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African textile exports may reach $4b under new US trade deal

FINANCIAL STANDARD
By Reuters | June 11th 2015

Africa’s textile and apparel exports to the United States could quadruple to $4 billion over the next decade through an extended duty-free trade treaty, a US official said yesterday.

The trade programme known as the African Growth and Opportunities Act (Agoa), currently before American lawmakers, provides eligible sub-Saharan countries duty-free access to the world’s top apparel market, giving Africa a competitive edge over suppliers such as Bangladesh and Vietnam.

The US administration has already called for Congress to renew the programme well ahead of its expiry date of September 30, 2015. The programme, in which about 40 African countries are eligible to take part, could be extended another 10 years.

“Ten years is a game-changer,” said Gail Strickler, assistant US trade representative for textiles and apparel, adding the extension could be passed “imminently”.

Lack of skills

“Africa should be able to quadruple its exports, literally without a lot of trouble, creating another 500,000 new jobs.”

Established in 2000, Agoa has already been renewed past its original 2008 expiry date. Last year, US clothing imports from sub-Saharan countries reached $986 million, up nearly six per cent from 2013, as countries such as Lesotho, Kenya, Ethiopia and Tanzania participated in the programme.

Analysts said Africa had lower labour costs and abundant raw materials, such as top-quality cotton from Uganda, but congested ports, a poor road network, lack of skills and old technology were a hindrance.

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“While the costs may be rising in Asia, they are still way more competitive than Africa, especially on productivity, quality and product range,” said Joseph Nyagari, an official at the Nairobi-based African Cotton and Textile Industries Federation.

African officials and Asian firms with factories in Africa welcomed AGOA’s extension, saying investment would follow.

Taiwanese firm New Wide Garment, which has six factories in Kenya and one each in Lesotho and Ethiopia, also aims to expand.

“Now with a ten-year extension it means most of the investors will jump into Africa. We intend expanding more in Africa,” Heman Boodia, its Africa vice president told Reuters.

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