Getting started in exporting

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Successful exporting

The main keys to successful exporting are commitment and planning. Management commitment and effort are crucial to the whole process of exporting and building effective relationships. Planning is an essential step before you start exporting. It will help you to recognise:

  • exporting options;
  • success factors;
  • the value of a timetable for achieving each milestone;
  • who you will need to involve in your venture; and
  • the real resource costs of time, people and money.

Successful exporting is about covering costs, obtaining a return on investments and getting paid. Exporting that is not profitable in the long-term wastes resources and can result in company failure.

Whatever your product or service, as a potential or existing exporter you must understand key issues such as:

  • clients and their needs;
  • matching the product to market needs;
  • rules or regulations affecting exports;
  • the price the client is prepared to pay for the product or service;
  • costs of delivering products or services to the export market;
  • levels of service expected in the market;
  • the competition; and
  • any relevant cultural factors.

Critical success factors when exporting are: management commitment and effort to the whole process, strategic market selection, market orientation, and personal contact. These are highlighted in this chapter and explained in more detail in the chapters that follow.

Exporting for the right reasons

Exporting offers considerable opportunities for many Kenyan companies. It is the only way for some to grow their business. For others, exporting offers the advantages of a larger market with greater economies of scale. There are many other valid reasons for exporting. These include:

  • expanding production to use plant more efficiently and enjoy economics of scale;
  • increasing sales to even out and reduce seasonal demand fluctuations;
  • increasing production to lower unit costs and gain more competitive domestic prices;
  • increasing your competitiveness by exposing a product to world markets;
  • increasing profitability; or
  • developing a broader customer base.

You should carefully consider whether or not to export. Avoid taking a short-term view, or reacting to an uninformed appraisal of domestic or international trends. For example, exporting may be unwise if it is undertaken to:

  • cash in on short-term price booms in a market;
  • relieve short-term over-capacity; or
  • react to unsolicited enquiries from overseas.

However, these events may be useful triggers for you to assess trends and develop a longer-term view about exporting. For example, consistent unsolicited requests for a product from overseas buyers may suggest potential export markets.

Unsolicited enquiries

You should be cautious when responding to unsolicited enquiries. It is not necessary to respond to every unsolicited enquiry, as they can often be very speculative queries from people who are not committed buyers. First-time exporters can make the mistake of responding in detail, which can be very time-consuming, and provide little or no results. Be selective about which enquiries you respond to, and concentrate on those ones from your main target markets. Validate any enquiries carefully, by confirming the importer’s ability to pay before sending any goods. You may want to use an agent to check the potential importer’s financial credentials, such as how long the importer has been operating.

International trade agreements

One of the first tasks for the potential exporter is to determine what trade agreements will influence their export activities to a given market. Depending on the nature of the agreement, your products could be more or less competitive in the target market. One should also bear in mind that these agreements can change; for example, special preferences granted to a specific product or country may be eliminated in future agreements, reducing the competitive advantage.

Kenya is a signatory to a number of multilateral and bilateral trade agreements that open up market access opportunities for Kenyan exporters:

Regional Trade Agreements

Kenya is a member of the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA) trade agreements within the African Region. The EAC partner states comprise of Kenya, Burundi, Rwanda, Uganda, and Tanzania. Membership entails extending preferential tariffs to goods imported from member states subject to agreed conditions (the Rules of Origin). Goods originating in Kenya also enter into the other member countries at preferential rates. This provides an incentive to import from or export to other members of the regional trading bloc.

For more information on the EAC, visit the EAC website: www.eac.int or contact the EAC desk, Ministry of Trade, Telposta Towers, Nairobi.

For more information on COMESA, visit www.comesa.int or contact the COMESA desk, Ministry of Trade, Telposta Towers, Nairobi.

ACP/EU Cotonou Partnership Agreement

The ACP/EU Cotonou Partnership Agreement is a trade, aid and political agreement signed in Cotonou, Benin, between 77 African, Caribbean and Pacific (ACP) countries and the European Union (EU). Under the agreement, Kenyan exports to the European Union enjoy duty free entry and freedom from all quota restrictions. Duty-free entry is on all agricultural products and a wide range of industrial products.

For updates and more information on the ACP/EU, visit www.acp.int or contact the Ministry of Trade, Teleposta Towers, Nairobi.

African Growth and Opportunity Act (AGOA)

Kenya qualifies for duty free access to the United States of America (USA) market under AGOA. Over 6400 products are eligible for export to the USA duty and quota free under AGOA. Virtually all Kenyan products qualify under AGOA.

For updates and more information on AGOA, visit www.agoa.gov or contact the AGOA desk, Ministry of Trade, Telposta Towers, Nairobi.

