Kenya’s export earnings to the US under the Africa Growth and Opportunity Act (Agoa) dipped 41.7 percent last year, new data shows, hit by an overall drop in shipments of apparel products and denying traders gains during a period when the shilling had substantially weakened against the dollar.
The Office of the United States Trade Representative (USTR) in a newly published report said that Kenya exported products worth Sh65.77 billion ($510million) to the US under the Agoa scheme in 2023, bucking a growth trend from the previous year when Washington took up goods worth Sh66.88 bllion ($517million) from the country.
“Kenya, Madagascar, and Lesotho were significant suppliers of apparel under Agoa in 2023,” USTR said in its report, noting that overall US apparel imports from all Agoa-legible countries, however, fell to $1.1 billion (Sh141.88 billion) in 2023 from $1.4 billion (Sh180.57 billion) in 2021.
The dip in Agoa fortunes means that Kenyans missed a dollar windfall through 2023 when the shilling plummeted to record levels against the greenback. The shilling hit record low of 160.75 against the dollar in January after bad run throughout 2023—which meant good tidings for exporters paid in dollars.
More than half of Kenyan exports to the US are comprised of clothing, macadamia, coffee, titanium ores and concentrates, and black tea. Three-quarters of US-bound exports benefit from duty-free access to the US under the Agoa.
The Agoa pact, first enacted in 2000 before renewal for 10 years in June 2015, allows duty- and quota-free access to the US for thousands of products like food and beverages, wood, plastics, and rubber from sub-Saharan Africa, but Kenya has largely tapped the apparel line.
The Agoa is due to expire next year with President Joe Biden’s administration keen to extend it. The US Congress has put down proposals that would see Agoa extended to 2041, thus remaining in effect for 16 years.
Senators Chris Coons (Democrat-Delaware) and James Risch (Republican-Idaho) in April this year introduced the bipartisan Agoa Renewal and Improvement Act of 2024, which would see Agoa cover 54 out of the previous 32 African countries.
The extension is expected to integrate Agoa with the African Continental Free Trade Agreement to support the development of intra-African supply chains.
Kenya has long sought a sustainable full free trade agreement with the US outside of the two-decade-old Agoa deal, but progress has been dragged by regime change in both countries.
The two countries are locked in negotiations under the US-Kenya Strategic Trade and Investment Partnership (Stip) whose terms Kenya and the US started stitching together in July 2022 before the end of former President Uhuru Kenyatta’s term in office.
The US, however, maintained that the Stip will not graduate Kenya out of Agoa, which the US trade representative was keen to renew upon expiry mid-2025, subject to approval by lawmakers – the Congress.
The Stip targets wide areas of governance, investment, climate change, agriculture, and trade facilities in areas such as customs procedures.
For example, in agriculture, the US and Kenya negotiating measures to facilitate agricultural trade and enhance transparency besides improving Sanitary and Phytosanitary (SPS) measures.
The two countries are negotiating on fighting graft through information sharing of best practices to prevent and combat bribery and corruption and will explore negotiating specific commitments.
Additionally, the two countries are discussing measures to support digital inclusion, including accessibility, and online consumer protection.
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