This transcript has been lightly edited for length and clarity.

Welcome back to Beyond a Single Story and this season of the African Growth and Opportunity Act, AGOA. We hope you're having a wonderful holiday season. We're currently on a break and we'll resume releasing new episodes in January. 

  

However, we're excited to share a bonus episode with you. Last week, my co-host Witney Schneidman and I spoke with Jas Bedi, a Kenyan business leader and chairman of the Kenya Private Sector Alliance. In that episode, we only shared a short portion of our conversation about AGOA. 

  

However, in this longer conversation, we touch not only on AGOA, but on other topics that directly impact business investments related to AGOA. You will hear more about Jas's background, as well as his views on domestic legislation processes, secondhand clothing markets and the African Continental Free Trade Agreement. With that, we're excited to share this extended conversation with Jas Bedi. 

  

Thank you so much, Jas. And obviously, you've had a vast experience working in the business sector across East Africa and across the African continent. Can you tell us a little bit about your experience working with businesses on the continent? It's been a journey. 

  

I started exporting in the continent early 90s, say, 92, 93. And the reason – my first market, my first export market was, believe it or not, I went to Zambia and I picked up a very small order from Zimbabwe. It was only US $1,500 at the time. 

  

And I was very excited I got an order. And I came back home and I told my dad, who's a family business that we run, that we have an export order. And he laughed at me and he said, come on, this won't pay the bills, right? I said to him, I said to him, I said, you know what, this is the beginning. 

  

I see a big tsunami coming, and this tsunami is going to be with secondhand clothes, because at that time we just liberalized our economy. And a lot of secondhand clothes started making their way into Africa, into East Africa, into Kenya. And I saw that we will be in deep trouble. 

  

So, my mantra in the 90s was export or perish. And that first export market was within those days, it was called the preferential trade agreement, the PTA, which then migrated and graduated into COMESA, which is a common market of East and Southern Africa, which today is 26 countries, 660 million people, $1.6 trillion GDP combined. So, we've been playing in that space because we have a competitive and comparative advantage against Asia. 

  

And who are our competitors? I call, I mean, our competitors are largely Asia. I call it India, it's China and India combined. And that's really where we compete with, and we have a competitive advantage within the region of COMESA and East Africa of tariff of 25%, in certain cases even higher. 

  

And so, that's really been the game. And then in the late 90s, I started exporting to the UK. Again, I wanted to do a fashion-free and a recession-free business. 

  

And the only fashion-free and recession-free business I could think of was uniforms. So, I became the largest back-to-school producer for the UK, supplying to Marks & Spencer, Debenhams, John Lewis, Tesco, and yeah, Debenhams, I've said. All the big back-to-school players were buying from us back-to-school. 

  

That was a big business. And then we saw this opportunity coming up in the late 90s, and that was export of shirts to the US because shirts were on very heavy quota from Asia. So, I started doing some contract for some factories to do shirts in export category 340 and category 640, but they were high-quota items. 

  

But that came to a stop very, very quickly because the Kenyan government went and signed a quota call. The US, when they say one country exporting, and this is way back in the late 90s, when they see your exports hitting 3% of that line item into their territory, they start watching you very carefully. And I think we were reaching 3% very quickly of that one line item, category 640, category 340. 

  

And they called our peers at that time into negotiations of a quota call. And I did tell her, listen, you're going to the US, enjoy the niceties, but don't sign the quota call. And she went and signed, and she came back, we now have a quota to export. 

  

I said, come on. Now we've got restrictions on our trade, how much we can do. Prior to that, we could sell as much as we can. 

  

But anyway, long story short, that killed a lot of factories. There were a lot of small factories. And then the next big hope for us was AGOA. 

  

17th May 2000, Kenya was the first country, as soon as AGOA was announced, we were the first country who signed up. And the second country that came on board, a day later, that was Mauritius. And we've been exporting strong enough volumes into the US. 

  

Right now, we are the largest exporter out of the region, sub-Saharan Africa region, AGOA accredited countries, that our exports last year were $470 million. The year before, they were $540 million. We had a dip. 

  

Our dip was 11%. But the rest of the world, the dip was 17%, and going up to 21%. So I think if you really look at that, our dip was smaller than the rest of the world. 

  

And that was mainly because post-COVID, there was a huge demand for the entire world. There was not enough product in the US. Inventory levels were very high. 

