The suspense over the much-awaited decision on another 10-year extension of the African Growth and Opportunity Act (AGOA) – often called the United States’ General System of Preferences allowing duty-free imports – for African exporting nations is finally over with President Barack Obama recently signing into law the AGOA’s extension for an additional decade.

The AGOA bill was passed with overwhelming bipartisan support during a vote on June 11, 2015. But behind the scenes a cross-section of stakeholders – including African governments, the African Union, the African Diplomatic Corps and members of the U.S. and African private sectors – impressed upon U.S. lawmakers the significance of AGOA and its critical role in strengthening commercial and economic relations between the United States and the nations of Africa. President Obama, before his visit to Kenya and Ethiopia, said, “AGOA will be central to our efforts to boost the trade and investment that supports hundreds of thousands of jobs both in Africa and the United States, creating opportunities for all of us.”

Importers of African textiles and apparel at the TexWorld USA show in late July in New York City were pleased with AGOA’s renewal, which they said created a “win-win situation” for both the U.S. importers and sub-Saharan African shippers.

Mary Marino, the North American director of Cotton Made in Africa (CMiA), was enthusiastic about African exports of textiles and apparel. She expected cotton exports from Africa to grow following the AGOA’s renewal.

“We at the CMiA promote sustainable cotton which is different from organic cotton … we minimize the use of chemicals since Africa does not process cotton, it is sent abroad and then imported back into the country and re-exported to the markets,” Marino said.

CMiA, headquartered in Hamburg, Germany, and part of the Aid by Trade Foundation, promotes cotton produced in a number of countries, including Cameroon, Ethiopia, Ghana, Ivory Coast, Malawi, Mozambique, Tanzania, Uganda, Zambia and Zimbabwe.

The African continent represents 5 percent of global cotton production and more than 9 percent of the world’s cotton exports. Cotton is one of Africa’s most important cash crops, with more than 2.5 million livelihoods dependent on cotton production alone, thus underlining AGOA’s significance for textile and apparel production and, in effect, cotton production.

“Much of the cotton is produced in Africa by smallholders (farmers with less than one hectare of land). These farmers tend to achieve low yields and have a limited access to inputs such as water and pesticides. Quality has traditionally been seen as high throughout the continent, largely thanks to hand picking,” Marino explained.

A key operator called the East Africa Trade and Investment Hub (EATIH), a trade promotion agency based in Nairobi, Kenya, and funded by the U.S. government, has applauded AGOA’s extension. J.C. Mazingue, trade advisor for Africa and a contractor for USAID, said that AGOA would give African exporters duty-free access to 8,000 products, including almost all textile and apparel products.

AGOA, renewed until 2025, has a third-country provision that will give African exporters an added advantage: any fabric can be cut and sown free of U.S. duty. This will also motivate African companies to invest in capacity. Most African factories are doing well. Africa needs greater capacity, which means there is demand for African textile and apparel products in the U.S. The largest African exporter of apparel is Kenya, followed by Lesotho, Mauritius and Ethiopia. The government of Ethiopia has identified textile and apparel as a priority industry. Overseas companies, mainly from India, China and Turkey, have invested considerable sums of money in Ethiopia because of the much lower labor and energy costs. Ethiopia’s primary energy source is hydraulic derived.

According to Mazingue, “The East Africa region is becoming a de facto sourcing hub of the continent. Ethiopia, Kenya, Lesotho, Madagascar, Mauritius are well positioned.”

Ethiopia specializes in work wear, uniforms, basic knits, and more, Mazingue explained. Kenya is the leader in chinos, slacks, denim jeans; Lesotho is a big producer of denims; Madagascar has woven and knit shirts manufacturers; and Mauritius is increasingly becoming a destination for fashion and value-added products, he said.

Infrastructure is a pressing concern for companies deciding whether to source on the continent, and while each country comes with its own issues, Mazingue said, “Generally, energy costs need to go down, and transportation and logistics need to improve.

