African textile and apparel producers are in Washington for a historic U.S.-Africa summit to fight to preserve a U.S. trade preference program that has generated more trade, investment and jobs across the continent.
As President Obama prepares to host a three-day summit from today attended by nearly 50 African heads of state, a delegation of apparel and textile companies and associations joined forces with their U.S. counterparts to step up a lobbying campaign for the Africa Growth and Opportunity Act, which expires on Sept. 30, 2015.
Arvin Boolell, minister of foreign affairs, regional integration and international trade of Mauritius, who spoke at an AGOA Civil Society Network-sponsored event on Friday, said apparel exports to the U.S. increased 16 percent to $907 million under AGOA from 2000 to 2013 and warned that those strides could be imperiled if the pact is not renewed soon and for at least 15 years to provide stability and certainty to investors.
“We could only imagine how bad the job losses would be if the entire AGOA program was allowed to lapse,” he said in prepared remarks. “U.S. importers are already warning that they will be forced to shift orders out of Africa if AGOA has not been renewed by the end of 2014. Accordingly, renewal of AGOA before the end of 2014 is an imperative.”
AGOA contains a stipulation known as the “third-country fabric provision” that allows companies producing in 27 least-developed countries that are part of the pact to use fabric outside of the region and still receive duty-free benefits when shipping to the U.S. Government officials largely attribute sub-Saharan Africa’s developmental success in the sector to that provision.
Boolell said apparel exports under the third-country fabric rule account for more than 90 percent of total AGOA apparel exports to the U.S., adding that it is “absolutely essential to the survival of the AGOA apparel industry that the third-country fabric provision should be extended for the full term by which AGOA” is extended.
Under AGOA, several sub-Saharan African countries have developed and implemented aggressive strategies to attract apparel and textile investment and have in large part succeeded, despite many challenges they still face with infrastructure and barriers to cross-border trade, according to Rajeev Arora, executive director of the African Cotton & Textile Industries Federation.
He said Ethiopia is one of the biggest success stories, having attracted about $500 million in new investment and created 40,000 new jobs over the past five years. Kenya has had about $20 million in new investment and created 7,500 jobs, while Uganda has seen about $10 million in new investment and created 2,000 jobs.
Arora cited these three countries among a total of 15 that have benefitted greatly from the duty-free benefits under AGOA, which has created a total of 352,000 jobs in the apparel and textile industry on the continent.
“Keeping that in mind, what is important going forward is the prompt renewal of AGOA for the continental success of Africa,” Arora said. “Third-country fabric provision should also be extended in full with AGOA so as not to lose the momentum and growth that has happened in the last five years and to ensure the sustainability of jobs created.”
Paul Ryberg, president of the African Coalition for Trade, said the big change that has swung the momentum in the right direction in sub-Saharan Africa is the new commitment by many AGOA countries to more strategic planning, which has spurred investment and job creation.
“Kenya is an example of that,” Ryberg said. “It has developed its own national and strategic plan for AGOA and the government is doing things to create a more business-friendly environment that has led to new investments.”
Many governments across the continent have earmarked the textile and apparel industries as drivers of job creation and economic growth but logistical issues still hamper growth.
As part of the National Industrialization Roadmap in Kenya, for instance, the government has created a $40 million textile industry revival plan that will include the creation of a textile industry hub at the export processing zone in Athi River town near Nairobi. The government, according to Kenya’s industry minister Adan Mohamed, speaking at a panel discussion at “Source Africa” in Cape Town in June, would lease land to industry-specific investors to build a “textile city” complete with factories for cotton ginning; yarn spinning, and fabric, apparel and accessories production. This is expected to create at least 200,000 jobs in the sector.
Nigeria has set aside $500 million for the revival of its own textile and apparel industry, while Ethiopia, said Jaswinder Bedi, a Kenya-based industrialist who is also chairman of ACTIF, “has got fantastic low costs on production and energy and labor, which gives it a competitive advantage.”
Sub-Saharan African countries acknowledge the benefits derived from AGOA but are also pushing for more improvement in their shipping and logistics capabilities.
“I think it’s very important for us in Africa to improve our logistics,” Mohamed Kassem, chairman of the Egyptian Ministry of Trade and Industry, said at Source Africa. “It’s not only how fast it is from Durban or Alexandria to the East Coast, but what’s the waiting time.…We experienced this when we started shipping to the U.S. around 20 to 25 years ago. Then, it was 30 to 35 days. Now it’s down to 11 to 13 days to the East Coast from Alexandria.…It’s all part of improving our supply chain on the continent.”
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