  

And everybody, including Bangladesh, Vietnam, China, everybody did well post-COVID. And then there was this big glut, and the bigger economies actually had a pain of 21% of their order book went down. Lots of inventory in the US. 

  

So that is just about correcting now. And as it is correcting, we in Kenya, we're really looking forward to increased business. We can see people talking. 

  

Yes, but the big clock is ticking on 30th September 2025, which is about 10 months from now. Just over 10 months from now, AGOA will expire. And we are hopeful that it will get renewed in this lame duck session between now and 20th of January. 

  

We have a new sheriff in town. Let's take it from there. So yeah, there is a lot of promise. 

  

Investment continues to happen in Kenya. I'm building my own export processing zone. It's under construction. 

  

I haven't stopped because I want to lead by example and get the uncertainty out of the way. And I know of other factories, big boys who have brought it to Kenya, like the North Face, and they're all building up new capacity, new factories. So they're all coming into Kenya. 

  

So it's a shame that we're only doing half a billion because we should be doing more than 2 billion, maybe 5 billion. And that's the new target. And I talked to His Excellency, the President of Kenya, and I told him, shame on us. 

  

We are just something with half a billion of exports. And look at Bangladesh, they're doing 42 billion. And 42 billion, out of which 70% of their business is Europe because they're duty-free to Europe. 

  

And they're not duty-free to the US, but still they're doing 6 billion to the US, which is still a sizable number. We should be actually doing 30% of that 6 billion, which to me is a big possibility. Chas, how does the uncertainty over Goa's extension impact on you? Well, like I said, for Kenya, we are, I think we are cautiously optimistic, that's the right word. 

  

And the reason I say that, the earlier Trump administration had initiated an FDA discussion with Kenya. And we were actually embarking on that FDA discussion. And then of course, in the Biden administration, the FDA discussions were moved to a strategic trade and investment partnership agreement, which is STIP, as you know. 

  

So we have more or less agreed on lots of issues. On the STIP, we are having one or two issues that we really are uncomfortable with me, with us. I think it's to do with labor and things like that. 

  

And we were hoping by November, we would have concluded that agreement. But November has almost come and gone, and it hasn't happened. So like I've always said, that Kenya was always banking that we have an insurance. 

  

If AGOA doesn't come through, we will either have an FDA agreement or we'll have a STIP agreement, but we'll probably be the only country on the continent, which is what the US would want to showcase to the rest of the continent. And we've done, we've tried it with Kenya. It works with Kenya, it can work with you. 

  

And I don't think the US is wrong in thinking the way they are thinking, because they're looking at 25 years of AGOA, what have we attained? What have we done? Have we managed to reorganize supply chains, which to a certain degree, yes, they have. They're looking at how can we also benefit from a more reciprocal agreement, not a one-sided agreement. And I don't think they're wrong in their understanding, but I still think we need to build a lot of capacity on the continent. 

  

We've just signed as Kenya, we've signed an EPA with Europe, and they will get market access into Africa or into Kenya duty-free in 2025. But if you look at what are we importing from Europe and what are we importing from the US, 82% of that book is duty-free anyway, because we're only importing machinery, raw material, which is coming in at zero tariff. So it wouldn't make a big difference. 

  

So, but giving it a delayed entry or a symmetry into this market, I think will be a sign of goodwill. And yes, we have done it with Europe, but maybe we could also do it with the US Jaz, I was wondering if you could talk a little bit just on that point, on your experiences working with American businesses. Now, very often we talk about AGOA and we talk about its impact, its promise on the continent. 

  

But we want to hear more about how you've also engaged and interacted with US businesses and from your own perspective, how they view the value, the value add of AGOA to the work that they do. Well, one thing is for certain, the volumes out of, the US is the world's biggest market and for the business that we are in, the textile apparel space, the US volumes are far larger, but also the prices are far lower as well, compared to Europe. The factories that we have built in Kenya today are large volume factories. 

  

And we're doing that pretty well with the US because we can, the SKUs are not so many. But then that also creates another problem because if you're not used to a variety of SKUs, you actually then become so used to large volume business and that sometimes doesn't come and you have different difficulties. So let me just give you a perspective on demand. 

  

The US demand, per capita demand of all textiles is 39 kilos. That means every American buys 39 kilos of all fibers for his wardrobe annually. The European demand is 25 kilos. 

