Newsletter No. 14 6 May 2016
AGOA agreement to boost Kenyan apparel exports
The extension of a preferential US trade deal with African nations has come as a boon to Kenya’s apparel exports which are tipped to 5 per cent to $400 million, according to the Kenya Association of Manufacturers (KAM).
East Africa’s biggest economy exported clothing worth $380 million in 2015, when the US extended its African Growth and Opportunity Act agreement by a decade, according to Phyllis Wakiaga, the CEO of KAM.
“The 10 year extension of the AGOA agreement has offered African manufacturers more confidence to make long-term investments, especially in apparel,” Wakiaga said, according to a Bloomberg report
Brands such as Puma, Wal-Mart, JC Penny, H&M source some of their garments from Kenyan Export Processing Zones, which employ over 66,000 people, according to KAM. The EPZs, which are required to export 80 per cent of their output beyond the regional East African Community bloc, enjoy 10-year tax exemptions.
East Africa could potentially export garments worth as much as $3 billion annually by 2025, according to a 2015 McKinsey report. According to the report, affordable electricity and cheap labour — with monthly salaries as low as $60 — make Kenya and Ethiopia attractive to investors.
Kenya’s textile industry declined in the 1980s after market liberalization policies demanded by multilateral lenders exposed the market to secondhand imports. Most new clothing sales are now sourced in China. South African retailers such as Woolworths Holdings, Truworths and Mr. Price Group also have a presence in Kenya, targeting the middle class.
The regional East African Community bloc is working to revamp the domestic garment market by banning secondhand clothes imports at the end of 2018, Wakiaga said. Kenya imported used clothing worth $243 million weighing more than 100,000 metric tons in 2013, according to the UN agency Comtrade.
Kenyan garment exporters ramping up their production could also tap local fashion retailers too, she said.
“Second hand clothes sellers have a chance to take up the sale of new clothes as the supply will be guaranteed from the manufacturers, thus they may avoid loss of jobs,” Wakiaga said. (SH)
Fibre2Fashion News Desk – India
NEWS BRIEF ON THE CLOTHING AND TEXTILES SECTOR
Kenya, Uganda, Tanzania (Rwanda & Burundi)
Historically East African Region has been in lame light for poor infrastructure, and lack of proper industrial policies which has been a trade barrier to the rapid growth of textile and apparel industries. The recent integration of East Africa Community with funding from African Development Bank through World Bank has so far stimulate and improved the road network that links these three countries and extend the same to Rwanda & Burundi, to enhance bilateral business on regional trade.
Kenya took a fore front in development of garments sector early 90’s but with introduction of quota system by Economic European Community (EEC) 90% of the factories closed down and several employees lost the jobs, this trend also affected Uganda who had invested a lot in Ginners, same applies to Tanzania who’s cotton growing sector went drastically down ,good luck AGOA came in as savior to revive this ailing sector.
East Africa Region generally is endowed with resources which can create jobs opportunity that can eradicate poverty, the textile sector is therefore one of the key industry that can transform drive the economy of these three countries. Among the three countries Kenya took a step to establish Export Processing Zones with view of exploiting the American market and currently immerged as one of the leading garments exporter in Africa. Uganda being a land locked country tried also to penetrate the market but the logistics could not spare them into this business. On the other side Tanzania continues to grow cotton with view of setting up knitting mills to compete in the same market, they have also established an Export Processing Zone to spear head the growth of textile sector.
With good sound management and reforms Rwandese Government is also keen to join other players in market, though they have started on a very small scale but given time they’ll prove to be a force to reckon with ,though with a challenge similar to Uganda of being a land locked country, Burundi has not picked up due to political instability.
However when we look at wide scope of East Africa Region, it is prudent to have proper policy makers, researchers, good infrastructure, apparel training institutions and strong monetary policies, well with good integration , East Africa region is ripe for trade with untapped opportunities to be exploited. The history of textiles and garment sector reveals that the demand of textiles is unlimited for both local and overseas market, unfortunately this industry has been overlooked. The US government introduced AGOA which covers more than 600 products, if the East African Community can identify the resources and talents in each every region i.e Kenyans are good in making garments, Ugandans can proceed with knitting mills and Tanzanian’s concentrate with growing of cotton the supply chain shall benefit each country across the board, therefore a win-win situation for each country. The success of textile & apparel sector in East Africa shall depend on commitment of each government setting up good industrial policies, this sector has proved to be one of the most labor intensive and the road map to eradicate poverty in the region.
By: Mr. Heman Boodia (Vice President New Wide Garments Africa Region)
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