Challenges faced by Ugandan textile industries in accessing duty free trade to the USA markets under AGOA

Abstract

The African Growth Opportunity Act (AGOA) is a bilateral Agreement between the United States of America and 48 African Countries that offers increased preferential access for African exports to the US market for purposes of broadly improving the welfare of the population in beneficiary African countries. The Act extends GSP benefits (duty and quota free market access) for eligible Sub-Saharan beneficiary countries up to September 2015 (previously 2008 before extension) subject to specific rules of origin and governance related requirements.

The study’s major objective is to assess the challenges faced by the Ugandan Textile Industries in accessing the duty free trade to the US market and entails: Examining the historical development of Uganda Textile Industry before AGOA, analysing the various ailments in the Textile Industry in Uganda within AGOA arrangements and examining the constraints involved in the implementations of AGOA. Recommendations are based on the information provided by different stakeholders of the textile and industry on the way forward towards meeting the US market demands.

Qualitative data was obtained on socio-economic characteristics of the various people engaged in this trade. The data collection method used included the use of the questionnaire, in depth interviews with key stakeholders (i.e. textile/ factory firms, government institutions, all complemented by review of previous reports on the same subject.

In terms of findings, the major challenges faced by the textile industries were the cost of financing, government’s lack of policy framework concerning textiles and other constraints that cause inefficiency such as the cost and productivity of labour and qualitative factors affecting competitiveness

Finally the study recommended that government should be actively involved in regulating the incentives given to the textile firms and encourage other institutions to competition, productivity and innovations in the textile industry in Uganda.