country profile and export guidepestle analysis political . kenya is situated in the east of africa...

COUNTRY PROFILE AND EXPORT GUIDE

Kenya

The Ministry of Industry, Trade and SupplyPhone: 5629030www.mit.gov.jo

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COUNTRY PROFILE AND

EXPORT GUIDE

KENYA

This guide is made possible by the generous support of the American people through the United States Agency

for International Development (USAID). The contents do not necessarily reflect the views of USAID or the United

States Government.

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CONTENT

Profile Export Guide ……………………………….…………………………………………………3

Outlook …………………………………………………………………….……………………………3

Pestle analysis ……………………………………………………………………….…………………4

Political ……………………………………………………………………….………………..4

Economic ……………………………………………………………………………………...5

Social ……………………………………………………………………………….…………..6

Technology ………………………………………………………………………….………...7

Legal …………………………………………………………………………………….………7

Environment ……………………………………………………………………………….....7

Export Guide …………………………………………………………………………………..………8

Market Entry Options | Products & Services ……………………………………………...……..12

Import Requirements | Documents | Guarantees …………………………………………...…..13

Duties | Tariffs | Taxes | Jordanian Imports ……………………………………………………....15

Sanitary & Phytosanitary Measures………………………………………………………………...15

Non-Tariff Barriers …………………………………………………………………………………...16

Key Import Stakeholders ………………………………………………………………………….…16

Import Infrastructure & Logistics ……………………………………………………………….…16

Financial Sector ………………………………………………………..…………………………..…19

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KENYA: PROFILE & EXPORT GUIDE

OUTLOOK: 2015 - 2016

Doing Business Report , 2015 Overall Ranking (189 countries) 129

Global Competitiveness Report 2015-2016 GCI score(1-7) Best 3.9

Overall Rank (Rank/140) 99

Transparency International Report -

Corruption Perception Index, 2014 Overall Ranking

0 (highly corrupt) to 100 (very clean)

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Outlook Image 1: Kenya

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Table 1: General Profile: 2015 - 2016

Socio-Economic Indicators Sectoral/Technology Indicators

Population, Total 52 mn Mobile cellular subscribers

(per 100 people)

31.59

Urban population growth

(annual %)

5.46 Internet users

(per 100 people)

2.9

Life Expectancy at birth, total

(years)

64.29(2013) Gross enrollment ratio, primary,

both sexes (%)

83.63 (2006)

Fertility rate, total(births/women) 5.22(2013) Gross enrollment ratio,

secondary, both sexes (%)

29.03 (2006)

GDP at market prices(current US$) 48.06 bn Agriculture, value added, % of

GDP

41.92

GDP growth (annual %) 6.97 Industry, value added, % of GDP 14.66

FDI, net inflows (BoP current US$) 944 mn Services, value added, % of GDP 43.42

Environmental Indicators Trade Indicators

Energy use

(Kg of oil equivalent per capita)

455.59

(2012)

Merchandise trade

(% GDP)

40.07

CO2 emissions (metric tons per capita)

0.15 (2011) Exports of goods and services

(% of GDP)

19.48

Electric power consumption (kwh/capita)

98.84 (2012) Imports of goods and services

(% of GDP)

28.89

High-technology exports

(% of manufactured exports)

5.7 (2010)

Source: World Development Indicators

PESTLE ANALYSIS

Political

Kenya is situated in the East of Africa bordering Somalia to the East, Uganda to the West, Ethiopia to

the North and Tanzania to the South. It gained independence in 1963. The current president is the son

of Kenya's founding president who took up office in 2013 and who belongs to Kenya's largest tribe.

Kenya has been lately on the news in terms of huge potential economic prospects on one side and as a

result of attacks by Boko Haram on the other side. In East Africa, Kenya is the largest and most

advanced economy.

Two major milestones in the political context of Kenya were the founding of the new constitution in

2010 and elections in March 2013. Prior to that period, Kenya authoritarian rule, high levels of

corruptions and domestic tensions existed. During 2008, ethnically-charged post-election violence took

place to be followed by sporadic terrorism related incidents where Boko Haram have implemented

terrorist activities in the years that followed. However, Kenya has been placed in the forefront of

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African countries to have a major role in putting Africa on the world map in terms of economic

prosperity and political stability.

Economic

While the Kenyan shilling in January 2016 has, like the South African rand, against the dollar, economists

have a relatively optimistic outlook for the country, especially in relation to many of its African peers.

Many estimate that because Kenya managed a real GDP growth of about 6.5% in 2015, it will continue

with this positive trend over the next 2 to 3 years. Some suggest that because Kenya is an oil importer,

it may grow at 6.8% in 2016 because the Kenyan government is saving quite a bit of money from the low

price of fuel. It will, thus, invest its savings in expanding infrastructure. On the other hand, in 2016,

Kenyans are already experiencing the effects of rising food prices – influenced by the global El Niño

weather pattern that has resulted in drought across much of the region. So, while consumers from

countries like Ghana are currently under pressure, Kenya’s government spending is projected to

increase - facilitating infrastructure and public services.

