The renewal of African Growth and Opportunity Act (AGOA) sees opportunities for Africa’s skillful textile industry; however certain regional economies are failing to fully benefit from the arrangement due to power challenges.
AGOA is a trade programme providing duty-free treatment to US imports of certain products from select sub-Saharan African (SSA) countries.
(READ MORE: USA looking for AGOA legislation renewal)
The textile industry is one area that has utilised the opportunities created by AGOA.
“Throughout Africa, we have tremendous benefits with AGOA as countries like Lesotho has about 35,000 employed almost exclusively exporting to the US,” Belinda Edmonds, executive director of Africa Cotton and Textiles Federation told CNBC Africa.
“Other countries that are developing fast are Kenya which is now the biggest exporter of apparel from Africa as of 2014. Ethiopia is also charging ahead with very significant figures,” she added.
Edmonds said, in 2014, Africa exported just under a billion US dollars’ worth of apparel to the US under AGOA.
She also said South Africa in relation to her regional peers had a much more skilled and slightly more expensive labour force which was straining growth potential.
“The growth potential in South Africa is more challenging but not necessarily impossible as there are some firms doing fantastic job domestically like exporting fashion items,” she said.
“The big growth for employment needs to be in the bulk market but South Africa tends to be a little more expensive.”
(READ MORE: AGOA steadily improving trade between S.Africa and USA)
Edmonds said South Africa’s power issues have hampered the country’s competitiveness in terms of building or sustaining the textiles industry which could have been a great feeder for the rest of Africa adding that there was shortage of textile products in the African continent.
I think it is going to be significant especially if one looks at companies that are already trading in the SADC region.