Newscasts - Kenya's textile industry faces uncertain future, economist says
31/07/2025 20:24
Click the following link to watch video: https://share.newscasts.refinitiv.com/link?entryId=1_u4gihxgr&referenceId=tag:reuters.com,2025:newsml_RW411631072025RP1_930&pageId=Newscasts Source: 'Reuters - Business videos' Description: Kenya’s textile industry could face renewed pressure as U.S. tariffs on exports are set to take effect on August 1, raising concerns about the future of a sector that has grown under the African Growth and Opportunity Act (AGOA), an economist said on Thursday (July 31). Olivia Zollino reports. Short Link: https://refini.tv/45iVcws Video Transcript: An economist says Kenya's textile industry may face renewed pressure amid changes to US trade policy under President Donald Trump. The country is facing a 10% tariff on exports from August 1. There are also concerns about the future of the African Growth and Opportunity Act, or AGOA, which has supported the development of Kenya's export-oriented apparel sector. The US trade initiative provides duty-free access to the US market for eligible African countries and is due to expire in September. Moses Muchiri Mwangi, an economist at the Institute of Economic Affairs, says it appears that AGOA may lapse. If that happens, it means we have to go back to the drawing board and ask ourselves, can Kenya sustain its textile industry? Will investors be still willing to invest in Kenya's textile industry? Do we have new markets? Can we still export to the US with the tariffs and the duties and still remain competitive? In April, Trump announced a baseline tariff on all imports, citing the need to protect American industries. Muchiri said the uncertainty could slow capital investment and reduce demand for other imports like machinery used in textile production. And therefore, of course, the effect will be less business for the port. Less business means less people employed on the same. Kenya also exports coffee, tea, pharmaceuticals and horticultural products to the United States. But Muchiri noted that apparel exports have benefited uniquely from duty-free access. And remember, in terms let's say textiles, which Kenya is a major producer of the same towards to the US market. It has competition from all over the world and the other people probably producing more efficiently than we are. According to the World Bank's 2024 Kenya Economic Update, the country has struggled to diversify its export base despite global trade growth. It attributes the issue partly due to domestic inefficiencies and protectionist policies.