Kenya’s export earnings to the United States under the African Growth and Opportunity Act (AGOA) fell by 41.7 percent last year, new data shows, hurt by a general decline in garment shipments, denying traders gains during a period when the shilling weakened sharply against the dollar.
Kenya exported Ksh65.77 billion ($510 million) worth of goods to the United States under the AGOA scheme in 2023, bucking the growth trend from the previous year when Washington took Ksh66.88 billion ($517 million) worth of goods from the country, the Office of the United States Trade Representative said in a newly released report.
“Kenya, Madagascar and Lesotho were the leading suppliers of apparel under AGOA in 2023,” the USTR said in its report, noting that total US apparel imports from all AGOA countries fell to $1.1 billion (Sh141.88 billion) in 2023 from $1.4 billion (Sh180.57 billion) in 2021.
The decline in Agwa’s fortunes means Kenyans have missed out on dollar gains until 2023 when the shilling hits record lows against the greenback. The shilling hit a record low of 160.75 to the dollar in January after a poor performance throughout 2023 – good news for exporters who get paid in dollars.
More than half of Kenya’s exports to the US consist of apparel, macadamia nuts, coffee, titanium ores and concentrates, and black tea. Three-quarters of exports to the US benefit from duty-free access to the US under AGOA.
AGOA, which was first passed in 2000 before being renewed for 10 years in June 2015, allows duty-free and quota-free access to the United States for thousands of products such as food, beverages, lumber, plastics and rubber from sub-Saharan Africa, but Kenya has largely exploited the clothing line.
AGOA is set to expire next year, and the Biden administration is keen to extend it. The US Congress has introduced proposals that would extend AGOA until 2041, so it would remain in effect for 16 years.
In April of this year, Senators Chris Coons (D-Del.) and James Risch (R-Idaho) introduced the AGOA Renewal and Improvement Act of 2024, which would extend AGOA to 54 of the previous 32 African countries.
This extension is expected to integrate AGOA with the African Continental Free Trade Agreement to support the development of supply chains within Africa.
Kenya has long sought a full and sustainable free trade agreement with the United States outside the two-decade-old AGOA, but progress has been stalled by regime change in both countries.
The two countries entered into negotiations under the U.S.-Kenya Strategic Trade and Investment Partnership (STIP), the terms of which Kenya and the United States began drafting in July 2022, before the end of former President Uhuru Kenyatta’s term.
But the US has stressed that the STEP agreement will not pull Kenya out of AGOA, which the US Trade Representative has been keen to renew when it expires in mid-2025, subject to approval by lawmakers – Congress.
The plan targets broad areas in governance, investment, climate change, agriculture and trade facilitation in areas such as customs procedures.
For example, in agriculture, the United States and Kenya are negotiating measures to facilitate agricultural trade, enhance transparency, and improve sanitary and phytosanitary measures.
The two countries will negotiate on combating corruption by exchanging information on best practices for preventing and combating bribery and corruption, and will explore negotiating specific commitments.
In addition, the two countries are discussing measures to support digital inclusion, including accessibility and consumer protection online.