Generalised System of Preferences (GSP)

Under the GSP, a wide range of Kenya’s manufactured products are entitled to preferential duty treatment in the US, Japan, Canada, New Zealand, Australia, Switzerland, Norway, Sweden, Finland, Austria, and other European countries. Almost all agricultural products are covered, in addition to footwear, luggage, handbags, leather work gloves, leather apparel, and watches.

Bilateral Trade Agreements

Kenya also has bilateral trade agreements with a number of other countries such as Argentina, Bangladesh, Bulgaria, China, the Czech Republic, India, Iran, Lesotho, Nigeria, Pakistan, Poland, Romania, the Republic of Korea, Thailand and Russia. Under these agreements, Kenya and its bilateral partners accord each other the MFN (Most Favoured Nation) treatment in all matters with respect to their mutual trade relations.

Tariffs and customs classification

Each country has a tariff schedule, or list, indicating various tariff rates. However, a product may have several rates. For example, there is often a rate applicable to MFN (Most Favoured Nation), a non-MFN, or preferential, according to the specific trade agreements. The tariff structures of countries vary. Tariffs tend to be high in developing countries and lower in developed countries. Tariffs on agricultural products tend to be higher than on others. It is important for the exporter to obtain the most updated schedule for information on the major tariffs and duties of the target market.

Most trading nations have adopted the HS system (the Harmonized Commodity Description and Coding System) to assign a product a code that is recognizable by customs officials in other nations. The HS system is an international six-digit commodity classification developed under the auspices of the Customs Cooperation Council. Individual countries have extended it to ten digits for customs purposes, and to eight digits for export purposes.

To find out the HS Code for a product,
visit www.foreign-trade.com/reference/hscode.htm.

Some questions to ask:

  • What is the HS code for your product or service?
  • Under this code, are there tariffs, entry barriers or non-tariff barriers that would either hamper or help market entry of a product from Kenya?
  • Are there specific tariffs, taxes, duties and/or permits that apply to this product?
  • Would you have the option to alter the product slightly to take advantage of preferential treatment?

Most importers demand that exporters inform them the HS Code of their products so that they can confirm the duty or preferences accorded. This would determine the competitiveness and aid in deciding where to source.

“Made-in” and rules of origin

Today’s supply chains are global. This means the activities required to get a product from the point of its conception to its design, production, distribution and so on, are undertaken by various firms or links along the chain that are spread across geographic regions.

Materials may be sourced in one county, the pieces put together in a second and third country, and the distribution managed from another country.

Due to the fact that regional trade agreements give preference or apply tariffs according to agreements between countries, governments have to know the product’s country of origin. If it passes through processes in many different countries, customs must use the rules of origin to know which agreement applies. Thus governments demand stamps/marks of “Made in Kenya” to be put on the product.

For imports under preferential agreements, the importing country has to make sure the lower rate is applied if it originates from the country that is supposed to receive the preference. Therefore, they need evidence to indicate clearly that the product was produced either entirely, or at least substantially, in the preference-receiving country.

National systems used to determine rules of origin vary. However, they are based on the following two principles:

  1. Value added: a product is considered to have been manufactured in the country where a specified percentage (40-60% - it depends on the national legislation; e.g. under COMESA raw materials or value added component be above 35%) of the product value has been added.
  2. System of classification (HS): a product is considered to have originated in the country where, as a result of processing, its tariff classification changes.

AGOA (African Growth and Opportunity Act) and rules of origin

One of the key issues for African textiles manufacturers in the extension of AGOA was the renewal of a provision that excludes African beneficiaries from complying with the normal, stringent rules that define where textiles and apparel products are made to determine if they are eligible to receive AGOA benefits – the so called ‘Rules of Origin’. In effect the designated African country beneficiaries known as the ‘Lesser Developed Beneficiary Countries’ (LDBCs) under the Act can continue using fabrics produced in countries not covered by AGOA (so-called third country fabrics) in the production of clothing products for export to the US. Kenya is deemed to be an LDBC for this purpose.

International standards

Countries require that imported goods conform to mandatory quality, health, safety and environmental standards. Standards are an important tool in international marketing of products and services because they convey information that makes it easier for the buyer to understand and trust in their quality and specifications. Buyers may be hesitant to purchase products that are based on standards which are different from the buyer’s own country. Standards also exist to protect the health and safety of populations as well as the environment.

Complying with international standards makes it easier to access foreign markets. Like everything else, standards change and exporters should stay on top of these changes. Stay in touch with Kenya Bureau of Standards and they can provide you with the latest information on standards.