However, with a current account deficit of around 7-8% of GDP in 2015, there’s also a pretty significant

budget deficit. Fortunately, analysts suggest that the Kenyan government will, at the beginning of 2016,

unveil changes to the budget, in a supplementary budget for this current fiscal year and this will headline

a reduction in the budget deficit and support that all further improve current accounts.

In its Kenya Economic Update for March 2015, the World Bank was proven right in projecting that the

economy would grow by 6% in 2015, supported by lower energy costs, investment in infrastructure,

agriculture, manufacturing and other industries. These aspects were also premised on a stable

macroeconomic environment, continued investment in infrastructure, improved business environment,

exports and regional integration will help sustain the growth momentum. With the increased

competitiveness of the manufacturing sector which will be a key driver of growth, exports and job

creation, Kenya is emerging as one of Africa’s key growth centers; poised to become one of the fastest

growing economies in Africa. In fact, the country has the potential to be one of Africa’s great success

stories from its growing and youthful population, a dynamic private sector, new constitution, and its

pivotal role in East Africa. The lives of ordinary citizens will be transformed if the government focuses

on addressing challenges of poverty, inequality, governance, low investment and low firm productivity to

achieve rapid, sustained growth rates.

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As reported by the Central Bank of Kenya, the country’s imports increased from 125,696 million KES in

August of 2015 to 138743 million KES in September. 1 Overall, imports in Kenya have averaged

61,646.95 million KES from 1998 until 2015 – with an all-time high of 159,936 million KES in September,

2014 and a record low of 13453 million KES in January of 1999. Introspectively, an MIT project2 suggests

that Kenya might have an interesting product space – essentially, a network connecting products that

are likely to be co-exported the project model and can be used to predict the evolution of a country’s

export structure. With an Economic Complexity Index (ECI) of -0.568, the Kenyan economy is the

86th most complex country in the world, and exports 191 products with revealed comparative

advantage: simply, Kenya’s share of global exports is larger than what would be expected from the size

of its export economy and from the size of a product’s global market.

Kenya imports mostly machinery and transportation equipment, petroleum products, motor vehicles,

iron and steel, resins and plastics from India, China, UAE, South Africa, Saudi Arabia, United States and

Japan. Importantly, while Kenya imported approximately US$13,6 million in nitrates from Jordan, Trading

Economics notes that these figures were dwarfed by the US$3.93 billion from India, US$3.22 billion from

China, US$892 million from Japan, US$793 million from South Africa, and US$660 million from the

United Kingdom. In the same period, Kenya exported tea (US$915m), refined petroleum (US$680m),

cut flowers (US$642m), coffee ($209m) and legumes (US$162m). Interestingly, although Kenya exported

to the United Kingdom, the Netherlands, Uganda, Tanzania, the United States and Pakistan in earnest, it

also managed to garner US$680m from Zambia, US$533m from Uganda, the Netherlands (US$489m),

the United States (US$439m) and the United Kingdom (US$419m).3

Social

Perhaps, one of the ways to understand Kenya’s society – in spite of environment and infrastructure

issues – is the success that mobile money has had. According to Mastercard, success of internationally

recognized services like MPESA as a mobile money transfer platform are attributable to a lack of a

traditional infrastructure and alternative conventional payment media.4 Today, customers – consumers

and merchants – can send or receive payments to each other and this is extrapolated to show that

Kenyan society is, like much of Africa, ripe for more flexible and accessible products and services, and

Mastercard considers Kenya Number 1 in terms of readiness to do business.

1 Please note that $ 1.00 is 102/= Kenya Shillings 2 Please visit: http://atlas.media.mit.edu/en/profile/country/ken/#Product_Space 3 http://www.tradingeconomics.com/kenya/exports 4 http://mobilereadiness.mastercard.com/country/?ke

http://atlas.media.mit.edu/en/profile/hs92/0902/





http://atlas.media.mit.edu/en/profile/country/zmb/

http://atlas.media.mit.edu/en/profile/country/uga/

http://atlas.media.mit.edu/en/profile/country/nld/

http://atlas.media.mit.edu/en/profile/country/usa/

http://atlas.media.mit.edu/en/profile/country/gbr/

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In comparison with other sub-Saharan African countries, Kenya appears to be making progress in

realizing economic and social rights and, significantly, has adopted strong protections for economic and

social rights in its 2010 Constitution. Although Kenya has a large and diverse economy making it stand

out in Africa in general and East Africa in particular, it is still plagued by poverty, inequality and

population growth. Youth comprise a major segment in the population.