  

Chinese demand at the moment is 16 kilos. Indian demand is six kilos. African demand is two and a half kilos, out of which one kilo is second hand. 

  

So fast forward 2030, the Indian demand will move from six to 15. Chinese demand move from 16 to 25. India and China will become the world's biggest market because of sheer size. 

  

40% of the world's population lives in two countries and that 40% when they start consuming, you can imagine what will happen. There will not be enough product for Europe and not enough product for the US on the current capacity. I see within that reality, there are opportunities for Africa to step up production and to look at offering something else to the world. 

  

And the North African countries, three of them, that is Morocco, Egypt, and Tunisia, they're already doing $10.5 billion with Europe because of proximity, because four days on the boat, the goods are there. And if you look at the rest of Africa, the apparel business that we're doing with the US is only $1.5 billion, $1.7 billion. It's not a lot of money compared to what three countries are doing in North Africa with the European market. 

  

The European market is also a sizable market. So there are interesting times. I see the global supply chains are reorganizing themselves. 

  

I see that a lot of friendly shoring will happen. And I see that Africa will be sitting pretty because once India and China start consuming, I think we will be very, very strategic to supply product to the European Union and to the US There's a debate here in Washington about renewal versus modernization. And one train of thought says, just renew the legislation as it is, as soon as possible. 

  

Other people say, no, we need to modernize it. We need tax incentives to get more US investment. We need to extend the review period so it's not an annual review. 

  

Just curious about your thoughts on that debate and how we can make AGOA more impactful. You know, the textile production, to set up textile mills, five, seven, 10 year windows are not large enough because the investment value is huge. But more importantly, I think we tend to forget that the most important person should be the buyer because at the end of the day, the buyer determines who is going to do what and where those supply chains are going to get organized from. 

  

You saw how successfully BVH entered into Ethiopia and they made sure there were 30 or 40 other factories that joined them in their pursuit of production in Africa. And then of course, when AGOA was removed, all those factories struggled. A lot of them relocated. 

  

A lot of them went back home. Some are still struggling. So legislation is key. 

  

That's my point. And if you look at what happened in Uganda, where I have my own investments, January 1, 2024, we were removed from AGOA. I did a $40 million investment and overnight my business went to zero in Uganda. 

  

And going back to your question, so what should we do now? Should we just do a straightforward renewal or should we change it or modernize it? I think in my opinion, a straightforward renewal is what is required, but we should stay focused on our goals. And if our goal is to reorganize supply chains, if our goal is to make sure that we see investment on the continent, maybe this time around we should incentivize the buyer. Anybody who buys a 100% made in Africa label and he could be given a 5% tax rebate in the US and that's when you'll start seeing investment because the buyer starts forcing. 

  

The buyer forced all these factories into Ethiopia, one buyer, PVH. And you can imagine if all the buyers start saying, guys, we want to buy from you, but we want 100% African source. Then you start seeing investment. 

  

Otherwise, what is going to happen is more of the same. And more of the same is what 70% of that export revenue goes back to China. And I think that's where the fine line decision is that how much China or how little China. 

  

And that really is the biggest elephant in the room. But to redefine that angle, I think if the buyer is given that opportunity that he should write on the rules of origin, that this content is 35% value added, 55% value added or 75% value added. And then you start getting different tax breaks, not given to the African manufacturers, but given to the buyer. 

  

The business has to be market driven and it cannot be supply driven. And anything that we, any legislation that we put on, on the supply side will be supply driven legislation, which will fail because it's got to be pull and not push. Right, right, right. 

  

You make a good point about incentivizing the buyer as well as incentivizing the investor. I think that's the challenge we face from the US going into Africa, is not understanding the opportunity. Yeah. 

  

And, you know, Jaz, I want to pick up on, you know, just something that you had said earlier on about secondhand apparel and just giving your vast experience in the textile manufacturing industry on the continent. I had seen somewhere a while ago about, you know, secondhand clothing being imported into Ghana and just how a lot of these clothes are ending up in landfills and just creating an environmental problem in Ghana. I would love to hear your insights and perspectives on this story. 

  

Secondhand clothes destroyed the African textile industry. It was a thriving industry in the 70s and the 80s. How do you compete with something that's free? And it's really free and maybe out of fashion in the US or in Europe or in Canada, but there's nothing wrong with that piece of garment. 

