September 3oth 2025, is more than a date on the calendar; it marks a pivotal juncture in Kenya’s economic trajectory. The expiration of the African Growth and Opportunity Act (AGOA), President Trump’s re-election, and Mahamoud Ali Youssouf’s election as African Union (AU) Chairman earlier in February this year are closely related developments that have significantly influenced the continent’s trade and integration agenda, with Kenya at the heart of this transition. These forces are not unfolding in isolation; rather, they are converging. For Kenya, whose textile exports have thrived under AGOA, the moment presents both risk and opportunity. Rising tariffs and regulatory uncertainty raise critical questions: will Kenyan industry adapt, innovate, and expand its reach, or face contraction? The run-up to September 31st 2025 is not simply a procedural milestone but a strategic turning point that will shape the region’s economic future.
AGOA and Kenya’s Trade Relations with the U.S.
The AGOA, enacted by the United States (US) Congress in May 2000 under the Trade and Development Act, aimed to promote economic growth in sub-Saharan Africa and strengthen trade ties with the United States. Initially set for 15 years, AGOA was extended in June 2015 for an additional 10 years, running through 2025.
The Act has benefitted approximately 1,800 products,[1] including textiles, apparel, agricultural goods, and natural resources.
AGOA provides duty-free U.S. market access to over 30 eligible sub-Saharan African countries, including Kenya, Ghana, Nigeria, Lesotho, Madagascar, and South Africa, that meet set governance and economic standards. It supports exports, investment, and job creation in sectors like apparel, agriculture, and manufacturing.
Within this broader regional framework, Kenya has emerged as one of AGOA’s most notable success stories. Kenya’s textile sector has particularly flourished under AGOA, especially in apparel exports. In 2022, Kenya’s apparel exports to the U.S. reached $603 million, accounting for 67.6% of Kenya’s total exports to the U.S.[2]
Beyond textiles, AGOA has facilitated the growth of other sectors within Kenya’s economy. Agricultural products such as coffee, tea, cut flowers, and macadamia nuts have gained increased access to the U.S. market, contributing to the diversification of Kenya’s export portfolio. Additionally, AGOA has attracted U.S. foreign direct investment, which, although experiencing a slight decline of 9.5% ($306 million) from 2021 to $277 million in 2022, has played a role in job creation and the transfer of knowledge and technology.[3]
Prior to the implementation of AGOA, Kenya had minimal exports to the USA. During the 1990s, Kenya maintained a narrow export base dominated by agricultural commodities like tea, coffee, and horticultural produce. All these were primarily destined for traditional partners in East Africa and the European Union, rather than North America.[4]In fact, according to trade data, Kenya averaged just around USD 101 million in annual exports to the U.S. during the nine years preceding AGOA (1992–2000).[5] Specifically, Kenya’s textile and apparel exports to the United States were negligible, with estimates at approximately USD 3.2 million in 1990, and rising only modestly to USD 42.1 million by 1999 despite a global textiles boom in other African countries such as Mauritius and South Africa.[6]
In 1993, U.S. exports to Kenya totalled USD 131.2 million, while imports from Kenya stood at a paltry USD 92.2 million. This illustrates not only limited trade volumes but also a small, albeit positive, trade balance for Kenya at around USD 39 million that year.[7] This pre‑AGOA landscape was shaped by Kenya’s inward-looking import substitution strategy, trade liberalisation hesitantly implemented during structural adjustment, and export incentives aimed at manufactured exports starting only in the early 1990s.[8] Although Kenya introduced export compensation schemes, Export Processing Zones (EPZs), and foreign exchange retention policies in the early to mid-1990s, these reforms had not yet translated into meaningful expansion of exports to distant markets such as the U.S. by the end of the decade.[9]
In sum, Kenya entered the AGOA era with relatively modest bilateral trade. Its U.S. exports hovered just above the USD 100 million mark annually, with the garment trade negligible and not yet integrated into American supply chains. The AGOA regime would later unlock far greater export potential.
However, it is still worth signalling that the benefits of AGOA have not been uniformly realised across all sectors. Many Kenyan businesses, particularly small and medium-sized enterprises (SMEs), have faced challenges in fully leveraging AGOA[10] due to capacity constraints, lack of awareness, and difficulties in meeting stringent U.S. market standards. These hurdles underscore the need for targeted interventions to enhance the competitiveness and readiness of Kenyan enterprises in international markets like the European Union, Canada, and India. Even in these markets, SMEs still struggle to comply with non‑tariff barriers, regulatory fragmentation, and limited access to export finance. Barriers such as complex documentation requirements, costly quality compliance, and weak logistics infrastructure impede SME participation across these destination markets, which clearly confirms that the AGOA experience reflects broader structural constraints in Kenya’s export ecosystem.[11]Therefore, without deliberate policy and institutional support, be it via export financing schemes, compliance assistance, or coordinated export coalitions, the potential of AGOA and other trade agreements remains underleveraged, and Kenya’s SMEs will remain marginalised in global value chains.
