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Published Sunday September 30, 2018 22:00
Kenya is betting on bigger shipments of processed food, tea and coffee to help double its export earnings from the US free-trade deal in five years’ time — marking a shift from its long dependence on apparels.
Several Kenyan products, notably apparel and agricultural produce, are big beneficiaries of the preferential African Growth and Opportunity Act (Agoa) arrangement, which has lifted import duty on all eligible products and granted preferential market access upon compliance with Rules of Origin.
Apparels have long dominated as Kenya’s biggest export earner in the US with most other product lines unexploited.
“While the apparel sector is considered the leader, it will be necessary to equally improve the performance of the other identified sectors to avoid the over reliance on the apparel sector in the US market,” Industry, Trade and Co-operatives secretary Peter Munya says in Kenya’s 2018-2023 strategic plan on Agoa.
The country’s export earnings under the Agoa are expected to hit Sh110.5 billion by 2023, representing an 82 per cent leap from the estimated Sh60.2billion realised in 2016.
Earnings from processed food exports to the US are expected to grow fastest at an average 28 per cent per annum to fetch the country about Sh3billion by 2023. Coffee exports are expected to post the second fastest growth over five years and realise Sh11.4 billion. Tea earnings are forecast at Sh6.7 billion by the same year.
Kenya’s top exports to the US comprise woven apparel, knit apparel, coffee, tea and macadamia nuts. The apparel sector is expected to remain the dominated forex earner in the US market, accounting for about 59 per cent of total export earnings by 2023 or Sh65.1 billion.
Despite trade opportunities arising from tariff preferences provided under the Agoa and the General System of Preferences (GSP), Kenya is yet to fully exploit the US market. For instance, in 2016, the US imported apparel worth $83 billion while Kenya only exported $340 million worth of apparel to the US during the same period.
The extension of the Agoa initiative to September 2025 has particularly enthused growth in the textile industry amid a steady flow of investment. Though the Act originally covered the eight-year period from October 2000 to September 2008, amendments by then US President George Bush in July 2004 extended it to 2015. The US Congress then extended it further to 2025. Continue reading...
Source: Business Daily