Technology

Kenya’s ICT sector was liberalized in 2000, and this led to a technological revolution that has stimulated

home-grown innovation and transforming Kenyan’s lives. Transiting from 2G to 3G technology, the

country is now working on adopting 4G Long Term Evolution [LTE]. As one of Africa’s leading countries

for ICT innovation and services – with coverage greatly expanded, bandwidth increased, quality

improved, tariffs falling and investment and innovation up, the World Bank support on the Kenya

Transparency and Communications Infrastructure Project is ensuring that the country’s ICT sector is

now a main driver of economic growth. The sector has been adding one percentage points annually to

GDP growth over the past decade, and is expanding by 20% on average yearly. Importantly, if Kenya is

going to continue to innovate and remain one of Africa’s top ICT hubs, it must address challenges such

as the cost and reliability of electricity. Relatively, transport infrastructure must be improved and lead to

a much better business environment – attracting more investment, promoting commercialization of ICT

and especially generating revenue for the government of Kenya.

Legal

In the past, Kenyan Judiciary hase been inefficient with backlog of cases filed in the Commercial Division

of the High Court taking years to resolve. A build-up in the backlog of cases and the influx of foreign

investment in Kenya since 2003 has forced many parties to seek alternative dispute-resolution methods

such as arbitration and mediation, which have been a common dispute option in commercial justice in

Kenya. This alternative appears to be cheaper, more efficient in comparison with taking the path to

litigation. Economic reforms in Kenya have also matched legal process reforms.

Environment

Kenya has been experiencing an array of environmental issues recently ranging from water pollution and

soil erosion to desertification, deforestation, and poaching. Additionally, there are constant periods of

drought/flooding. Kenya has been making an effort to improve its environmental capacity. They are part

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of thirteen international agreements covering standards on climate change, desertification, hazardous

wastes, endangered species, ozone layer protection, and marine life protection among others.

Although there are many environmental issues affecting Kenya, the most prominent ones are water

resources (contamination, droughts, and floods), deforestation and desertification, and wildlife poaching.

Furthermore, subsistence agriculture in Kenya is still widespread, thus a drought will have a multiplier

effect on the population. When rain levels were extremely low in 2009 and the harvest reflected that,

Kenya’s government declared a state of emergency as 10 million Kenyans were at risk of facing hunger.

On the other hand, seasonal flooding is fairly common (typically July – September). This leads to a

variety of issues including population displacement, mudslides, crop destruction, and water

contamination. Lake Victoria, the largest lake in Africa by size, is facing a hyacinth infestation which is

endangering fish species and severely affecting fishing output.

EXPORT GUIDE | KENYA

Introduction: In December 2015, it was reported that Kenya's total value of imports for the first

quarter of this FY 2015/2016 had fallen by 13.55 per cent, over the previous one. This was, essentially,

caused by a drop in imports from the U.S. The value of imports from India, Saudi Arabia and France also

fell while imports from the United Arab Emirates, China and South Africa increased. More importantly,

Kenya’s medium term growth could reach the 10 per cent mark and presage a brighter future of

business as there’s further expectation that Kenya’s investments in power generation will be propelled

even further by the planned free trade zones close to power sources and the railways connecting them.

Table 2: Product Exporters to Kenya – 2013/2014 | Specific [Jordanian] Sector

No.

Specific Sector | Products

Export Partners

Percentage

1. Construction

Note that this includes Prefab Buildings, Transport Equipment,

Machinery, Pipes, Stone, Marble and Granite

China 32

India 17

UK 9.9

Please See: http://atlas.media.mit.edu/en/visualize/tree_map/hs92/import/ken/show/1001/2013/

2. Leather & Garments

Note that this includes clothing accessories, bovine, carpets, rugs, textile

floor coverings plus embroideries and knitted Fabrics

China 83

India 8.8

Thailand | Indonesia 5.6 | 4.9


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3. Furniture

Note that this includes wooden building products, carpentry, including

doors, windows, wooden frames, and decoration works

China 62

Malaysia 8.9

Italy 5.6


4. Therapeutic & Medical Supplies

Note that this includes veterinary products, disposables such as gloves &

syringes and other medical Instruments

China 28

Germany 17

India 8.1


5. Printing, Packaging & Stationary

Note that Kenya provides Ethiopia with up to 46% of its pen and pencil

products. This list includes note pads, et al

India 32

Indonesia 14

China 12


6. Engineering & Electric

Note that this includes pumps, cranes, elevators, escalators, metal

electrical home appliances, light fixtures, wiring and accessories

China 32

India 17

South Korea 8.5


7. Chemical & Cosmetics

Note that this includes medical cosmetics, beauty products as well as

other generic cosmetics

India 52

Switzerland 9.6

China 6.8


8. Food Supplies, Agricultural & Livestock

Note that this includes fruits, vegetables, food stuff, livestock, mineral

water, alcoholic and soft drinks

Russia 35

Ukraine 34

Australia 17


9. Mining

Note that this mining sector specifically excludes petroleum – although

this is Kenya’s main import but includes Asphalt, Phosphate and Potash

South Africa 43

Italy 32

China 21

Please note that these facts and figures are collated from the Observatory of Economic Complexity. This site is a comprehensive way to attain specific details on international trade. For more information, please visit: www. atlas.media.mit.edu/en/

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Table 3: Service Exporters to Kenya – 2013/2014 | Specific [Jordanian] Sector

No.