  

It's not torn. It's not used. It was used for a few weeks or a few months. 

  

As soon as that premise left the donor, the donor donated, and there's nothing wrong with that, but it became a business as soon as it entered Mombasa or any seaport or Accra, and that's where the problem is. We moved away. If that supply chain was free, nobody would trade in it because you can't make money out of it. 

  

And because that supply chain is not free, it's just subsidized, everybody's at the trade. People are making tons of cash, but they didn't care over the 20, 30 years that this business has been ongoing. We have lost so many jobs. 

  

We are worse off as a society. And we've created landmines where we don't know what to do with this. And yes, there is a new thought process out there about regenerated cotton and recycled polyester, including these water bottles. 

  

But the cost of recycling is much more expensive than virgin polyester. It's more expensive for me to buy a recycled polyester T-shirt than to buy a virgin polyester T-shirt, and similarly for cotton. So the numbers don't stack up. 

  

And so when people talk about, oh, we will tear, we will remake and reuse, there is a whole new school of thought out there, especially in Europe, that secondhand is good. But will it really help the problem on the continent because we've created joblessness? We in Kenya had about 20 textile mills and about 280 garment factories. Today we have four textile mills and we have about 20 garment factories. 

  

The impact on jobs was over 200,000 in Kenya alone. And that's direct jobs, so their dependents are, each job is like times five, so it's a million jobs that were impacted or million people that were impacted, not million jobs. So we have this situation where what is socially good and has good intent, it actually became a menace and it was mismanaged because Africa just became that dumping ground. 

  

And it's very difficult for me to export secondhand clothes. Let's say I want to export secondhand clothes to the US, I will not be allowed or to India for that matter because they wanted to protect their own country, even China. So there is that fine line between donor good intent and leaving at that point. 

  

And if there was just real free distribution through Red Cross and Save the Children, it would have never been turned into a business. And that would have really done the actual job where the donor is genuinely consciously looking after somebody who is underprivileged of our society. So if you had a magic wand, being the businessman that you are looking at the US market, what would you like to see that's not happening now to increase the volume coming from your businesses and from Africa more generally to the United States? Well, like I said, for the US right now, I would let the status quo stay because we haven't really got the capacity of the value chain and the third country public provision must stay. 

  

But I would really, if I had that magic wand, I would want to spur investment and investment can be spurred, has been spurred and it was successfully done in Ethiopia, like we saw with one customer. Let's this time round, let's give that incentive to the US buyer where he should start getting some incentive to a 100% localized or regionalized African supply chain. So the label should be made in Africa and not made in Kenya. 

  

And like what I'm doing for Germany in Uganda, I'm doing a product called Cotton Made in Africa where we're tracing the farmer group that grows cotton for us and it's done all the way to the T-shirt. And it's a whole story that we are selling of conventional cotton and it's a story of which farmer group grew that cotton, who picked it from the farm. And if you Google Laura Chapel in Uganda, it's a two minute video, you'll see my plantations and you'll see what we're doing in an entire value chain. 

  

But we're trying to capture the emotion in the marketing to that conscious customer who knows that if he buys this, he's helping so many people. So we need to change the narrative, move away from price and let's move to value. Let Africa be the value player. 

  

And you know what? Somebody asked me the other day, what is your USP? I told him go to China. He said, why? I said, they're very good at selling. But if you want a UVP, a unique value proposition, talk to me, I'll give you a value proposition, which is totally sustainable, totally traceable and it has got the right carbon footprint and it's good for the environment and it's going to help the climate agenda. 

  

What the disagreements they had at COP 29, we would actually be helping that discussion because we're actually now looking at the carbon footprint of a T-shirt, for example, and measuring it. And so I would actually go that direction, talk about value propositions as opposed to selling propositions. One last question from me. 

  

So you mentioned Ethiopia. What did Ethiopia do that attracted that investment? It was not what Ethiopia did. It's what the buyers, Ethiopia was very good at marketing because I showcased when I was chairman of the African Cotton and Textile Industries Federation, 26 countries, I actually showcased three countries to the buyers. 

  

That was Kenya, Ethiopia and Uganda, but it was really buyer driven investment. That's why I'm saying the most important person in the room is a buyer. And if that buyer is what to push that investor into all the investors in Ethiopia, I think the only correction that I would do if I was to rewrite AGOA, I would give that buyer a little bit of incentive, but I would give a safety net to the investors as well because the buyer doesn't invest. 

