When the U.S. renewed the lapsed African Growth and Opportunity Act (AGOA) trade preference program through December 2026, the apparel industry and the 32 eligible sub-Saharan countries breathed a sigh of relief. However, stakeholders agree the one-year extension is more stopgap than solution—too brief to drive the stability and long-term investment the region truly needs.
The last AGOA renewal, in 2015, extended the program for 10 years and drove significant investment across Africa’s garment industry. According to the U.S. Office of Textiles and Apparel (OTEXA), Kenya exported about $533.0 million in textile and apparel products to the U.S. in 2024; Madagascar followed at $354.8 million; and Lesotho exported roughly $151.3 million in the same period.
This one-year renewal, reduced from the three years the House initially proposed, adds volatility on top of uncertainty already caused by global tariffs and trade wars.
Investment in Limbo
“Companies are looking for predictability before they will invest in new countries and with new partners,” said Julia Hughes, president of the United States Fashion Industry Association (USFIA).
Wayne Milano, senior vice president of sourcing and product development of Catalyst Brands, echoed that sentiment in oral arguments before the AGOA TPSC Subcommittee in July 2025. The company pushed legislators for a 10-year extension.
“Apparel sourcing has a 6-to-12 month lead time,” he said. “However, the uncertainty of the program’s future as well as the ever-changing reciprocal tariff landscape has made mid-term sourcing decisions extremely complicated.”
Catalyst, whose portfolio includes JCPenney, Aéropostale, Brooks Brothers, Eddie Bauer, Lucky Brand and Nautica, has long sourced from Kenya, Lesotho, Madagascar and Mauritius. The company highlighted its “significant public-private partnerships in capacity-building,” resulting in factories that are transparent and capable of producing complex apparel such as men’s suits and women’s intimates.
The concern is that opportunities for operations like this could dwindle.
“Folks want to continue to invest in the region, and they need that certainty going forward so they can make their long-term planning,” said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation (NRF). “If the program isn’t renewed, folks are going to start to look for other options.”
Jason Kra, president of supply chain giant Li & Fung’s LF Markets USA, concurred. “If you’re investing in a new factory in Africa, chances are it will require a year to a year and a half to build to be operational, 6 months to scale up, and your ROI likely will be 5 to 8 years, possibly a little bit less,” he said, stating a “sustained AGOA renewal of 10 to 20 years” is what’s needed for long-term investment.
Adding to the challenges in the region, tariffs on eligible countries remain subject to geopolitical shifts. Reciprocal tariffs stack on top of AGOA, generally ranging from 10 to 15 percent. The U.S. imposed 30 percent tariffs on South Africa last August, followed by scrutiny of the country’s eligibility for the trade pact.
South Africa Parliament’s chairperson of the select committee on economic development and trade, Sonja Boshoff, called on the government to act decisively and responsibly to safeguard South Africa’s trade relationship with the United States.
“The prolonged uncertainty around South Africa’s AGOA status placed avoidable pressure on exporters, investors and workers who rely on stable access to the U.S. market,” she said in a statement. “It serves no one’s interests to create doubt about South Africa’s commitment to predictable, rules-based trade. Constructive engagement with key trading partners is not about compromising sovereignty, but about ensuring economic stability, protecting jobs and maintaining investor confidence.”
Future Tweaks and Retroactive Refunds
AGOA is set to expire on December 31, 2026, but further renewal is contingent upon potential reforms in Washington to modernize the program and “make sure it enhances U.S.-Africa trade and aligns with President Trump’s America First Policy,” said U.S. Trade Representative Ambassador Jamieson Greer after the bill was signed. “AGOA for the 21st century must demand more from our trading partners and yield more market access for U.S. businesses, farmers, and ranchers,” he said.
It is difficult to predict what would change, made more challenging by the numerous countries involved, each with its own situation. “[Revisions] might be based on the investment in the country. If the administration believes that country A has too much Chinese investment and has primarily loose investing, they might put additional restrictions on the rules of origin from that country,” said Ron Sorini, principal at law firm Sorini, Samet & Associates. “It’s going to be a fairly individualized look.”
The clock is ticking. December is not far away in apparel planning cycles, and importers may accelerate shipments from AGOA countries as a hedge before year-end, experts say, just as brands front-loaded goods before Liberation Day tariffs took effect.
The AGOA renewal was retroactive to September 30, 2025, meaning that any duties paid during its lapse can be reimbursed by the U.S. government. This is not automatic and companies must manually file for a refund. Per CBP guidance, importers must file a retroactive duty refund request to CBP by August 2, 2026.
“We fought hard to make sure a refund was part of the bill, because companies are facing tariff bills from the IEEPA reciprocal tariffs, so any relief is helpful on their part,” said American Apparel and Footwear Association president Beth Hughes.
Third-Country Fabric Question
The latest AGOA extension preserves the “third-country fabric provision,” which enables manufacturers in qualifying Least Developed Country (LDC) Sub-Saharan African nations to source yarns and fabrics from outside AGOA (i.e., Asia, India, the U.S.) while still qualifying finished garments for duty-free access to the U.S. market.
Non-LDC AGOA countries like South Africa must use U.S. or regional (African) yarns and fabrics to qualify for duty-free treatment.
“We’ve done a lot of education on why third-country fabric provision is important,” said AAFA’s Hughes. “We’d love to use more U.S. cotton. There’s also cotton on the Continent, but building spinning capacity is capital-intensive, with returns that can take seven years or more. They just need more infrastructure and time.”
Future AGOA updates also open the pathway for more U.S.-centric rules. A push toward more U.S. cotton and other inputs could also be instrumental in future trade negotiations, especially following Bangladesh’s recently reduced tariff agreement.