Specific Sector | Services

Export Partners

Percentage

10. Services: Education Please see Note 1 Below N/A

11. Services: Clean Technology Please see Note 2 Below N/A

12. Services: Clinical Research Outsourcing Please see Note 3 Below N/A

13. Services: Medical Tourism Please see Note 4 Below N/A

14. Services: Architecture & Engineering Please see Note 5 Below N/A

15. ICT: Programming | Mainframe Computer China | U.S. | Netherlands 29 | 24 | 13

ICT: Consultancy, Data | Related Activities China | U.S. | Netherlands 29 | 24 | 13

ICT: Computer Repair | Peripheral equipment Hungary | China | S. Korea 38 | 15 | 10

Please note that info on ICT Sector Services is collated from the Observatory of Economic Complexity. This site is a comprehensive way to attain specific details on international trade. For more information, please visit: www. atlas.media.mit.edu/en/

Note 1: Education Services Sector

Kenya is, perhaps, a natural ally and potential client for Jordan’s education services sector. After all,

although it is still in its infancy, Kenya has used ICT in education for longer than most other African

countries. Nonetheless, because new ICT and education initiatives are still dominated by technical

aspects, Jordan’s professional services could help appropriately integrate ICT for an improved education

quality, technology and pedagogy. The recently expired ICT Integration Program that contributed to the

Kenya Education Sector Support Program (KESSP) was implemented between 2008 and 2013, and spent

upwards of 4.5 M euros.

Note 2: Clean Technology [Solar & Wind] Services Sector

According to Kenya’s Energy Regulatory Commission, Kenya receives daily insolation of 4-6kWh/m2.

Importantly, the Kenyan Government has zero-rated the import duty and removed Value Added Tax

(VAT) on renewable energy equipment and accessories. A vibrant solar energy market for providing

electricity to homes and institutions remote from the national grid has developed in Kenya over the

years and a preliminary survey established that the annual market demand for Photo Voltaic (PV) panels

was 500 kilowatt peak (kWp), projected to grow at 15% annually. Potential to do more business in

Kenya’s wind sector shows a different story: the country has an installed capacity of 5.1 MW, operated

by KenGen [Kenya Generation] at a site in Ngong. However, high capital cost and lack of sufficient wind

regime data are some of the barriers affecting the exploitation of wind energy resources. Moreover,

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potential areas for wind energy generation are far away from the grid and load-centers, requiring high

capital investment for the transmission lines.

Nonetheless, Kenya’s renewable energy market is dominated by domestic firms, with close to half of the

total number of projects being partly developed by a Kenyan company. These are typically private

companies set up exclusively to develop renewable energy projects, for example TowerPower, Gitson

Energy and Aeolus Kenya. However, many of the domestic firms have partnered with international

companies in order to jointly develop projects or secure components for the projects; for example,

turbines and panels. By reviewing the competitive landscape in Kenya it becomes evident that Asian

companies are playing an increasingly important role in the country's renewables sector. For example,

South Korea's Hyundai Engineering and Construction Co, Japan's Toyota Tsusho and China's JinkoSolar make

up nearly 25% of the project pipeline.

Note 3: Clinical Research Outsourcing Service Sector

Because Kenya spent almost USD $ 24 million in 2013 on chemical testing equipment from Germany

[27%], the U.S. [16%] and China [7.8%], we can assume that Kenya depends on these countries when it

comes to clinical research. Note that Jordan has an opportunity enter this market because although the

country is making strides, it still does not have adequate capacity to carry out its own clinical research.

Note 4: Medical Tourism Service Sector

According to the International Medical Travel Journal, Kenya is trying to reverse the trend of its citizens

traveling to South Africa, Dubai or India for medical treatment. Instead, Kenya plans to treat them at

home and attract medical tourists from other African countries.

Plans are currently underway to build local facilities and launch a strategic medical tourism scheme to

reduce the amount of money spent abroad. A substantial fund has been set aside to rehabilitate a

hundred clinics and hospitals across Kenya, and equipment for diagnostics, cancer, renal and heart

diseases will also be bought to improve local health services.

