Africa Sourcing Set for Revival After Biden Gives AGOA ‘Huge Shot in the Arm’
A campaign is in the works to get Kenya, Tanzania, Uganda and Rwanda rebuilding their domestic textile industries.
Boasting modern, environmentally friendly geothermal power, especially in Kenya, a relatively stable political environment and a favorable climate, East Africa also has a large and attractive consumer base. It is said that the region has the potential to rival some of the most established textile-producing areas in Asia.
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Speaking at the Sourcing Journal Fall Summit last week in New York City, Antoinette Tesha, program director, textiles and apparel, for Gatsby, Africa, the NGO charged with promoting the region, described Kenya, Tanzania, Uganda and Rwanda as a four-country bloc that’s environmentally friendly and “ready to go” from a business infrastructure point of view. That includes a flexible work permit system, the usual tax breaks, “and governments willing to work with you to make your investment journey easier,” she said.
Cennydd Williams, managing partner at Teulu 12 consultancy, who shared the stage with Sourcing Journal editor-in-chief Pete Sadera and who goes by “Ken”, said the cost of doing business in East Africa is particularly favorable. Economic factors like wages and inflation are kept in check by various government mechanisms. He noted the one aspect he found particularly appealing was that the textile community was already an established industry, but still small enough to allow investors to work within a framework.
“So the incentive package can be adapted to each investor and his particular needs,” said Williams who has done sourcing for Calvin Klein, Tommy Hilfiger, Van Heusen, Speedo and Izod. “If you’re a high consumer of electricity or water, or you have a certain kind of footprint that you require in the business, Gatsby can actually open the door to the ministry of relevant trade or industry bodies and allow that to happen.”
All four countries, Uganda, Kenya, Tanzania and Rwanda, were charter benefactors of the African Growth and Opportunity Act (AGOA) when it was instituted by the United States in 2000, but two now have tenuous standing. President Biden recently ejected Uganda from the organization that affords the countries duty free access to U.S. markets for coffee and textiles, because of certain human rights policies.
Rwanda eliminated from AGOA provisions in 2018 by former President Trump over a ban on used clothing imports. It was intended to be temporary but the exclusion remains in effect today.
The morning of the Summit, Biden announced his support for the renewal of AGOA, which is set to expire in 2025. According to a statement from the White House, the goal is to “deepen trade relations between our countries, advance regional integration, and realize Africa’s immense economic potential for our mutual benefit.” It added, “In so many ways, Africa is the future—and so when Africa succeeds, the whole world succeeds.”
According to Tesha, Biden’s statement will go a long way to developing the kind of critical mass in the East Africa textile sector that will help stakeholders lobby governments for the kinds of changes the industry needs to grow. “The more production we have, the more sourcing we have in the region, the quicker and easier it is to influence what our governments do,” she said.
For Williams, it’s a case of when, not if, and it’s about time. “I think it will reassure those who were thinking about coming into the country as well as those that are already,” he said. “I think what the president has done this morning is a huge shot in the arm to everyone involved.”