Nairobi — Kenyan exporters got a reprieve after US president Barack Obama extended trade benefits under the African Growth and Opportunity Act (Agoa).

But the country may not afford spats with the Obama administration if it wants to continue reaping from the opportunities in the American market. The US has been pressuring Kenya to implement key reforms to avoid the recurrence of political violence experienced two years ago.

Local exporters were worried that President Obama could delist the country from the Agoa initiative for 2010 due to the growing diplomatic row between the US and Kenya over the pace of reforms.

The US removed Guinea, Madagascar and Niger from the list of countries benefiting from Agoa saying the three countries' democratic progress is threatened by political turmoil and had failed to make "continual progress" in meeting US's requirements for the trade arrangement.

For Niger, the US also suspended non-humanitarian aid and imposed travel bans on some government officials in response to president Mamadou Tandja's moves to extend his tenure.

More democracy

President Tandja's term was to end on December 22, 2009. Earlier in December, Mr Obama sent Mr Tandja a message calling for more democracy. The US also froze $20 million in aid to Niger under its US Millennium Challenge Corporation agreement with the country.

"The main point of Agoa is to reward countries that perform well," Mr Anthony Newton, the director of the economic policy staff in the State Department's Bureau of African Affairs, said on December 24.

A United Nations report recently blamed Guinea's junta leader Moussa Dadis Camara for the September 28 killings of more than 150 pro-democracy marchers by security forces.

"The country that demonstrates good governance and respects democratic norms is certainly more liable to have good economic policies as well," Mr Newton said. The government is responsible for society and the economy as a whole, he added.

Guinea, the world's top exporter of bauxite and a pivotal country for the security of West Africa, has been on the brink of chaos since the massacre and a botched assassination attempt against Camara on December 3 by his former aide de camp. Mauritania, which had been suspended, is now eligible for preferential US tariff treatment under the programme, according to the Obama administration.

The US provides duty-free treatment for nearly 6,500 eligible items such as clothing, cocoa, wood, leather, processed foods and cut flowers under Agoa. But the biggest single import under the programme is oil. To be eligible, countries must be making continual progress toward establishing the rule of law and political pluralism, the protection of human rights and workers rights and efforts to fight corruption.

Several African countries have had their Agoa benefits suspended over the past decade due to political instability caused by coups. On January 1, 2009 president George W Bush suspended Agoa benefits for Mauritania in response to a military coup in August 2008, while in 2004, he suspended Agoa benefits for the Central African Republic and Eritrea. In 2005, Cote d'Ivoire was suspended following years of political unrest.

Kenya, which hosted the Agoa conference recently, nearly had its benefits suspended last year, following the disputed election results in December 2007 that was followed by violence. But the country remained a beneficiary after political leaders formed a grand coalition government.

Some senior government officials have been banned from travelling to the US for allegedly blocking reforms. Eligibility is also hinged on protection of intellectual property, fight against corruption, poverty reduction, improved health care and educational opportunities, protection of human and workers' rights, and elimination of child labour.

The textile industry is one of the leading players in the Agoa arena, with firms located in the export processing zones having supply contracts with US buyers. Statistics show that in 2008 the returns from the Agoa initiative accounted for the bulk of Kenya's total trade with the US, adding up to some $300 million (Sh2.3 billion).

Fully exploited

According to the Economic Survey 2009, direct employment in the garment and apparel sector that is heavily supported by the Agoa initiative stood at 25,776. Analysts say the potential benefits of Agoa have not been fully exploited.

Also of concern is that African exports under Agoa have declined in recent years. In 2008, of the $81.3 billion worth of exports from Agoa-eligible African countries, merchandise valued at $66.2 billion entered under the Agoa duty-free provisions.

Even with the duty-free and quota-free market access provisions, African countries have not been able to effectively exploit the preferences. The reason is that African countries are not competitive.