Kenyan government sees potential for cotton revival

Kenya government sees potential for their cotton through the AGOA exports which is a strong motivation to grow the industry this year after the U.S. extended its African Growth and Opportunity Act, or AGOA, by a decade. The initiative comes as manufacturers in East Africa’s biggest economy are counting on apparel exports to the U.S. growing.

To revive its cotton industry, the government is planning training and credit facilities for farmers as part of a bid to restore production that peaked at 38,000 metric tons of seed cotton in 1984-85. Kenya currently produces 15,700 tons of seed cotton, creating about 5,240 tons of lint. Demand for lint is about 37,000 tons, with the shortfall imported from neighboring countries, according to Fanuel Lubanga, a development manager at the state-run Agriculture and Food Authority.

Lubanga in an interview in the capital, Nairobi said that national output is expected to double during the 2017 harvest because farmers are now using seeds bought from Israel instead of recycling seeds, previously a common practice.

Kenya exported clothing valued at $380 million in 2015, with companies including Puma SE, Wal-Mart Stores Inc., JC Penny Co. and Hennes & Mauritz AB among those who source garments from Kenyan Export Processing Zones, which employ more than 66,000 people. While EPZ manufacturers currently use no domestically grown cotton, instead importing Asian fabrics, the Industry Ministry is working on ways for Kenyan farmers to secure contracts to sell to them, Lubanga said.

The six-member East African Community, which includes Kenya, is working to revamp the domestic garment market by banning secondhand clothes imports at the end of 2018, the Kenya Association of Manufacturers said in April. Kenya imported used clothing worth $243 million and weighing more than 100,000 tons in 2013, according to data by the United Nations agency Comtrade.

Turkish investors have shown interest to grow cotton on a large scale in Siaya, Lubanga said, referring to a county in southwestern Kenya.
Lubanga further added that the demand for lint is still high, both locally and internationally. The prices have been high in the past few years, which they hope will remain at similar levels.

According to a 2015 McKinsey report, East Africa could potentially export garments valued at as much as $3 billion annually by 2025. The study shows that affordable electricity and cheap labor — with monthly salaries as low as $60 likely to make producers such as Kenya and Ethiopia attractive to investors.