Kenya’s textile and apparel sector is expanding rapidly under the African Growth and Opportunity Act (AGOA), but declining export earnings despite rising shipment volumes are exposing structural weaknesses in the country’s export model, according to recent industry data and studies.
Kenya exported approximately 148 million apparel units in 2025, a 27.6% increase from 116 million pieces the previous year, driven by strong demand from the United States and continued investment in export-oriented manufacturing zones. However, export revenues fell by 4.1% to about 58.1 billion Kenyan shillings ($450 million), underscoring a growing disconnect between production growth and financial returns.
The trend highlights what analysts describe as a “volume-driven growth trap,” where increased output fails to translate into higher income due to falling unit prices and a concentration in low-value products.
AGOA, which grants eligible African countries duty-free access to the U.S. market, has been central to Kenya’s textile expansion over the past two decades. The scheme supports tens of thousands of jobs and has positioned Kenya as one of sub-Saharan Africa’s leading apparel exporters. More than 90% of Kenya’s AGOA exports consist of garments, making the sector highly dependent on U.S. trade preferences.
The number of AGOA-accredited firms rose to 44 in 2025 from 40 a year earlier, while total investment in the sector climbed 10.4% to 42.3 billion shillings. Employment also increased significantly, with the workforce expanding by nearly 23% to over 82,000 workers, largely concentrated in export processing zones (EPZs).
Despite these gains, industry stakeholders warn that Kenya’s textile sector is under increasing pressure from global sourcing dynamics. International buyers, particularly large Western brands, are demanding lower prices while shifting orders toward basic, low-margin garments such as T-shirts and simple knitwear.
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“The industry is producing more but earning less per unit, which is not sustainable in the long run,” said an industry analyst familiar with the sector’s performance.
Competition from established Asian manufacturing hubs such as Bangladesh, Vietnam and China has further intensified pricing pressures. These countries benefit from larger-scale production, integrated supply chains and broader product diversification, allowing them to offer more competitive pricing and higher-value goods.
As a result, Kenya risks being locked into a low-value segment of the global apparel market, where profitability remains thin despite high output. Analysts note that this “low-value trap” limits the sector’s ability to generate higher export earnings, even as volumes rise.
The challenge is compounded by external economic factors, including subdued consumer demand in key Western markets and cautious retail ordering patterns, which have pushed suppliers to accept lower margins to maintain production volumes.
At the same time, uncertainty surrounding the future of AGOA adds to the sector’s vulnerability. Although the program has been extended to 2026, its long-term status remains unclear, raising concerns about the sustainability of Kenya’s export-led growth strategy.
Industry experts argue that Kenya must urgently shift toward higher-value production to remain competitive. This includes investing in design capabilities, developing branded apparel, and moving beyond basic garment manufacturing into more sophisticated product categories.
Strengthening the domestic textile value chain is also seen as critical. Currently, much of Kenya’s apparel production relies on imported fabrics, limiting value addition within the country. Expanding local cotton production and textile manufacturing could help capture more value domestically.
Diversification of export markets is another priority. Heavy reliance on the United States exposes the sector to policy risks and demand fluctuations. Expanding into Europe, Asia and regional African markets could provide greater stability and growth opportunities.
The Kenyan experience reflects a broader trend across export-oriented apparel economies, where growth in volume no longer guarantees increased earnings. As global buyers prioritize cost efficiency and speed, manufacturers face mounting pressure to upgrade capabilities and move up the value chain.
For Kenya, the path forward lies in transitioning from a volume-based manufacturing model to one focused on value, innovation and market diversification. Without such a shift, analysts warn, the sector’s current growth trajectory may continue to generate jobs and output, but fall short of delivering sustainable economic returns.