The Uncertainty of AGOA’s Expiration
While AGOA has underpinned Kenya’s trade growth with the United States, its impending expiration on the 31st [12] casts a shadow over these gains. The expiration raises questions about the sustainability of current trade patterns. Efforts to extend the program, such as the AGOA Renewal and Improvement Act of 2024, have faced obstacles, particularly as President Trump’s protectionist policies could shift U.S.-Africa trade relations towards more bilateral agreements. Kenya has also sent numerous trade representatives to the US to try and work this through, including renewed attempts just in August 2025. The failure to renew AGOA poses risks for Kenyan businesses, especially in sectors like textiles and apparel. Without AGOA, Kenyan goods could face higher tariffs, making them less competitive in the U.S. market. This would likely reduce the appeal of Kenyan exports, shrink market share, and negatively impact industries that depend on AGOA benefits.
In the absence of AGOA, Kenya’s access to the U.S. market would be significantly constrained. The number of products eligible for duty-free access would shrink from the 909 product lines offered under AGOA to approximately 120 under the Generalised System of Preferences (GSP) and a mere 11 under the Most Favoured Nation (MFN) basis.[13] This reduction would not only affect export revenues but also have broader economic implications, including potential job losses and decreased foreign exchange earnings.
To mitigate these challenges, Kenya initiated negotiations for a Free Trade Agreement (FTA) with the United States. Such an agreement could provide a framework for continued preferential access to the U.S. market. However, analysts indicate that while an FTA might create trade opportunities, it could also result in tariff revenue losses ranging from approximately USD 8.4 million to USD 28.4 million, depending on the extent of tariff elimination.[14] These potential losses highlight the need for careful consideration and strategic planning in the negotiation process to balance trade benefits with fiscal implications. While AGOA is unilateral, non‑reciprocal and subject to renewal by the U.S., FTA is a binding, reciprocal treaty with guarantees on tariff elimination and regulatory predictability. Studies indicate that under an 80 – 90% liberalisation scenario, Kenya could realise trade creation worth approximately USD 8.4–13.1 million, whereas full liberalisation promises trade creation of USD 24.4 million alongside trade diversion of USD 17.7 million.[15] At the same time, a comprehensive bilateral FTA could stimulate deeper integration of goods, services, investment, and digital trade, areas not covered under AGOA. This is likely to strengthen Kenya’s export potential in high‑value sectors.[16] However, AGOA currently provides duty‑free access on thousands of tariff lines with minimal revenue risk to Kenya, whereas the FTA’s fiscal cost and domestic policy concessions require careful modelling and phased implementation.
Pursuing an FTA also carries significant implications for Kenya’s role in regional integration frameworks like the East African Community (EAC) and the African Continental Free Trade Area (AfCFTA). The reciprocal nature of an FTA could disrupt the EAC common external tariff and challenge intra‑community trade cohesion unless accession clauses and cumulative rules of origin are carefully structured.[17]Furthermore, the FTA could act as a catalyst for broader economic reforms, but only if aligned with continental aspirations under AfCFTA. AfCFTA’s aspirations emphasise collective bargaining power and harmonised trade policies.[18] Failure to synchronise the bilateral agreement with regional obligations risks undermining efforts toward integration, whereas a well‑crafted FTA could reinforce Kenya’s leadership in both regional and global markets. In fact, the uncertainty surrounding AGOA’s expiration has already prompted divergent responses among African states, illustrating the broader strategic recalibrations that the continent must consider.
