Published on 06/12/2025
Parliament has approved a UGX6.1 billion bailout for Fine Spinners Uganda Limited following the United States’ decision to revoke Uganda’s eligibility under the African Growth and Opportunity Act (AGOA) after the passage of the Anti-Homosexuality Act.
The bailout aims to mitigate the impact of lost export markets on the textile company.
The approval followed the presentation of three supplementary expenditure schedules totaling UGX8.104 trillion. Among these, the Ministry of Agriculture, Animal Industry and Fisheries requested UGX10.295 billion, of which UGX6.114 billion was earmarked to implement a Cabinet directive to purchase 540,000 T-shirts. These T-shirts, originally manufactured for export, will now be sold on the domestic market, with repayment to Government expected within two years.
“Fine Spinners manufactures T-shirts mainly for the export market, including the United States. However, following the enactment of the Anti-Homosexuality Act, the company lost the US market. By that time, Fine Spinners had already invested heavily in producing 540,000 T-shirts for export.
They approached Government for support to sell the T-shirts locally through the Uganda Tailors Association (UTA), which will repay the cost over 18 to 24 months,” explained Patrick Isiagi, Chairperson of Parliament’s Budget Committee, during the 2nd December 2025 plenary sitting.
Not all MPs supported the bailout. Ibrahim Ssemujju (Kira Municipality), in a minority report, criticized the proposal as favouring Fine Spinners. He noted that the supplementary budget was divided into two components, one covering the transport of cotton lint for Fine Spinners, and the other for purchasing the 540,000 T-shirts.
“This is where the alarm bells ring. Government is being asked to bulk-buy T-shirts with public funds, hand them to a private association, and then somehow recover the money. This is the kind of transaction that begins election seasons in a Ministry and ends in a political rally. Ugandans have seen enough to know when something doesn’t add up,” Ssemujju said.
He defended his rejection of the proposal, arguing that cotton farmers in Acholi, Teso, Bukedi, and West Nile have waited for decades for meaningful support. During this time, their cooperative ginneries collapsed and farm-gate prices remained low. Instead of helping farmers, Government is subsidizing a private textile company and buying its T-shirts with public funds.
“The same Fine Spinners has supplied apparel to Government programs before. Now Government is positioning itself as their biggest customer during an election period. Supporting the textile sector is important, but not through hurried subsidies, opaque transactions, and unverifiable sales arrangements. If Government wants a national textile strategy, let it table one. Buying T-shirts for tailors with taxpayer money is not a strategy, it’s a risk. Parliament must not approve it blindly,” Ssemujju added.
AGOA, enacted by the U.S. Congress under the Trade and Development Act of 2000 (Public Law 106‑200), provides eligible sub-Saharan African countries duty-free access to the U.S. market for a wide range of goods, expanding upon the Generalized System of Preferences (GSP). To qualify, beneficiary countries must meet eligibility criteria including, maintaining a market-based economy, protecting human and worker rights, upholding rule of law, promoting political pluralism, and removing barriers to U.S. trade and investment.
For textiles, AGOA also imposes “Rules of Origin” requiring goods to be wholly obtained or sufficiently manufactured in the beneficiary country, with a minimum portion of local value addition. Compliance is reviewed annually, and the U.S. President can revoke AGOA status if a country fails to meet the requirements.
On 29 December 2023, the U.S. issued a proclamation removing Uganda, along with the Central African Republic, Gabon, and Niger, from AGOA effective 1 January 2024. Uganda’s removal was specifically attributed to “gross violations of internationally recognized human rights” following the Anti-Homosexuality Act.
“These governments are set to be removed as beneficiary sub-Saharan African countries under AGOA,” stated the U.S. Office of the Trade Representative. Analysts have noted, “Politically, it is a way for the U.S. to influence African governments while promoting rights and reforms.”
The withdrawal has direct implications for textile exporters. Fine Spinners, which had produced T-shirts for export under AGOA expectations, suddenly lost access to a duty-free U.S. market, creating urgent financial and operational pressures that prompted the government bailout.
In response, Ugandan officials have highlighted alternative markets. David Bahati, Minister of State for Industries, said in January 2024 that Uganda will not compromise its culture and values, noting that the East African Community (EAC) market, currently over 300 million people and projected to reach 886 million by 2050, can absorb such products.
He added that the African Continental Free Trade Area (AfCFTA), with 1.2 billion people today and 2.5 billion by 2050, along with preferential access to Chinese, European, Asian, and Arab markets, will further mitigate the impact of AGOA withdrawal.
AGOA has historically supported hundreds of thousands of jobs across Africa in textiles, manufacturing, and other sectors, by providing duty-free access and encouraging export-led growth. Its revocation underscores the vulnerability of firms heavily reliant on preferential trade, explaining why emergency measures like the Fine Spinners bailout are now deemed necessary.
