The African Growth and Opportunity Act is a United States Trade Act that was enacted on 18 May 2000 as Public Law 106 of the 200th Congress. The legislation has been renewed on different occasions, most recently in 2015, when its period of validity was extended to September 2025. The legislation significantly enhances market access to the US for qualifying Sub-Saharan countries. Kenya’s Export Processing Zones are undergoing a resurgence with recent data showing that total sales from the EPZs has grown by 21.7% to KES 136.2 bn in 2024 from KES 111.9 bn. This has led to increased hope among stakeholders such as manufacturers and investors, where there will be expansion to international markets, especially under the African Growth and Opportunity Act.
Since its enactment in 2000, AGOA has been instrumental in supporting Kenya’s non-traditional exports to the U.S market. It offers duty-free access to various product lines such as textiles and apparel, agricultural products such as coffee and tea and manufactured goods such as footwear. In Kenya, the textiles sector which has dominated the Export Processing Zones, has employed over 60,000 workers, majority of which are women. This has helped in fostering gender equality in Kenya’s labour force and fostered economic growth. According to the Kenya National Bureau of Statistics, the value of apparel exports to the US rose by 19.2% to KES 60.6 bn in 2024 from KES 50.8 bn in 2023. This growth signifies the role that AGOA plays in boosting Kenya’s export earnings and supporting employment in EPZs. With a pending extension, skeptics argue that over-reliance on AGOA can lead to over-satisfaction given the agreement’s limited shelf life and its limited export base. Granted extension, Kenya must utilize it to scale industrialization, diversify their exports and shift towards self-sufficiency.
There are various measures that Kenya can take to maximize its benefits from the AGOA agreement. First, localizing the supply chain since 80% of inputs used in the apparels are normally exported from areas such as Asia. This limits domestic value addition and reduces potential income that could be earned. To achieve this, the government could revive the cotton industry by incentivizing domestic cotton production through subsidies, facilitating industrial parks for textile processing near cotton growing areas and encouraging EPZ firms to source materials locally via procurement quotas. Second, Kenya’s exports are characterized by low technology and low margin nature which exposes Kenya to competition from Asia and automation from the West. This can be mitigated through technical upskilling focusing on EPZ demand and automation in production lines.
Kenya has a rare opportunity to steer to a competitive and value driven industrial economy with the convergence of AGOA and EPZ revenue growth presenting both a safety net and a springboard. The transition will not happen automatically as it requires coordinated action between the government and industrial partners. If Kenya can deepen its local supply chains, upgrade its industrial capacity and diversify its trade partners, it will not only make the most of AGOA but it will future-proof its trade competitiveness for years to come.