  

The only thing he invests is on the orders. He places the orders on the table. But the people who put real dollars behind the business and do that hard investment of machinery, capital training is the investor groups. 

  

Investors right now are so scared. They are scared to the level that I do a $40 billion investment like I did in Kampala and overnight because of a certain legislation in AGOA, I've given no safety nets, nothing. First January, 2024, you're out of business. 

  

And that's exactly what happened with Ethiopia when they were removed out of AGOA. All those buyers, all the investors lost out. They couldn't sell. 

  

The investor gets punished for an action of a government or an individual, which the Europeans look at it very, very differently. And I give you examples. I mean, with all the problems that Zimbabwe had, the Europeans never removed them from the trade agenda. 

  

I'm talking about the poor farmers who are growing tobacco or growing cotton or whatever they were. They were never punished for no market access. Yes, there were sanctions put on the individuals and on the regime. 

  

That's a very different discussion. But why should you sanction a product which has got nothing to do with the legislation or the regime of that country or the politics of that country? So that's a correction line that needs to happen because otherwise people will get scared. I can't put in $100 million and something happens with my government tomorrow, which is not favorable, and they get put on notice. 

  

And to your point, it hurts the very people that AGOA was intended to help. Yeah. And that's not helpful. 

  

So, Jaz, moving forward with the African continental free trade area, you had mentioned as you spoke, maybe we have peaked at globalization. It's now an era of geopolitics. And on the continent, we see more push for intra-African trade. 

  

Right now, intra-Africa trade is really low, really, really low. And so the future of the African continental free trade area as it pertains to these conversations about AGOA renewal, where do you see the promise? Where do you see the opportunities for alignment? You know, for me, it's a very simple discussion. Globalization, yes, has peaked. 

  

But the next big thing is regionalization and localization. And in regionalization and localization, the continental free trade agreement is going to be very, very key because we have 1.4 billion people on the continent. We have a combined GDP of 3.5 trillion. 

  

That is the same size as India. India has 1.4 billion people. The economy is 3.5 trillion. 

  

You can imagine it's a game changer for a country like India. And it'll be a game changer for a continent like Africa. It's 5.4 million square kilometers. 

  

Huge. You can put the United States, Europe, UK, India, China into the landmass of Africa. That is a sheer size. 

  

So we have huge opportunities. One in four in the world will be African by 2050. So you can see what's going to go and happen, that even if you drink one Coca-Cola every day and your per capita consumption does not go up, that one Coca-Cola is destined to become 2.5 billion bottles a day in a matter of time. 

  

So there's got to be expansion that's going to happen for that same per capita consumption, still one bottle a day. So you can see the dynamics are changing. You can see that 40% of the working age population by 2040 will be African. 

  

Reorganize yourselves. Have that versatility on your plate. You got Europe at your doorstep, duty free, because we're a young population. 

  

So the global dynamics are changing. And in this global dynamics, I think we need to start looking within the continent. And that's what I've been doing. 

  

Like in Uganda, what did I do? When I was removed out of Agoa, I started looking at the local and regional market. I just forgot that even that one kilo is demand. It's something. 

  

And so reorganize yourself. Have that versatility on your plate. You got Europe at your doorstep, duty free. 

  

You got US duty free. You got the continent duty free. And you got the other regional economic blocks which are already functional duty free. 

  

And play a competitive and comparative advantage so that you can maximize return on your investment. Thank you so much, Jas, for the perspectives that you've shared with us today. The reality that yes, global dynamics are changing, but as these change, really looking at how we strengthen the partnerships that we have that exist and thinking about areas where we can make things better. 

  

And I think most importantly, how we tell the story matters. How we tell the story matters. Thank you for joining us for this episode of Beyond A Single Story. 

  

We wish you all a happy holiday season and look forward to welcoming you back with new episodes in January. As always, a special thanks to the production team that made this series possible. This episode was produced by Aaron Stanley and Nathaniel Oakes. 

  

Technical assistance was provided by Shaarona Harris and editing was done by Brian Prevost. The views expressed by guests of the podcast are their own and do not necessarily represent the views of the Wilson Center Africa Program. The Africa Program is part of the Wilson Center, a congressionally chartered think tank that provides insights on global affairs to policymakers and the public through deep research, impartial analysis and independent scholarship.