Nonetheless, Jordan has a further opportunity to work with Kenya: under this scheme, the government

in partnership with the Jordanian private sector would establish modern, fully equipped health facilities

to attract patients locally and from other countries saving about 10 million Kenya shillings annually. Time

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is also of the essence as tenders are already open – with the private sector buying equipment and

training personnel and later charging the government.

Note 5: Architecture & Engineering Service Sector

Because the United States, China, the UK and Germany provide more than 80% of Kenya’s engineering

and architectural equipment, the three countries probably provide an equitable proportion of Kenya

utility, transport, geotechnical, residential and non-residential architectural and engineering services,

especially when one considers that China is really invested in the region. For its part, Jordan could

leverage its current agreement with Kenya to partner with a government that’s really keen to do

business with as many friends as possible.

Market Entry Options | Products & Services

Table 4: How Jordan Can Become Established in Kenya

No.

Specific Sector | Products

Tactics | Techniques

1. Construction

According to the Kenya National Bureau of Statistics

revealed that Kenya’s construction industry rose 13.1

per cent in 2014 compared to 5.8 per cent in 2013. The

Economic Survey 2015 suggested that the double-digit

expansion was due to steady growth in property

development, a vibrant real estate sector and the

ongoing mega infrastructure projects. With government

expenditure in infrastructure increasing, Jordan must

leverage the current bilateral agreement to work on

expansion of major airports as well construction of

roads + energy infrastructure across the country.

2. Leather & Garments

Like Ivory Coast is doing now, Kenya is actively

encouraging foreign investment through mergers,

acquisitions, joint ventures, takeovers, or

startups. Jordan could help develop Kenya’s apparel

supply chains under the updated African Growth and

Opportunity Act (AGOA).

3. Furniture While Kenya’s furniture industry is primarily focused on

timber or organic wood, Jordan has the capacity to

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penetrate the market with alternatives – solving current

supply inadequacies and providing both technical and

capital inputs to the process.

4. Therapeutic & Medical Supplies Jordan should focus on signing sectoral agreements with

a country like Kenya and insist that state-owned medical

logistics entities like the Kenya Medical Supplies

Authority [KEMSA] are included as strategic partners.

KEMSA works with the World Bank and USAID

5.

6.

7.

8.

9.

Printing, Packaging & Stationary

Engineering & Electric

Chemical & Cosmetics

Food Supplies, Agric. |l Livestock

Mining

Kenya embarked on the devolution of financing to the

counties to ensure efficient service delivery has resulted

in opportunities for Jordan to collaborate and change the

way Kenya does business with the world.

Aspects in Table 3 are taken from various sources, including PricewaterHouse Coopers, KPMG and Deloitte.

Import Requirements | Documents | Guarantees, etc.

For importers or others doing foreign trade, Documentary Import Collections are payment

mechanisms, usually cheaper than Letters of Credit but provide more security to the supplier than open

account transactions. This mode of payment generally boosts trading relationships by reassuring

suppliers of their payment and safeguards the importer’s title to goods. Usually funds are received from

the importer and remitted to the exporter through the banks involved in the collection in exchange for

those documents. When importing goods into Kenya as a private individual or commercial entity, duties

and taxes are calculated on the CIF value, i.e. the sum of the value of the imported goods and the cost

of shipping and insurance. On top of any duties, imports into Kenya are subject to Sales Tax, Excise

duty, and Import Declaration Fee.

Kenya applies East African Community (EAC) Common External Tariff – a customs duty that is levied at

an average of 25%. In regard to the sales tax, imports into Kenya are subject to a standard VAT rate of

16%, levied on the sum of the CIF value, duty, and other applicable taxes.5

Because there are no minimum thresholds for imports into Kenya, duties and taxes will be levied

regardless of value. Lastly, excise duty is charged on products like alcoholic beverages and tobacco. This

5For additional information on Kenya’s overall tax structure, please visit: http://www.revenue.go.ke

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could be [ad valorem] charged as a percentage on the sum of the CIF value and duty; or specifically based

on units of measure.

An Import Declaration Fee is charged on all imports at a rate of 2.25% of the CIF value, or Ksh. 5000/=

per import, whichever is higher. There are a number of import restrictions on animals and animal

products, chemicals matches or prepared matchwood, drugs: prescription and non-prescription,

foodstuffs, fish products, parasites, insects and weed killers, printed papers, plants and plant products,

vegetables, war materials and weapons.

Kenya’s import requirements are pretty straightforward and start with an Import Declaration Form

(IDF) that must be obtained from the Kenya Revenue Authority. Fortunately, Jordan could take

advantage of the presence of a whole host of freight forwards and customs experts. For instance,

although the importer is responsible for apply for the IDF, an agent such as Kenfreight can be consulted

to help in passage of the different hoops and eventual import success.

