The chief executive officers' perception of the benefits of African growth opportunity act (Agoa) on Kenyan exports to American markets through export processing zones
Ogeto, Robert O
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Globalization has been a key factor in socio-economic and political decisions by governments and major corporations. Efforts have been made to craft and implement sound strategies in the face of globalization. The Kenya government enacted the EPZ Act, to promote export oriented industrial investment and achieve export led growth. The enactment of African Growth and Opportunity Act (AGO A) presented an opportunity to attain this objective and for EPZ firms to access the substantial US markets. Concerns have been raised that the benefits of AGOA are yet to be felt and the provisions of the Act are not favouring export led growth and EPZ finns. This study aimed at assessing the perceptions of Chief Executive Officers (CEOs) of the benefits of AGOA on Kenyan exports through the EPZs to the American markets. Using a survey design, the researcher collected data from the CEOs of firms operating in the EPZs and the CEOs of the Export Processing Zone Authority (EPZA), the Export Promotion Council (EPC) and the Kenya Investment Authority (KIA). Out of a convenience sample of 39 EPZ firms, 32 of them and the 3 institutions (EPZk, EPC and KIA) provided data that was analyzed to assess the perception of the benefits of AGOA on Kenyan exports through the EPZs to the American markets. The· period of the study was between August and September 2006. This study has established that there are real benefits of AGOA such as an increase in exports, duty free access to the US markets, product promotion and unlimited export market opportunity for EPZ finns and a major consideration to set up business in the EPZ is the access to the US market under AGOA. Other benefits include creation of employment Vl11 opportunities, increased Foreign Direct Investment, generation of foreign exchange, etc. However, there are challenges such as; limited product ranges, stringent quality standards, stiff international competition, strained labour relations, heavy investment and operating costs, unfavourable exchange rates, low labour productivity, inability to retain investors once the Act lapses, and imbalance in sectoral investment and growth. To meet these challenges, the government, EPZ finns and other stakeholders should lobby for and diversify export products, fully exploit provisions of the Act, improve efficiency in production of textile products, enhance infrastructure, technology and sourcing strategies, avail tax concessions to reduce costs, reliance on imported inputs to attain a competitive position. There is also need for an efficient industrial and labour relations system, recruitment and training of talent and provision of amble infrastructure facilities.
CitationA management research project submitted In partial fulfillment of the requirements For the award of masters of business Administration (mba) degree school of Business, university of Nairobi.
Business Administration and planning