South Africa, for example, has expressed concerns over recent U.S. tariffs that undermine the benefits of the trade agreement. Trade Minister Parks Tau highlighted that the imposition of a 31% tariff on South African goods, particularly citrus exports, effectively nullifies AGOA’s advantages.[19] In response, South Africa is exploring diversification of its export markets, especially towards the global south, including China. Additionally, the South African government is investing in modernisation and infrastructure development to support economic resilience in sectors affected by the tariffs. Most African countries are seeking the extension of AGOA to boost their trade and exports at large. Nigeria has actively sought the extension of AGOA through its Speaker of the House of Representatives, Hon. Tajudeen Abass.[20]
Abass noted that most businesses in Nigeria are still unaware of the program, a factor that has limited their ability to benefit from it and emphasised that the program’s extension would provide more time to increase awareness and participation among the country’s enterprises. So far, the country has initiated the development of a national AGOA response strategy. The Ministry of Industry, Trade, and Investment, in collaboration with stakeholders, has identified focal products and is working on a draft document awaiting approval from the Federal Executive Council. This strategy aims to address challenges such as sanitary and phytosanitary requirements, labelling, packaging, and quality standards that have hindered Nigeria’s ability to meet U.S. market demands.[21]
Impact of U.S. Policy Shifts on Foreign Aid
The uncertainty surrounding AGOA’s future is compounded by broader shifts in U.S. foreign policy under the Trump administration. President Trump’s administration has proposed significant cuts to foreign aid programs, including those supporting health, education, and climate change initiatives in Africa. In Kenya, these cuts have impacted vital sectors. By March 2025, reductions were reportedly totalling USD 520.8 million in trade and investment initiatives, USD 64.99 million for educational programs, and significant cuts to funding for literacy, energy access, and climate-related projects.[22] These reductions have had profound implications, creating gaps in funding for essential programs aimed at boosting economic growth, enhancing educational outcomes, and providing sustainable energy solutions. These challenges are not unique to Kenya, as many African countries are experiencing similar impacts due to the broader U.S. policy shift, which has led to reduced foreign aid across the continent, particularly in critical sectors like health, education, infrastructure development, and climate action.
The reduction in U.S. foreign aid is likely to exacerbate existing economic challenges in Kenya,[23] particularly in rural areas where aid-funded programs play a crucial role in healthcare service delivery, agricultural development, and poverty alleviation. Many non-governmental organisations (NGOs) and community-based initiatives, which rely heavily on foreign funding, are already facing financial constraints, limiting their ability to provide essential services. Perhaps a good example of the policy’s impact is the “total freeze” order on all US foreign aid issued by newly elected Donald Trump on January 24, 2025, which is likely the most severe overall ban in the history of international development assistance.
In an instant, USAID’s building signs, email addresses, and websites were shut down. Nearly 1,000 employees and contractors were either terminated or placed on furlough. Payments amounting to millions of dollars owed to partners for reimbursements were halted, pushing many into debt or causing liquidity issues. Funding totalling USD 50 billion for direct disaster relief, climate change initiatives, anti-poverty efforts, and health programs was immediately cut off.[24] Moreover, decreased funding for climate resilience programs is likely to slow progress in mitigating the effects of climate change, leaving vulnerable communities at greater risk of environmental shocks such as droughts and floods.[25]
The decline in U.S. aid has already had ripple effects on Kenya’s health sector, particularly in the fight against infectious diseases such as HIV/AIDS,[26] malaria, and tuberculosis. Programs previously supported by U.S. agencies, such as the President’s Emergency Plan for AIDS Relief (PEPFAR),[27] have experienced funding uncertainties, potentially undermining efforts to curb the spread of these diseases. The reduced financial support has also constrained access to life-saving medications and treatment programs, disproportionately affecting low-income populations.
In response to these challenges, Kenya may need to explore alternative sources of funding and strengthen partnerships with other international donors and private sector actors. One way of mitigating the impact of reduced U.S. aid to ensure continuity of essential development programs is by diversifying funding sources and enhancing domestic resource mobilisation. Additionally, leveraging regional initiatives and agreements, such as AfCFTA, could provide new avenues for economic growth and development. Kenya could also increase engagement with emerging global powers, including China and the European Union, to offset the reduction in U.S. aid by securing new bilateral and multilateral funding agreements.
Furthermore, Kenya must focus on fostering sustainable economic policies that reduce dependence on foreign aid.[28] Expanding the tax base, improving fiscal management, and investing in key sectors such as renewable energy, technology, and manufacturing could enhance economic resilience. Encouraging foreign direct investment (FDI) through favourable policies and incentives may also attract new funding for infrastructure and development projects. Moreover, strengthening public-private partnerships (PPPs) could provide alternative financing mechanisms for essential programs in health, education, and climate resilience.
To summarise, while U.S. policy shifts on foreign aid present significant challenges for Kenya, strategic planning and proactive policy responses can help mitigate the negative effects. Kenya can position itself to achieve sustainable development despite reduced U.S. assistance by diversifying its economic partnerships, enhancing domestic revenue generation, and leveraging regional integration, especially through AfCFTA.
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