Apart from the IDF, one needs:

1. Certificate of Conformity: Here, the Kenya Bureau of Standards appointed agents such as Intertek,

SGS, Bureau Veritas, amongst others to provide inspection service.

2. Master Bill of Lading: This document identifies the consignee, their address and is used in customs to

identify the taxpayer or the exempted party. Note that Kenya requires that the consignee is in the

destination country and has a Tax Identification Number [TIN].

3. An alternative for shipments through Mombasa port is to describe the consignee as “Kenfreight E.A.

Ltd as agents of the actual receiver. This will circumvent the need of endorsements by consignee at

the back of the Bill of Lading.

4. Packing List: Description of goods on the packing list must match with the details mentioned on the

Bill of Lading and the Commercial Invoice. The Packing List must indicate the package number,

description, weight in metric ton, length in meter, width in meter, height in meter and cubic

measurement of all packages.

5. The Commercial Invoice must be detailed and bear the total CIF value of the consignment

6. Exemption letter (if applicable): Charities, major projects, governmental organizations etc. can apply

for exemption of duties and/or VAT. This is done by the receiver writing to the Treasury.

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Duties | Tariffs | Taxes | Jordanian Imports

Import duty and taxes are due when importing goods into Kenya by a private individual or a commercial

entity. These are calculated on the CIF value, i.e. the sum of the value of the imported goods and the

cost of shipping and insurance. In addition to duty, imports are subject to Sales Tax, Excise duty, and

Import Declaration Fee.

1. Duty Rates: Kenya applies duties and tariffs of the East African Community (EAC) Common External

Tariff. Customs duty is levied at rates between 0% and 100%, with an average of 25%.

2. Sales Tax: Imports into Kenya pay a 16% VAT rate on CIF value, duty, and applicable taxes.

3. Kenya does not have minimum thresholds for imports to Kenya and so, duty and taxes are payable,

regardless of the value. Nonetheless, other taxes and customs fees [like Excise Duty] are charged on

products like alcoholic beverages and tobacco. Excise can be ad valorem, i.e. charged as a percentage

on the sum of the CIF value and duty; or based on units of measure.

4. Import Declaration Fee is charged on all imports at a rate of 2.25% of the CIF value, or Ksh. 5000 per

import, whichever is higher.

Sanitary & Phytosanitary Measures | Kenya

1. In general, non-tariff barriers such as SPS and TBT have not necessarily Kenya’s imports but the

country’s access to markets for commodities such as fish and horticulture. Nonetheless, in regard to

Jordanian imports, Kenya is expected to follow the Uruguay Round of Negotiations that mandate that

SPS be applied only to the extent necessary to protect food safety and animal and plant health. It’s

important to note that like many other African countries, this can, however, constitute unfair

technical barriers to trade when used indiscriminately.

2. Kenya has experienced many problems with the implementation of the provisions of the SPS

Agreement and welcomes a review of its operation and implementation. Article 10 of the Agreement

for example provides for developed countries to take account of the special needs of developing

countries in the preparation and application of sanitary and phytosanitary measures. This should be

examined in light of the difficulties that developing countries face in the implementation of the terms

of the Agreement.

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Non-Tariff Barriers | Kenya

1. Kenya’s non-tariff barriers are classified by the World Trade Organization as Customs and

Administrative Entry Procedures and major problems sited include imports clearance under the

SIMBA system, numerous documentation for an import consignment, limited customs hours at entry

points, long lead time before application of EAC harmonized duty and tax rates, and the cumbersome

process of physical verification where customs rejects declared import value. Some of the country’s

most-restrictive-to trade issues include (i) government participation in trade and restrictive practices

tolerated by governments; (ii) lengthy customs and administrative entry procedures; (iii) technical

barriers to trade and sanitary and phyto-sanitary measures; (iv) specific limitations including

quantitative restrictions, and quotas; (v) charges on imports; (vi) transport, clearing and forwarding;

(vii) transit clearance issues; (viii) procedural restrictions.

2. There are issues with quality inspection and certification procedures – and problems under

this cluster are related to application of the Pre-Shipment Verification of Conformity (PVOC)

program; involvement of too many bodies in import inspection and certification procedures without

collaboration; lack of testing laboratories for inspection bodies at major entry and exit points, and

import requirements among EAC/COMESA countries.

3. There are other importation non-tariff barriers and these are related to include inefficiencies of

handling imports by Kenya Ports Authority and port charges.

Key Import Stakeholders | Kenya

1. The East African Community [EAC] *

2. Common Market for Eastern and Southern Africa [COMESA]*

3. Kenfreight for freight services – Air, Ocean and Road

4. Kenya National Chamber of Commerce and Industry

5. The Honorary Consulate of Jordan in Kenya

Import Infrastructure & Logistics | Kenya

While Kenya’s infrastructure indicators may look relatively good when compared with low-income

countries, they remain below the levels found in Africa’s middle-income economies, like Egypt.

