Kenya Digital Exports Face Uncertainty as US Tariffs Loom
Kenya’s digital export sector, along with its broader export economy, faces a significant challenge as the African Growth and Opportunity Act (Agoa) nears its expiration. This trade pact, which has provided duty-free access to the US market for African goods for the past 25 years, is set to lapse, potentially jeopardizing thousands of jobs and impacting the competitiveness of Kenyan businesses.
Impact on Tech and Outsourcing
While apparel manufacturing often dominates discussions around Agoa, the tech sector within Kenya’s Export Processing Zones (EPZs) also stands to lose considerably. Estimates suggest that between 3,000 and 7,000 jobs within these zones, representing 5% to 10% of the total EPZ workforce, are related to technology and outsourcing services. Companies benefiting from EPZ incentives could see their operational costs rise significantly if the US Congress fails to extend Agoa, potentially leading to job losses and reduced investment in the sector. The expiration of Agoa could trigger tariff increases exceeding 30% on Kenyan exports to the United States, threatening advancements made in apparel production and potentially raising expenses for Kenyan technology service providers dependent on EPZ incentives.
The potential expiration of Agoa presents a serious hurdle for Kenya’s burgeoning digital economy and its established export industries. With a large number of livelihoods on the line, the extension of this trade pact is crucial for maintaining Kenya’s competitiveness in the global market and securing the future of its export-oriented sectors.
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