The East African Standard (Nairobi)
OPINION
December 18, 2006
Posted to the web December 18, 2006
Elias Ratteng
Nairobi
It was routine at the begining of the year for workers in Export Processing Zones to go on strike, especially in factories at Athi River and Mombasa.
Their grievances ranged from poor working conditions to pay. The Trade and Labour ministries many times blundered in resolving the disputes and they led to closure of one or two of the factories, leading to loss of more than 2000 jobs.
This is regrettable because the Government promised to create jobs. It is equally painful to note that neighbouring Uganda has strategically lured some textile companies to invest and offered them attractive incentives, including tax holidays.
The biggest worry that should give the Government sleepless nights is the impending expiry of "the third country fabric" provision under the United States African Growth and Opportunity Act (Agoa). In this, the US government allowed selected African countries to import fabrics from other countries to manufacture textile and export to the American market without paying taxes.
This was aimed at increasing African competitiveness against aggressive Asian countries such as China, India and Pakistan. This opportunity increased Afro-American trade by 44 per cent last year, creating more than 250,000 new jobs and $500 million new investments.
Kenya alone exported $250 million worth of apparel and textile products to US, and more than 30,000 new jobs were created. Madagascar, Lesotho, Uganda and other eligible African countries have all benefited from the legislation. The "third country fabric" provision was meant to give the beneficiaries time to develop their ginneries and it was to lapse in 2008.
They were expected to be self-reliant in supplying fabrics to their factories. But with only a year to go, Kenya has not taken any serious step. We cannot even supply thread that meets the quality of US textile buyers! The requirement was indeed a tall order, but strategic governments set up think tanks to realise the dream.
In Madagascar, for example, the government negotiated with world-renowned fabric suppliers, Liberty Mills, and convinced it to open a production unit and encourage farmers to invest in cotton farming to provide the needed raw material.
Initially, most fabric imports to Kenya were from Pakistan, but now it is time saving and cheaper for US garment barons such as Gloria Vanderbilt and Wal-Mart's Stores to order fabric from Madagascar. If the Government could have taken similar measures, we could be exporting fabric to sub-Saharan countries.
With the expiry of the fabric provision in 2008, unless congress extends it, nearly all EPZ factories will close, jeopardising thousands of jobs. The US Congress has until the end of the year to renew the provision in the Agoa legislation.
Trade and Foreign Affairs ministers must lobby Congress for an extension. (There are reports that this has already been extended for four years to 2012). Having passed the hurdle, the Government must consider doing what Madagascar did. The Kenya Association of Manufacturers understands the gravity of the matter and should help relevant Government departments.
It is easier now that the Democrats are in control in the US Congress, having beaten the Republicans in the mid-term elections last month. The Democrats had passed the law during President Clinton's time.
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