The World Bank has warned of local job cuts and industry closures in the absence of an extension of the African Growth Opportunity Act (Agoa) which expired at the end of September.
In a new assessment of the impact of the withdrawal of the preferential market access to the US by African countries, the World Bank expects exporters of apparel and textiles in Kenya, Lesotho and Madagascar to face the worst consequences.
Agoa gave Kenya and other African countries duty-free and quota-free access to the world’s largest economy. Kenyan exports to the US now face a new 10 percent tariff in the absence of an extension to preferential market access under Agoa.
According to the World Bank, tariffs on imported inputs for apparel and textiles can be devastating even when trade flows are small.
The future of the trade pact remains unclear even after the US administration promised a one-year extension with the uncertainty exposing exports from the continent to higher tariffs.
“For African exporters, and especially those working in the apparel and textile industries, like Kenya, Lesotho, and Madagascar, this uncertainty can deter investment and trigger order cancellations,” the World Bank said.
“A tariff hike or suspension could lead to immediate job losses in industries that dominate these countries’ formal employment.” Evidence from the World Bank’s past studies shows that Agoa has contributed to increases in exports of apparel and textiles and that it has driven the success of firms in East Africa.
While discussions on the extension of the pact have been underway with a positive indication of a one-year extension by the administration of President Donald Trump, the World Bank notes that eligibility conditions and political timing remain uncertain.
Experts have previously noted that renewal of Agoa has been delayed on potential changes in the agreement’s focus, including critical minerals and geopolitical alignment under a Republican administration.
Discussions to renew the pact which requires congressional support has further been complicated by the US government shutdown which remains unresolved nearly a week down the road.
“It is really bad timing that Agoa is expiring at a time when the US government is shut down. Agoa’s extension requires bipartisan congressional approval, but the focus is on resolving funding disputes,” Ngovi Gitau, a former Kenyan ambassador to South Korea, told this publication previously.
The White House is yet to issue a clear statement on Agoa's fate despite intense lobbying by African leaders at the UN General Assembly meetings last month.
Kenyan exporters have already marked reduced orders from the US amid uncertainties.
Export Processing Zone (EPZ) factories in Kenya such as Shona EPZ have laid off staff and may be forced to close after the lapse of Agoa.
More than 65,000 jobs at Kenya’s EPZs are at stake if Agoa is scrapped with firms fearing that tariffs for shipments of eligible products such as textile and apparel could surge to more than 30 percent from the current zero-percent duty.
United Aryan which exports Wrangler and Levi’s jeans to US stores under Agoa said it would shed 1,000 jobs or 10 percent as the pact expires.
Preferential access to the US market under Agoa has been credited with enabling manufacturing successes on the African continent.
Data from the US Trade Representative Office (USTR) shows US service imports from Kenya stood at Sh125.6 billion ($972 million) in 2024, rising by 4.7 percent or Sh5.6 billion ($44 million) from 2023.
