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Economy

Agoa textile exports lift Kenya, US trade 27.9pc

A textile factory at an EPZ. Kenya plans to set up a fully serviced Textile City in the country as part of the ongoing efforts to revamp the ailing textile industry that has suffered from lack of enough raw material,  following the collapse of the cotton sector. PHOTO | FILE
A textile factory at an EPZ. Kenya plans to set up a fully serviced Textile City in the country as part of the ongoing efforts to revamp the ailing textile industry that has suffered from lack of enough raw material, following the collapse of the cotton sector. PHOTO | FILE 

Exports of duty free goods to the US under African Growth and Opportunity Act (Agoa) increased by a quarter last year to Sh30 billion, helping grow trade between Kenya and America.

The goods, mainly textile products, rose 24.2 per cent from Sh24 billion in 2013 and accounted for 79 per cent of the total export exports to the US—which was up 27.9 per cent to Sh38 billion.

The Agoa programme allows Kenya and other Sub-Saharan African countries to export identified goods at preferential terms to the US, exempting them from paying tax.

“There was a notable increase in the value of export or articles of apparel to the US,” noted the Economic Survey that was released Wednesday.

The rise in Agoa exports helped lift employment in Kenya’s export processing zones to 37,758 workers, up from 32,932 in 2013 and 24,114 in 2010.

Other exports to the US included coffee, which fetched Sh3 billion and titanium ores and concentrates earning the country Sh2.1 billion.

The Agoa initiative is expected to end this year after the initial deadline of September 2012 was extended by the US law makers.

Supply

The extension of Agoa, commonly referred to as the Third-Country-Rule, marked a major relief for players in the Kenyan textile industry because it helped guarantee supply of raw material.

Textile firms in the country import close to 90 per cent of the 180, 000 bales of raw cotton or semi-finished fabric that they use to make garments for export to the US.

The government plans to set up a fully serviced Textile City in the country as part of the ongoing efforts to revamp the ailing textile industry that has suffered from lack of enough raw material, following the collapse of the cotton sector.

The Textile City model championed by the Ministry of Industrialisation and Enterprise Development aims to attract foreign investors to set up manufacturing plants.

US-based global fashion houses Calvin Klein, Timberland and Tommy Hilfiger are eyeing space in Kenya’s planned Textile City, which will be set up in Athi River, with construction expected to start in July.

Investors in the city will enjoy a 10-year corporate and withholding tax holiday, VAT and stamp duty exemptions and utility connections.

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