Manufacturers Push Kenya, US to Seal Long-Term Trade Deal After AGOA's Brief Extension

The Kenya Association of Manufacturers has stepped up pressure on the Kenyan and US governments to finalize a lasting bilateral trade agreement, capitalizing on the recent 16-month extension of the African Growth and Opportunity Act. The extension, which runs through December 31, 2026, offers a narrow timeframe to shift away from recurring short-term renewals that have long created instability for exporters.

Tobias Alando, the association's chief executive, highlighted the urgency in a statement this week. He pointed out that the extension provides a critical opportunity to build on existing trade ties. Kenya exported goods worth 126 billion shillings to the US last year, while imports from the US totaled 149 billion shillings. Over the past two decades, bilateral trade has reached 2.1 trillion shillings in US exports to Kenya and 1.8 trillion in the reverse direction.

AGOA, first enacted in 2000 by the US Congress, grants duty-free access to the American market for qualifying products from eligible African countries. This has proven essential for Kenya's manufacturing sector, particularly in textiles and apparel, where it has directly supported 68,000 jobs and indirectly aided 700,000 dependents. The program requires participating nations to meet standards on governance, market openness, political pluralism, and rule of law, criteria Kenya has consistently satisfied.

Alando warned that relying on periodic extensions breeds hesitation among investors and manufacturers. A more permanent arrangement, he argued, would foster predictability, broaden market access, encourage industrial diversification, and prioritize environmentally sustainable and value-added exports. The push comes as Kenya pursues separate negotiations with the US, emphasizing areas like mineral processing and technology transfer to underpin long-term economic resilience.

In Kenya's broader economic landscape, AGOA has anchored growth in export processing zones, concentrated around Mombasa and Kilifi counties. These zones, often privately operated, have drawn foreign investment and bolstered regional connectivity. For instance, improvements to Mombasa Port and the Standard Gauge Railway have enhanced logistics for exporters, enabling faster movement of goods and raw materials. Such infrastructure has been vital in sustaining the apparel sector's expansion, where employment in AGOA-accredited firms grew by double digits in recent years.

The textile industry stands out as a key beneficiary. Kenya has become sub-Saharan Africa's top apparel supplier to the US, with exports climbing steadily. In 2024 alone, apparel shipments under AGOA rose by over 19 percent, from 97.3 million to 116 million pieces. This surge has not only preserved jobs but also stimulated related industries, including logistics and supply chains that feed into broader manufacturing activities.

While apparel dominates AGOA utilization, the program's scope extends to agriculture and other manufactured goods. Kenyan exports like coffee, tea, cut flowers, and macadamia nuts have gained from duty-free entry, diversifying the trade basket. Pharmaceuticals and processed foods have also seen gains, though to a lesser extent. Analysts note that without stable access, these sectors could face tariffs averaging 20 percent or higher, eroding competitiveness against Asian rivals.

The bilateral deal under discussion could expand beyond AGOA's framework. Talks have focused on mineral processing, where Kenya aims to add value to its resources like titanium, soda ash, and fluorspar. These minerals are foundational to industries such as cement production and steelmaking, which directly support construction projects across East Africa. Enhanced US cooperation could bring technology and investment to refine these materials locally, reducing import dependency and strengthening domestic supply chains.

Kenya's manufacturing sector, contributing about 8 percent to GDP, has long relied on such trade preferences to compete globally. The Export Processing Zones Authority oversees over 100 zones nationwide, many equipped with utilities and transport links that facilitate operations. Investments in these areas have increased by more than 20 percent in recent years, driven by AGOA's reliability. However, lapses in the program, as seen briefly last year, threatened thousands of positions and underscored the need for a more enduring pact.

Government officials in Nairobi have echoed the manufacturers' call, viewing the extension as a bridge to deeper ties. The US remains Kenya's second-largest trading partner after China, with trade volumes reflecting mutual interests in agriculture, energy, and now emerging sectors like digital services. A long-term agreement could also align with Kenya's Vision 2030 blueprint, which prioritizes manufacturing and infrastructure to achieve middle-income status.

Challenges persist, though. Periodic US policy shifts, including protectionist measures, have historically complicated renewals. Kenya's delegation has lobbied in Washington for favorable terms, emphasizing compliance and shared economic goals. Manufacturers argue that a deal would not only safeguard existing jobs but also attract fresh capital for expansion, potentially in underserved areas like agro-processing and light engineering.

In the construction context, stable trade relations indirectly bolster the sector. Reliable export revenues fund public works, while imported machinery and materials become more accessible under favorable terms. Kenya's ongoing projects, such as highway expansions and affordable housing initiatives, depend on a robust economy fueled by manufacturing exports. Mineral processing advancements could lower costs for building materials, aiding urban development in cities like Nairobi and Mombasa.

As negotiations proceed, stakeholders monitor progress closely. The 16-month window is tight, but Alando remains optimistic, stressing that a bilateral framework would cement Kenya's role in global supply chains. For now, the extension averts immediate disruptions, allowing manufacturers to plan ahead while advocating for permanence.