But Mazingue also spoke about the “strategic advantage” accruing to textile and apparel manufacturers in Africa because of the availability of the cotton crop. The so-called “African cotton belt” comprises countries such as Zimbabwe, Malawi, Ethiopia, Kenya, Egypt, and others.

“The medium range of cotton from Africa can compare to any good cotton from anywhere. Malawi cotton, for example, is good and comparable to other cotton-producing countries,” Mazingue added.

Cotton produced in Africa is a choice that the farmer has to make. There is currently, however, a significant stockpile of cotton in China. “China’s huge stockpile can create market convulsions and affect pricing,” he maintained. “Indeed, the textile industry in Africa has a good potential for growth because all African countries are keen to create jobs and this can be done through the textile industry,” he said.

To achieve the goal of creating jobs, African countries give incentives to potential investors in the form of energy consumption as is happening in Kenya while Ethiopia subsidizes certain areas to generate employment. But, trying to put “things in perspective,” he said that subsidies are given strictly on a case-by-case basis. “Textile and apparel account for 90 percent of exports from the sub-Sahara African region to the U.S. market,” Mazingue said. Indeed, the EATIH, which has facilitated substantial textiles and apparel exports from African countries, supports nine East African countries – Burundi, Ethiopia, Kenya, Madagascar, Mauritius, Rwanda, Seychelles, Tanzania and Uganda – increase their exports to the U.S. under the AGOA.

Buyers at TexWorld pointed out that AGOA-supported export company Mombasa Apparel had launched its fourth textile factory in November 2014 on the coast of Kenya. It produces apparel destined for the U.S. through AGOA. Mombasa Apparel is one of the country’s largest employers, with some 10,000 workers in its four factories in the Mombasa region. According to one textile Kenyan exporter, who insisted on remaining anonymous, the company plans to have a fifth factory online by the close of this year, with the capital investment for the fourth and fifth factories amounting to $25 million.

However, not all African countries have been able to make any substantial headway in terms of increasing their textile and apparel exports following the AGOA renewal. Kenya, Lesotho and Mauritius provide the bulk of apparel exports under the program. In 2014, Kenya exported $423 million worth of apparel to the United States under AGOA; Lesotho, $289 million; Mauritius, $227 million; and Swaziland, $77 million. Experts have urged Ghana, which has not substantially increased its exports of textiles and apparel, to examine why these countries have been so successful in utilizing the preference program.

According to a report by management consulting firm McKinsey, Ethiopia and Kenya, particularly, have the potential to become bigger players in garment manufacturing. Some European companies, including H&M, Primark and Tesco, have been sourcing their garment needs from Ethiopia, but other countries have also been supplying substantial quantities of apparel. Ethiopia and Kenya, and to a lesser extent Uganda and Tanzania, are proving to be of interest to apparel buyers. The Ethiopian and Kenyan governments are taking steps to develop their domestic textile and garment industries.

Both Ethiopia and Kenya have strengths and weaknesses. Ethiopia has cost advantages whereas Kenya boasts higher production efficiency. But both countries face challenges such as poor infrastructure, cumbersome customs processes, a dearth of technical and managerial talent, and low levels of social and environmental compliance.

Apparel production, unlike textile production, typically requires low-skilled labor and minimal capital expenditures, allowing the producing countries to become globally competitive.

Africa’s textile and apparel exports to the U.S. could quadruple to $4 billion over the next decade through the AGOA extension, creating 500,000 new jobs, as Gail Strickler, assistant United States trade representative for textiles and apparel, said prior to the act’s renewal.

Last year, U.S. clothing imports from sub-Saharan countries reached $986 million, up nearly six percent over 2013. Analysts highlight the advantages that Africa offers in terms of lower labor costs and abundant raw materials, including cotton; however, congested ports, a poor road network, lack of skills and old technology are obstacles that need to be addressed.