 years. According to the Economic Survey 2013, Kenyans who were directly employed in the EPZ expanded by 1.5 per cent to stand at 32,516.Nabutola regretted even with the upward performance by local firms, some have left Kenya due to high cost of doing business and instead preferred neighbouring countries.

“For instance the traders have been relocating to Ethiopia owing to its cheap labour.  “but we are addressing the issues facing investors in the local market,” he added.