Kenya AGOA Extension Approved by US Senate: Boost for Kenyan Manufacturers

• The US Senate has approved an extension of AGOA to December 2028.
• The extension provides Kenyan manufacturers with greater certainty and predictability, enabling them to plan production and make fresh investment decisions.
• The Kenyan apparel industry is one of the biggest beneficiaries of AGOA, accounting for about 70 percent of the country's exports to the US.
• The sector supports more than 66,000 direct jobs and has seen significant growth in recent years under AGOA.

According to Trade and Industry Cabinet Secretary Lee Kinyanjui, the extension will be a highly significant development for Kenya's economy, as well as the eligible countries in Sub-Saharan Africa.

The US Senate has approved an extension of the African Growth and Opportunity Act (AGOA) to December 2028, providing Kenyan manufacturers with a much-needed boost in terms of predictability. This move is significant for Kenya's economy, as it will enable manufacturers to plan production and make fresh investment decisions without the uncertainty that has plagued them for years. The extension also includes provisions for retroactive refunds of eligible duties paid by exporters during the gap following the previous expiry, which will provide relief to those who have been affected by the uncertainty. According to Trade and Industry Cabinet Secretary Lee Kinyanjui, the extension will be a highly significant development for Kenya's economy, as well as the eligible countries in Sub-Saharan Africa.

The Kenyan apparel industry is one of the biggest beneficiaries of AGOA, accounting for about 70 percent of the country's exports to the US. The sector supports more than 66,000 direct jobs and has seen significant growth in recent years, with apparel exports under AGOA rising to Sh60.6 billion in 2024 from Sh50.8 billion in 2023. The extension of AGOA will provide manufacturers with a clearer investment horizon, enabling them to make decisions on machinery, capacity expansion, labour and supply contracts without the risk of US tariffs disrupting pricing and orders. This is particularly important for factories operating in Export Processing Zones, where market access is crucial for their operations.

AGOA was enacted by the United States in 2000 and has been a major pillar of Kenya's export relationship with the US. However, its future has repeatedly been uncertain, with the previous authorisation expiring on September 30, 2025, leaving exporters facing uncertainty over the tariff treatment of goods entering the US market. The third-country fabric provision is especially significant for Kenya because it allows manufacturers to source yarns and fabrics from non-AGOA countries, process them locally and still export qualifying finished garments to the US duty-free. This provision has been a key factor in the growth of Kenya's apparel industry under AGOA.

The proposed extension of AGOA to December 2028 provides Kenyan manufacturers with greater certainty, enabling them to plan production and make fresh investment decisions. Compliance officers should monitor the legislative process for final approval and be prepared to advise clients on potential changes in tariff treatment and export procedures.

Source: Original reporting via Capital FM