Paper short abstract:

This paper argues that, since the 1990s, the interests of key actors within Kenya's political settlement have aligned to sustain a dynamic garment industry within a relatively insulated EPZ programme, but that more advanced forms of industrial policy are restrained by Kenya's competitive clientelism

Paper long abstract:

During the last twenty years, Kenya has become the second-largest garments exporter in SSA, hailed as a future sourcing hub. Attributing this to Kenya's preferential access to the US market under AGOA as well as the shifting sourcing strategies of MNCs, scholars make no mention of the state's role in promoting the industry. Deploying a conceptual framework that combines political settlement analysis with two concepts from the state-business relations literature, namely the deals and rents spaces, this paper argues that ruling elites insulated Kenya's EPZ programme from the political meddling that undermined other initiatives during the 1990s and 2000s, allowing the Export Processing Zones Authority, a 'pocket of effectiveness', to attract a wave of investment from Asian garment manufacturers by offering open-ordered deals that contrasted with the wider disorderly deals environment. As their organisational power increased, these firms demanded further openings and orderings in deals, triggering positive feedback with spillovers for other industries. Their calls for more extensive industrial policies, however, particularly the development of a vertically-integrated cotton-textile-garment value-chain, have been undermined by splits within the industry which pit EPZ firms against non-EPZ firms who bemoan preferential treatment, as well as Kenya's 'competitive-clientelist' political settlement which endows ruling coalitions with short time-horizons, reducing elites' willingness to undertake long-term investments required. The story of Kenya's garments industry during the last two decades, the paper argues, thus provides valuable insights into the possibilities and challenges of conducting industrial policy in a competitive-clientelist setting, which is fast-becoming the twenty-first century's default political settlement-type.