allAfrica.com -- Kenya: Textile Worker Unrest: Agoa Success Story Wearing Thin

Workers at the Athi River EPZ complained that they were underpaid, earning as little as Ksh150

($1.9) per day and working long hours

KENYA'S GAINS under the Africa Growth and Opportunity Act (Agoa) suffered a major blow last week when wildcat strikes paralysed operations at Kenya's Export Processing Zones at Athi River and Nairobi, causing a two-day closure likely to disrupt export orders.

Chaos hit the Athi River zone, 30 kilometres from Nairobi, and the Sameer Park and Ruaraka zones in the city, leaving a trail of damage as thousands of striking workers damaged buildings housing garment factories. Business in the textile factories came to a standstill as the workers held demonstrations to press for better wages and terms of service.

In Athi River, the workers raided Kitengela shopping centre and looted shops as they battled contingents of anti-riot police. The strike, which had been simmering over the past week, affected more than 10,000 workers.

Export Processing Zone Authority (EPZA) spokesman Jonathan Chiffalu at the weekend said the authority and the investors were working out the cost of the damage, which is expected to run into millions of shillings.

Despite projections by a US trade report quoted in The East-African last week that more than 200,000 jobs could be created in Kenya under Agoa, substantially boosting the new government's pledge to create 500,000 jobs annually, several problems persist.

EPZ investors have cited delays in Customs clearance by the Kenya Revenue Authority coupled with poor infrastructure, particularly in the Kenya Railways network, as being major problems. Agoa activities have so far been under the Trade and Industry Ministry, with little connection to the Ministry of Agriculture.

Workers at the Athi River EPZ complained that they are underpaid, earning as little as Ksh150 ($1.9) per day (at 25 days a month with overtime, this works out at roughly Ksh4,000 or $50 per month), and that they worked long hours. Women, who make up over 80 per cent of the workforce at the Athi River site, also claimed that several of them had been sexually harassed by management personnel.

The pay is not very different in Uganda, where workers in EPZ factories, which are also dominated by foreign investors, earn $48 a month. However, workers are provided with accommodation. President Museveni is on record as saying that he does not care where investors come from so long as they can generate employment.

In Tanzania, the first EPZ is scheduled to open in March when 70 approved projects are expected to start operating at a 270-acre site managed by the Tanzania Airport Authority. The 70 investors come from Britain, South Africa, Asia, Kenya, and Uganda.

In 1998, the Zanzibar islands of Pemba and Unguja created free port zones, but the political clashes of 2001 led to reduced investor confidence.

Kenya's EPZ sector grew by 63 per cent during the 2000-2001 period, making it one of the fastest growing sectors of a depressed economy, which grew at a mere 1.2 per cent rate last year.

EPZ exports grew by 64 per cent from Ksh3.6 billion ($45 million) in 2000 to Ksh5.9 billion ($73.8 million) in 2001. Total turnover jumped by 48 per cent in 2001 to Sh6.5 billion ($81.3 million). The biggest market for the EPZ products was the US, which consumed 72 per cent of exports.

The more than 50 EPZ factories countrywide employ 22,000 workers. The other zones are in Voi, Mombasa, and Kilifi.

Kenya established the EPZ programme in 1990 to attract investors for export-oriented business. In return, it was expected that the country would benefit from increased capital investment, jobs generated, technology transferred and the diversification of exports.

Managed and promoted by the EPZA, the scheme offers a range of attractive incentives "to ensure lower-cost operations and faster setup, smoother operations and higher profitability through the establishment of an effective one-stop-shop service at the EPZA to facilitate all stages of the investment process."

However, investors in the EPZs have complained that since the September 11, 2001 terrorist attack in the US, the momentum of exports has been affected because American buyers temporarily suspended orders and shipping of products.

The strict market regulations, especially for horticultural products to the European Union, have also affected sales. However, the Kenya government, in partnership with horticultural farmers, is taking action to ensure that hygienic conditions demanded by the market are met.

Poor infrastructure has been blamed for inflated costs, with many manufacturers saying it is cheaper to transport goods from Korea to Mombasa than from Mombasa to Nairobi. This increases the cost of production and influences price competitiveness of EPZ exports. High costs of production, particularly expensive power supply, and the current economic recession, have complicated matters further.

According to Justus Ndotto, the EPZA chairman, the future challenge of the authority is to meet the stringent conditions under Agoa so as to reap maximum benefit from the opportunities provided by the Act.

Kenya's export of manufactured goods rose by 8.1 per cent during the first half of 2002 compared with an increase of 6.9 per cent in the same period of 2001. The improved performance was mainly as a result of increased access to external markets in the East African Community and Comesa.

However, under the Agoa access to US markets, textile and fabric exports increased by 196 per cent in the first half of 2002.

Critics say the US is using Agoa to impose a largely unregulated market system on African countries by taking advantage of their need for trade and investment. "The overwhelming thrust of the Act is to unilaterally impose on Africa, as a condition of trade with the US, an economic model and framework that primarily aims to benefit US corporate interests," says the Africa Faith and Justice Network, a US-based NGO.

In a paper prepared in consultation with the Africa Trade Policy Working Group of the Advocacy Network for Africa, the NGO says such an approach calls for African governments to embrace the US-defined free market agenda, involving minimal government interference in their own economies, and equal access and treatment to African resources and markets between often modest local industry and multinationals.

Access to the US textile apparel market is the main incentive of African nations to embrace the Act, but true benefits to Africa may prove to be minimal, it says.

"We consider just trade policy, together with debt cancellation and meaningful development aid, to be intrinsic elements of any US policy that claims the mantle of economic justice," says the NGO.