East Africa: Potential Opportunities for Investments in Textile & Clothing Sector

GDJASUJA

For East African countries, duty-free incentives for exports to the US under the African Growth and Opportunity Act (AGOA) provide an immense opportunity to integrate the currently fragmented cotton-textile-apparel value chain and bring remarkable trade and economic growth to the region. The existing value chain is underdeveloped and incomplete despite the fact that the region has a potentially growing cotton sector and a vibrant export-oriented apparel industry. The sector has largely remained underdeveloped. It is reported that seventy percent of cotton produced in the region is exported, while export-oriented apparel factories in East Africa have to rely on imports instead of local supplies. Key textile inputs, accessories, and machine parts also have to be imported. This has resulted in higher costs, long delivery times, outdated technology, shortage of skilled manpower, and overall inefficiency in the sector which is characterised by the high-volume, low-margin market segment. Within the East African region, Kenya and Ethiopia are believed to be the top sourcing destinations of greatest interest to global buyers. Hence, they have the highest potential to achieve regional integration of the cotton textile apparel value chain. Kenya and Ethiopia have a rapidly growing garment sector with companies focussed on exporting to the US.