Nonetheless, Kenya’s development plans include significant improvements to roads, railways, seaports,

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airports, water and sanitation, as the country increases competitiveness in the global market. Road and

rail connections with neighboring countries are still limited, but Kenya could be an important regional

hub for air transport, railways, and ports in the future.

According to a 2015 World Bank press release6 on Kenya’s infrastructure, although Kenya’s trade and

national logistics developed from the port of Mombasa, taking advantage of the Ugandan railroad, that

‘linear spatial structure along a corridor – so common in sub Saharan Africa – still remains even after

road traffic took over the rail and more recent development of an aerial alternative to the Northern

Corridor. World Bank argues that Kenya’s logistics are very much about struggling against various

procedural and physical impediments to move goods along the corridor and eventually not too far off.

However, please note the following:

i. The Standard Gauge Railway currently under construction is a key factor for Kenya. At an initial

cost of USD2.8bn, this is one of Kenya's largest projects; the China Exim Bank is funding 90% of

the project with the state-owned enterprise Kenya Railways Corporation contributing the

remaining 10%. Scheduled for completion by June 2017, the first phase of the project will link the

port of Mombasa to Nairobi. As of December 2015, 60% of construction was complete.

ii. There are also plans under way to extend the railway by 120km to Naivasha, north-west of

Nairobi. The second phase will then be focused on extending the railway to Malaba, Western

Kenya on the border with Uganda.

iii. The continued progress on this project bodes well for further rail projects being developed in

Kenya, such as those related to the LAPSSET corridor, and will also encourage further

investment projects as businesses look to capitalize on improvements to Kenya's logistics.

iv. Further boosting regional integration and trade flows is the proposed Arusha-Holili-Taveta-

Mwatate road construction project, launched in October 2015 by the Kenyan and Tanzanian

governments. The road will link East Africa to the northern corridor and is intended to help

reduce the time taken for goods to be transported, especially from the Port of Mombasa to

Bujumbura, Burundi by 400km.

v. It will also help to increase the imports between Burundi and Rwanda, and make it more cost

effective for Tanzania, Burundi, Rwanda and eastern parts of the Democratic Republic of Congo

6 http://www.worldbank.org/en/news/press-release/2015/02/04/kenya-devolution-and-infrastructure-boost-growth-and-shared-prosperity

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to import and export goods road compared to through the Dar es Salaam port. The project will

be funded by the African Development Bank (AfB).

Image 1: Sea route from Mombasa to Aqaba, Jordan

Table 5: Sample shipping path & costs - Jordan to Kenya

Scheduled Route

Aqaba Terminal Jordan > Jeddah Red Sea Gateway Terminal Saudi Arabia > Salalah Terminal Oman

> Mombasa Terminal Kenya > Nairobi inland Port

Mode of Transport Ocean > Ocean > Ocean > RAIL

Place of Receipt Aqaba , Jordan Rate Validity From 01-Mar-2016 to 31-Mar-2016

Place of Delivery Nairobi , Kenya Service Mode CY/CY

Last Acceptance Date 01-Mar-2016 Commodity FAK

Transit Time 23 day(s)

Surcharge Name Basis Currency 20DRY 40DRY 40HDRY Surcharge Type

Basic Ocean Freight Container USD 945 1840 1840 Freight

Congestion Fee Destination Container USD 0 0 0 Freight

Congestion Fee Origin Container USD 0 0 0 Freight

Peak Season Surcharge Container USD 0 0 0 Freight

Export Service Container JOD 15 20 20 Origin

Documentation Fee Origin Bill of Lading JOD 12 12 12 Origin

Documentation fee -

Destination Bill of Lading USD 70 70 70 Destination

Terminal Handling Service -

Destination Container USD 99 148 148 Destination

Inland Haulage Import Container USD 750 1300 1300 Destination

Import Service Container USD 50 55 55 Destination

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Please note that the following about this shipping sample above:

1. It is garnered from a reputable shipping company and while indicatory for study purposes, it is

accurate for the dates mentioned above and this sample quote is not valid for hazardous cargo,

unless otherwise specified and only applies to the weight and type of cargo declared. At time of

booking, hazardous cargo is subject to the acceptance policy of involved ports & vessels.

2. Transit time, scheduled routing and/or mode of transport, if provided in this quotation, are indicative

only and the Carrier does not undertake that the Goods shall arrive or be available at the Port of

Discharge or the Place of Delivery (as applicable) at any particular time nor that it shall be carried by

the scheduled routing or the mode of transport indicated.

3. An invoice for the service is issued based on information received on the Shipping Instruction

provided and exchange rates are indicative only and may therefore differ from the exchange rates on

the invoice.

