With over 10,000 workers in Kenya and millions across Africa counting on these investments, the future is uncertain. The expiration date of the African Growth and Opportunity Act (AGOA) is fast approaching. This formative trade agreement is now 25 years in force. It creates duty-free access for certain African products to the U.S. market. Unless Congress acts, that expiration date will be a Tuesday in the not too distant future. This leads to legitimate fear of economic repercussions and loss of livelihoods.
Kenya’s apparel industry has seen enormous benefits from AGOA. By 2024, exports to the U.S. soared to $470 million. In fact, these exports have directly supported over 66,000 direct Kenyan jobs, which have been particularly important amidst the COVID-related economic downturn. Surprisingly, three-fourths of this workforce are women. Factories like Shona EPZ, which employs around 700 workers, have thrived under AGOA, contributing to the local economy and providing opportunities for many.
For manufacturers, the trouble comes from AGOA’s looming expiration date. Shona EPZ has increased their investment to $10 million during the last seven years. Today, U.S. tariffs are the primary driver behind their production decline. Not surprisingly, the factory’s output has dropped to just a third of its usual capacity. This dramatic and sudden decline has raised alarm bells over job security for the now-unity employees.
Joan Wambui, a worker at Shona EPZ who has been sewing sportswear for the American market for six months, expressed her fears regarding the future:
“If Agoa expires, where shall we go?” – Joan Wambui
Isaac Maluki, production manager at Shona EPZ, expressed similar feelings to Isaac’s. He stated that the expiration of AGOA would force the factory to consider drastic measures:
“If the extension isn’t granted, we may have to send people home and possibly shut down.” – Isaac Maluki
“If we can’t get enough work to sustain the people here, we will have no choice.” – Isaac Maluki
“If the extension doesn’t happen, we are looking at the $10m investment going down the drain.” – Isaac Maluki
As African leaders join the chorus for an extension of AGOA, fears of losing jobs and economic prosperity in the process continue to spread. South African President Cyril Ramaphosa has made one such alarm. He further argued that the lapse of AGOA would be devastating for South Africa. Kenyan President William Ruto is now one of those lobbying Washington furiously for an extension.
As negotiations begin, experts stress the need for thoughtful strategy from African nations. Teniola Tayo remarked on the need for African countries to define their objectives and what they can offer in return for market access:
“African countries really need to figure out what they want from the US and what they can offer, because you need to be offering something in exchange for market access.” – Teniola Tayo
Lee Kinyanjui highlighted the necessity of extending AGOA to allow for proper transition mechanisms:
“An ideal situation would be the extension of Agoa so transition mechanisms can be put in place.” – Lee Kinyanjui
The consequences of AGOA’s expiration go far past economics. Then, just as now, many workers at factories such as Shona EPZ have come through the other side of adversity. Joan Wambui pointed out that many employees were previously struggling with addiction:
“Most of the people here were taken from the streets. They were drug addicts. If it expires, they might go back there, and here they are reformed.” – Joan Wambui
The possible abolition of AGOA not only endangers employment, but jeopardizes the strides taken in cities around the continent. What the experts can’t stress enough is one important thing. When African nations trade with one another they produce far more value-added goods compared to simply exporting their raw materials.
“When Africans trade amongst themselves, they tend to produce higher-value goods, more manufactured goods versus simply exporting raw materials.” – Teniola Tayo