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AGOA renewal raises African hopes of unhindered exports to U.S.

Published on August 28, 2015

A key operator called the East Africa Trade and Investment Hub (EATIH), a trade promotion agency based in Nairobi, Kenya, and funded by the U.S. government, has applauded AGOA's extension.  J.C. Mazingue, trade advisor for Africa and a contractor for USAID, said that AGOA would give African exporters duty-free access to 8,000 products, including almost all textile and apparel products.

AGOA, renewed until 2025, has a third-country provision that will give African exporters an added advantage: any fabric can be cut and sewn free of U.S. duty.  This will also motivate African companies to invest in capacity.  Most African factories are doing well.  Africa needs greater capacity, which means there is demand for African textile and apparel products in the U.S.  The largest African exporter of apparel is Kenya, followed by Lesotho, Mauritius and Ethiopia.  The government of Ethiopia has identified textile and apparel as a priority industry.  Overseas companies, mainly from India, China and Turkey, have invested considerable sums of money in Ethiopia because of the much lower labor and energy costs.  Ethiopia's primary energy source is hydraulic derived.

According to Mazingue, "The East Africa region is becoming a de facto sourcing hub of the continent.  Ethiopia, Kenya, Lesotho, Madagascar, Mauritius are well positioned."

Ethiopia specializes in work wear, uniforms, basic knits, and more, Mazingue explained.  Kenya is the leader in chinos, slacks, denim jeans; Lesotho is a big producer of denims; Madagascar has woven and knit shirts manufacturers; and Mauritius is increasingly becoming a destination for fashion and value-added products, he said.

Infrastructure is a pressing concern for companies deciding whether to source on the continent, and while each country comes with its own issues, Mazingue said, "Generally, energy costs need to go down, and transportation and logistics need to improve.

But Mazingue also spoke about the "strategic advantage" accruing to textile and apparel manufacturers in Africa because of the availability of the cotton crop.  The so-called "African cotton belt" comprises countries such as Zimbabwe, Malawi, Ethiopia, Kenya, Egypt, and others.

"The medium range of cotton from Africa can compare to any good cotton from anywhere.  Malawi cotton, for example, is good and comparable to other cotton-producing countries," Mazingue added." Read more. Source | Apparel