4. Please note that the total per surcharge type (freight, origin & destination) outlined herein are for

guidance only and shall in no way prejudice the responsibility of the Merchant for payment of Freight

and other charges in accordance with the terms and conditions of the governing Bill of Lading,

including in particular but without limitation

FINANCIAL SECTOR | KENYA

As at January 2015, there were 43 commercial banks, ten microfinance banks and one mortgage finance

institution; with all institutions regulated by the Central Bank of Kenya and with the Capital Markets

Authority bearing additional oversight over the listed banks. As at May 2015, Kenya had Africa’s third-

largest financial sector in sub-Saharan Africa. As per the Kenyan Government’s Vision 2030, there’s still

an overwhelming need for more access to finance to enhance growth and development prospects. To

support this aspect, the World Bank [injected] US$37 million to strengthen Kenya’s legal, regulatory and

institutional environment and assure financial stability; increasing affordable and long-term financing.

Kenya's banking sector is in good health, benefitting from relatively healthy asset quality and a robust

economic growth outlook. The ratio of non-performing loans (NPLs) to total loans stood at a modest

5.7% in June 2015 (the latest figure), the same level as it was in March. Still, we expect NPL levels to

edge up over the near term, due mainly to the effects of heavy currency depreciation in 2015. Earlier, in

March 2015, the sector registered impressive results for the December 2014 period - with top lenders

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recording a remarkable performance in their full year results. Entities like Equity Group Holding had

18% pre-tax growth, Kenya Commercial Bank 17.5% and Barclays Bank of Kenya had a 10% rise. While

foreign exchange exposure in the sector remains relatively contained - at end-June 2015 banks' net

foreign exchange open position stood at 3.3% of core capital - concern at the prospect of rising non-

performing foreign currency loans is likely to increase provisioning and in turn weigh on profitability. In

addition, businesses and consumers, squeezed by costlier imports and higher lending rates, will face

greater difficulty in repaying their debts.

The Kenyan banking authorities continue to strengthen financial sector supervision to ensure financial

stability and soundness. These efforts have been stepped up in recent months, with the Central Bank of

Kenya committing itself to increasing prudential oversight of the sector. While measures being enforced

were introduced back in 2013, the CBK is taking steps to increase its supervision and implementation of

the regulations. These include ensuring that banks comply with the new higher capital requirements (an

increase of 2.5 percentage points) and changes to loan classification which, according to a recent IMF

report is likely to mean a higher loan loss provisioning coverage ratio for a number of banks. All banks

are required to adhere to minimum liquidity ratios and cash reserve ratios with the Central Bank.

Importantly, Kenya has a high relative ratio of banks to the total population, with the 43 commercial

banks serving 44 million people, compared with Nigeria's 22 banks for 180 million. Growth in the

Banking Sector has been underpinned by alternative banking offerings.

According to a Central Bank of Kenya (CBK) circular issued in July 2015, limit on foreign exchange

exposure is 10% of a bank's core capital. Meanwhile renewed efforts by the CBK to strengthen banking

sector supervision - notably with regards to stricter capital requirements - will likely ensure that banks'

average capital ratios remain strong in the coming years.

The banking sector's funding structure is reasonably strong. The sector's loan-to-deposit ratio stood at

90% in September 2015 (the latest data) which, though around its highest level in a decade, but remains

comfortable. With the CBK introducing new guidelines on capital requirements and enhancing its

enforcement of prudential regulations, this will likely constrain banks' ability to further expand their

balance sheets over the near term. The banking sector remains well capitalized, with capital above

regulatory requirements. Capital as a percent of total assets has been steady since mid-2013 at around

15%, while regulatory tier 1 capital to risk-weighted assets stood at 15.7% in June 2015.

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Please note these additional aspects of the Kenyan financial sector:

1. According to the Insurance Regulatory Authority, there are 45 licensed insurance companies in the

country. The sector is fairly competitive with no particularly large companies. Although full foreign ownership is not allowed, various foreign companies – mainly from South Africa – have entered the

market in recent years. 2. However, at only 1%, Kenya’s life insurance penetration ratio is very low due to high levels of

poverty, amongst other issues. Even so, the penetration rate is still better than in most other African countries. In recent years, the country has seen the entry of a few foreign market players, which is a

very encouraging sign for future development. 3. In 2011, total premiums were equal to 3.2% of GDP according to Swiss Re Sigma, with about 63% of

the market being non-life insurance products. Some 43% of the non-life insurance market is for car insurance (26% is commercial and 17% is private), while almost 20% is for personal accident

insurance. 4. According to Business Monitor International (BMI), Kenyan companies seem to be more innovative

than those in other African countries. For example, Kenyans can pay premiums via their mobile phones through mobile money platforms like M-PESA and Airtel Money. Ultimately, there are no major import banking regulations in Kenya; in fact, there’s a whole plethora of solutions and access

to credit.