Jas Bedi, managing director of Bedi Investments Limited (Kenya) and chairman of Kenya Private Sector Alliance (KEPSA), anticipates a potential shift toward a hybrid or yarn-forward model that would incentivize the use of U.S. or African cotton.
“With AGOA’s zero most-favored-nation rate plus a 10 percent reciprocal tariff, Kenya now enjoys a 24-percentage-point differential over competitors such as Bangladesh, India and Indonesia in cotton apparel, and an even wider advantage in polyester, where U.S. tariffs are higher,” he said, calling the current environment favorable in relative terms.
Bedi, who also serves as the executive director of Fine Spinners Uganda Limited in Uganda, which was removed from AGOA in 2024, leverages the third-country provision for cotton goods made in Kenya.
Bedi expects revisions to AGOA in 2027, particularly to the third-country fabric provision. He noted that for roughly 70% of Africa’s AGOA apparel revenue, the fabric used under AGOA originates in China, “making the rule as much a U.S.–China issue as an African one.”
Manufacturing Communities at Risk
The lack of long-term partnerships and orders threatens not just business relationships, but thousands of vulnerable workers, namely women, who make apparel manufacturing their livelihood.
“Orders are placed usually six months in advance for overseas, particularly to Africa, because the freight time is extensive. So we’re already in February, and with the threat of this expiring again [in] December, those jobs can disappear overnight,” said Gail Strickler, president for global trade at Brookfield Associates and former assistant U.S. Trade Representative for textiles. “This is no way to treat people.”
When AGOA paused in September, Kenya’s United Aryan (EPZ) Ltd, which produces several million garments annually, primarily serving the U.S. market and companies like Kontoor and Levi Strauss & Co., downsized operations and released approximately 4,000 workers to align capacity with confirmed demand.
“This was not a reflection of structural inefficiency. It was a direct response to policy uncertainty and reduced order confidence,” said Pankaj Bedi, chairman and founder of United Aryan EPZ, and chairman of the Kenya Apparel Manufacturers and Exporters Association (KAMEA).
He cites full production capacity ranges between approximately 75,000 to 100,000 garments per day across facilities, but notes that going forward, “buyers are proceeding season by season” rather than committing to multi-year allocation growth.
“Investment decisions remain conservative and capacity restoration is gradual.” With apparel sourcing strategies and factory expansion planning operating on five-to-10-year cycles, “machinery investments, automation upgrades, and workforce scaling require confidence beyond a 12 to 15-month window.”
To offset continued uncertainty, Kenyan exporters have explored diversification as part of prudent risk management.
A preliminary trade deal with China allows Kenya to ship 98% of its exports duty-free to the mega Chinese market. And under the EU’s Economic Partnership Agreement framework, Kenyan apparel generally benefits from duty-free access to the European Union, subject to rules of origin compliance.
Africa Rising, Slowly
For African manufacturers and their U.S. partners, the long game is to grow the continent’s skills and infrastructure so as to remain desirable and competitive, regardless of trade policy or tariff whims.
Li & Fung is a “firm believer in Africa as the next frontier,” citing improved infrastructure, ports and greater government stability compared to a decade ago, said Kra. Its largest AGOA partners are Madagascar, Kenya and Mauritius.
But productivity must improve.
Africa currently has a labor cost advantage, but for the continent to compete, productivity will need to go up to the same levels as other countries like Bangladesh or Vietnam, he said. “For the region to thrive, we need to see investment, technology and productivity all scale, so quality and productivity will be close to the other industrialized manufacturing countries.”
United Aryan’s Bedi stressed that AGOA should be understood as “strategic economic architecture” rather than simply a preference program.
“If AGOA is renewed for 15 to 20 years without erosion of duty-free treatment, and the reciprocal tariff is removed, Sub-Saharan Africa can scale as a resilient and strategically aligned sourcing partner to the United States. The industry can adapt to either duty framework. What it cannot manage is prolonged uncertainty.”
Egypt Waiting in the Wings
Egypt, which sits outside AGOA, could benefit from the uncertainty. As brands and retailers redraw sourcing maps, many have been eyeing the North African nation. Egypt is Li & Fung’s largest producer on the continent.
Eugene Havemann recently left apparel manufacturer Handa Group, which had 80 sewing lines in Egypt, to launch Atlas Apparel, a vertical, duty-free manufacturing site in Egypt.
“With Egypt being one of the few countries left with duty-free solutions for U.S. customers, many big buyers are willing to source from Egypt,” said Havemann, who once owned and operated Madagascar Garments.
Egypt’s textile and apparel export boost to the U.S. was part of a concerted effort to promote regional economic cooperation and peace. To enter the U.S. duty free, goods must come from a Egypt Qualifying Industrial Zone (QIZ) and contain a minimum of 10.5% Israeli input (and a total of 35% combined value-added content from the QIZ, Israel, or the U.S.).
“Egypt offers great long-term investment opportunities, not only because of the trade agreements, but also due to its immense labor force. With over 112 million people, of which 50% are younger than 24 years old, there is a huge up-and-coming work force that needs to be employed.”
Shake Up Shifts Strategies
The current global trade “shake up” is a wake-up call.
Businesses, said Jas Bedi, cannot rely on a single market or corporate customer, and uncertainties are driving broader strategies. Global supply chains are being reorganized, Chinese investment in East Africa is increasing, and geopolitical realignments are reshaping sourcing strategies.
“When you go to Africa these days, you see construction everywhere and the signs are in Chinese,” said Strickler. “But it isn’t to make apparel for China; they’re making for the United States and Europe.”
The one-year AGOA extension has been deemed better than nothing, but for an industry built on long timelines and long-term capital, it is certainty—not stopgaps—that will ultimately determine Africa’s manufacturing trajectory.
