Kenya is counting on the Africa Union (AU) to lobby for an extension of the duty-free access to the American market for selected products amid sweeping US tariffs on imports that left the fate of the African Growth and Opportunity Act (Agoa) uncertain.
US President Donald Trump Thursday imposed sweeping tariffs on goods from countries across the world, ranging from 10 percent for nations like Kenya to 31 percent (South Africa) and 50 percent (Lesotho).
He did not mention Agoa, throwing Africa into confusion over the status of the US legislation guaranteeing duty-free access to American consumers for certain goods from the continent.
“We have been negotiating under the AU. Unfortunately, we have not yet secured an extension, but we remain hopeful,” said Trade Principal Secretary (PS) Juma Mukhwana.
Kenya and the US have also been looking to stitch together a bilateral trade agreement since 2018, but talks have been slowed by change of administrations in both countries.
Analysts say the new tariffs imposed by US President Donald Trump suggest that the renewal of Agoa is extremely unlikely.
The lack of assurance on the extension of the trade agreement has rattled local manufacturers and agri-businesses exporting to the US under Agoa, which risk losing business valued over Sh50 billion and employing over 58,000 people directly.
From 2019 to 2023, Kenya exported goods valued at Sh250.9 billion to the US under Agoa. Most of the Kenyan companies exporting through Agoa are in the textile and agriculture sectors.
By 2023, at least 39 companies employing 58,002 workers and with an investment of Sh29 billion were supported by exports through Agoa, data from the Export Processing Zones Authority shows.
“The capital investment of projects under Agoa, increased by 16.7 percent to Sh29.2 billion in 2023 from Sh25.1 billion in 2022,” the Kenya National Bureau of Statistics (KNBS) says.
Trade Cabinet Secretary Lee Kinyanjui, who is currently in the US with Agoa extension part of the agenda, said that the imminent end of the programme “has created anxiety among business people from both ends.”
“In Kenya, the textile industry is a major beneficiary of Agoa. This has created major opportunities for livelihoods through employment and indirect value creation. To guarantee this position, Kenya is lobbying for the extension of Agoa while working on the much-awaited trade negotiations that started in 2018,” Mr Kinyanjui said.
The lapse of Agoa would leave Kenyan businesses particularly hurt since bilateral trade talks with the US, which started in 2018, also look uncertain.
Agoa is considered the cornerstone of US-Africa economic relations and sought to help industrialise the continent, create employment and lift dozens of countries out of poverty.
It was based on a philosophy of replacing aid with trade.
The act has been credited with creating hundreds of thousands of jobs, particularly in the textiles sector.
Foreign Affairs PS Korir Sing'oei reckons that Agoa will remain until the lapse of the law at the end of September 2025 or repealed earlier by Congress.
This could imply that the 10 percent tariffs will not immediately apply. Kenya, which exports clothes to the US, expects not to be hit hard given that other top textile exporters, such as Vietnam, Lesotho and Bangladesh have been slapped with the higher tariff of 50 percent, offering the nation a competitive advantage.
The tariffs are set to take effect in days. Kenya ranked fifth in utilisation rates for Agoa behind Zambia, Lesotho, DRC and Benin in 2021, according to the latest analysis of the Agoa programme by the US International Trade Commission (USITC).
The country has largely tapped the apparel and garment product lines under Agoa, in addition to small-scale exports of macadamia nuts.
Dr Mukhwana said the government is hopeful to get a further 16 years extension on Agoa, and is already working to double cotton plantations from the current 104,000 acres, which would feed the textile and apparels sector that heavily relies on the US market.
Uncertainty over the renewal of the pact has, however, seen firms scale down investments in the Agoa sectors, according to Kenya Association of Manufacturers (KAM).
Earnings from exports to the US under Agoa, for example, declined 10.42 percent to Sh50.8 billion, data from the KNBS shows.
The double-digit drop was the first since 2009 when the earnings from exports under the deal contracted 19.68 percent to Sh12.70 billion.
Kenya has been looking to expand the range of products it sells to the US under the pact following reassurance from the previous administration of Joe Biden that the deal would be renewed.
The renewal of the Agoa pact will need approval of the US Congress, which has historically shown bipartisan support for the preferential trade, to be extended.
The bipartisan approach to Agoa was demonstrated in the Bill tabled in the Senate in April 2024 seeking extension until 2041 by Senators Chris Coons of Delaware (Democratic Party) and James Risch of Idaho (Republican Party).
Some of the changes proposed in the Agoa Renewal and Improvement Act of 2024 are extending the pact to the rest of Africa by including North Africa in line with African Continental Free Trade Agreement (AfCFTA) and eliminating “textile visas” clearance by the US Customs and Border Protection (CBP).
“This bipartisan bill aims to refine Agoa’s eligibility criteria, increase transparency, and hold US agencies accountable for their advice to the president,” the Bill said.
But Trump's sweeping tariffs have scuppered hopes of the legislation being renewed.
