Cotton under the Cosh: Kenya' Once-Thriving Textile Industry Is under Intense Pressure from Trade Reforms in the US, Which Are Squeezing It out of the Market, and a Shortage of Raw Materials. in the Face of Increased Competition from the East, Is the Answer for Kenya's Exporters to Diversify into Other Products? Solomon Mburu Reports from Nairobi

Article excerpt

A host of new challenges threatens to ruin the short-lived success of Kenya's textile industry. From its heyday in the 1970s and 1980s, when the industry employed a third of the labour force in manufacturing and supported more than 200,000 small-scale cotton farmers, it fell to near collapse in the 1990s, due to the influx of cheap imports and the dumping of second-hand used clothes.

The African Growth and Opportunity Act (Agoa) of 2000, which allowed Kenya and 37 other African states to export textiles and other products to the US market under a preferential trade programme, breathed some hope into the industry and started to rekindle its lost glory.

By 2003, Kenya's textile exports under Agoa had reached a record $272m and accounted for 20% of the country's GDP. But since then, the industry has been on a downward spiral that saw 2009 textile exports drop to an estimated $180m.

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The biggest culprit has been sustained pressure on the US government from US businesses and nonprofit groups to relax market-access rules to low-cost textile products from outside Africa. Already, textile exports from China, Cambodia, Vietnam and Bangladesh have been squeezing Kenyan exports out of the US market following the ending of the Multi Fibre Agreement (MFA) in 2005, which had imposed a quota on their textile exports. Asian textile exports to the US have since then been rising sharply, with Vietnam's growing by 98%, Bangladesh's by 71% and Cambodia's by 31%.

Further pressure on the US government could replace all existing preferential trade programmes with a broad-based unified system that caters for advanced developing countries - and a more charitable system that allows duty-free and quota-free access for the least-developed countries, irrespective of whether they are from Africa.

"The combined effect of the preferential trade reform legislation will destroy the African apparel industry that was created under Agoa," said Jaswinder Bedi, the chairman of Kenya Association of Manufacturers (KAM). The continent is already feeling the pinch, with a 48% drop in African apparel exports to the US from 2004 levels.

Kenya is the second-largest African textile exporter to the US after Lesotho, with textiles accounting for around half of the products Kenya exports to the US under the Agoa initiative.

Kenyan businesses have been advised to diversify and take advantage of other products that are eligible under Agoa, including horticultural products, tea and coffee. Apart from textiles, Kenya exports cut flowers, plastic products, essential oils, edible nuts and jewellery to the US. …