Fresh data from the newly released Economic Survey 2026 has exposed a deeply troubling paradox at the heart of one of Kenya’s most celebrated industrial success stories. The country’s textile sector, which is heavily reliant on the African Growth and Opportunity Act (AGOA), is essentially running faster just to stand still. While it is stitching and shipping record numbers of garments abroad, the revenue earned for its efforts continues to decline.
According to the survey data, Kenyan factories achieved a milestone in 2025 by exporting approximately 148 million apparel pieces to the United States. This represents a massive 27.6% jump in export volume compared to the 116 million pieces shipped the previous year. However, this growth in market volume failed to translate into better financial gains. The total value of those exports actually fell by 4.1%, dropping from KSh 60.6 billion in 2024 to KSh 58.1 billion in 2025.
This crisis of “increased production volume but declining value” has emerged amidst a wave of legal and policy anxieties. Earlier this year in February, US President Donald Trump signed legislation extending the AGOA agreement through December 2026, providing temporary relief to manufacturers who feared an immediate disruption to the export pipeline. Yet, this reprieve is short-lived. With only six months remaining before the new deadline expires, the future of the industry remains uncertain. United States Trade Representative Jamieson Greer signaled Washington’s intention to aggressively reshape the pact, stating that AGOA for the 21st century must demand more from trading partners and yield wider market access for US businesses.
Despite the squeezing profit margins, the sector continues to be an indispensable engine for local job creation and capital inflow. At a time when many of Kenya’s other economic sectors are struggling with layoffs and shrinking revenues, the apparel industry defied these challenges. Formal employment under AGOA expanded by 22.8%, growing the number of workers to 82,026 during the review period.
Additionally, total capital investment in the sector surged by 10.4% to reach KSh 42.3 billion, and the number of AGOA-accredited enterprises operating in the country rose from 40 in 2024 to 44 in 2025. Overall, the broader manufacturing sector maintained its 7.1% share of Kenya’s Gross Domestic Product (GDP) in 2025, with total manufacturing output growing by 2% to reach KSh 3.8 trillion.
Industry experts point to a combination of global economic pressures to explain why Kenyan factories are earning less per garment. Weakening consumer demand in Western markets has made international buyers highly price-sensitive. At the same time, aggressive undercutting from rival Asian textile exporters has forced prices down even further. To remain competitive in the market, Kenyan factories have shifted away from high-margin production toward lower-value, basic garments.
This current economic reality has trapped Kenya in a difficult cycle where producing more no longer guarantees earning more. Local manufacturers are now realizing that relying solely on short-term AGOA renewals is a dangerous strategy for long-term planning. Consequently, industry players are aggressively pushing for a comprehensive and permanent Kenya-US bilateral trade agreement to secure long-term stability.
Ultimately, economic experts warn that trade agreements alone will not save the industry. If Kenya is to escape this low-value manufacturing cycle, local factories must urgently upgrade their product quality and standards. The country must transition beyond merely assembling basic garments toward producing premium apparel, establishing its own fashion brands, and manufacturing high-margin finished products. Otherwise, Kenyan workers will continue to stitch more clothes while being paid less by the global market.
