Investors have protested over the government’s delay in securing the US Congress’ approval to extend a rule that allows textile firms to export garments made from imported inputs duty-free.
The third country fabric rule of the African Growth and Opportunity Act (Agoa) is set to lapse in September this year, locking out the bulk of textile imports from eligible African states such as Kenya unless the Congress intervenes this month.
Kenya Apparel Manufacturers Exporters Association national chairman Thomas Puthoor said failure by Kenya to lobby the American government to extend the provision this month, would lead to loss of 40,000 jobs, closure of 15 textile firms and loss of Sh18.5 billion revenue to the county’s economy.
“With a lapse of the rule, Kenya and other African states will be locked out of importing textiles that they use to make garments for sale in the US duty free,” said Mr Puthoor, saying textile firms want the rule extended to 2015.
The African Cotton and Textile Industries Federation (Actif) has also been rallying African governments to press for the waiver of the raw materials origin rule.
The Agoa framework passed in 2000 allows duty-and-quota-free export of about 6,500 product lines from a number of sub-Saharan African nations to the US.
The Third Country Fabric Rule provision of the Act initially allowed eligible African countries to import fabric from other parts of the world, manufacture them into finished products at home and export them to the US duty-free.
Agoa beneficiaries were supposed to build adequate domestic material base in a bid to create linkages along the value chains and create more employment. Five years after successfully lobbying for the Provision’s first extension in 2007, Kenya still imports close to 90 per cent of the 180,000 bales of raw and semi finished fabric that it uses to manufacture garments.
Export Processing Zone Authority (EPZA) statistics show that export of apparel to the US under Agoa grew by 26.5 per cent over the Sh12.7 billion in 2009 to Sh16.1 billion in 2010.
The lapse would cause massive capital flight from the Export Processing Zones (EPZ).
“We have seen positive signals that this provision will be extended as it is one of the priority Bills that are pending before the Congress,” Actif chairman Jaswinder Bedi said after meeting American business lobbyists and Congressmen a few weeks ago. [email protected]
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