For the latest information on standards, contact Kenya Bureau of Standards, P.O Box 54974 Nairobi 00200, Tel: 020 6948000/605490, Mobile: 0722 202137/8, 0734 600471/2, Fax: 020 604031, 609660, Email: This email address is being protected from spambots. You need JavaScript enabled to view it., Website: www.kebs.org

Product standards, health and environmental regulations

An increasing number of countries are adopting strict regulations to protect consumer health and the environment. However, these regulations differ enormously in various parts of the world and change on an almost daily basis. The problem of constant change applies particularly to food products, prescription drugs, chemicals, and common consumer products.

When standards differ so widely from one country to the next, they become a kind of trade barrier. This is because adjusting production processes to suit various countries’ standards can be costly. Regulations may also require product testing in the importing country, which may require stricter tests or higher fees than the domestic competitors. This can be quite challenging for small businesses.

In addition, some countries impose restrictions/quarantines on imports from certain countries in fear of introduction of harmful organisms into their countries. For instance the quarantine by Japan and USA on fresh horticultural produce is due to fear of introduction of pests from Africa.

Here is a list of products to which countries may apply mandatory safety and health regulations and the agricultural products that are subject to sanitary and phytosanitary regulations in most countries. This list is not exhaustive.

Products subject to technical regulations

Products subject to sanitary and phytosanitary regulations

  • Consumer articles
  • Automobiles
  • Toys
  • Pharmaceuticals
  • Cosmetics
  • Household electric appliances
  • Video and TV sets
  • Cinematographic and photographic equipment
  • Synthetic detergents
  • Machinery and equipment
  • Medical equipment
  • Food-processing equipment
  • Metal and woodworking equipment
  • Boilers
  • Electricity-driven construction and assembly tools
  • Raw materials and agricultural inputs
  • Fertilizers
  • Insecticides
  • Hazardous chemicals
  • Fresh fruit and vegetables
  • Fruit juices and other food preparations
  • Meat and meat products
  • Fish and fish products
  • Dairy products
  • Processed food products
   
     

For more information on technical barriers to trade (TBT), contact the World Trade Organization (WTO) national enquiry points who specialise in different areas as follows:

  • Technical barriers to trade - Kenya Bureau of Standards, P.O Box 54974 Nairobi 00200, Tel: 020 6948000/605490, Mobile: 0722 202137/8, 0734 600471/2, Fax: 020 604031, 609660, Email: This email address is being protected from spambots. You need JavaScript enabled to view it., Website:
  • Intellectual property – Kenya Industrial Property Institute, Weights and Measures Building, Kapiti Road, off Mombasa Road, P.O. Box 51648 Nairobi 00100 GPO, Tel: 020 602211 / 606326, Fax: 020 606312, Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
  • Trade in services – Ministry of Transport, Transcom House, Ngong Road, P.O. Box 52692 Nairobi, 00100, Tel. 020 2729200, Email: This email address is being protected from spambots. You need JavaScript enabled to view it., Website:
  • Phytosanitary matters – Kenya Plant Health Inspectorate Service (KEPHIS), Oloolua Ridge, Karen, P.O. Box 49592 Nairobi 00100, Tel: 020 884545/882308/882933, Fax: 020 882265, Email: This email address is being protected from spambots. You need JavaScript enabled to view it., Website:

Packaging and labelling

The exporter must adjust product packaging to adhere to regulations regarding language, labelling, and consumer protection and product classifications in force in the destination country. (Refer to the Packaging and labelling chapter for further detail).

Intellectual property rights

Another challenge for exporters is the question of protecting their product or service against intellectual property infringement. Intellectual property (IP) refers to inventions, designs, writings, films, plants and seeds. These are governed by international rules that allow people, companies and institutions to “protect” them through:

  • copyrights and trademarks;
  • patents;
  • industrial designs;
  • geographical indications; or
  • in the case of electronics, “integrated circuits topographies”.

Though your company may have intellectual property protection in Kenya, it is also necessary to obtain the same or similar protection in the country to which you will be exporting. As intellectual property law is complex, it is advisable to seek legal assistance in your foreign market’s country as well as advice from the Kenya Industrial Property Institute. Unless you have taken the precaution of registering international trademarks for your products and services, you could find yourself in conflict with the trademarks of a company in the country to which you wish to export.

For more information on intellectual property rights, contact Kenya Industrial Property Institute (KIPI), Weights and Measures Building, Kapiti Road, off Mombasa Road, P.O. Box 51648 Nairobi 00100 GPO, Tel: 020 602211 / 606326, Fax: 020 606312, Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Costs related to securing intellectual property rights in foreign countries can vary and are sometimes high. You must investigate the intellectual property issues in your industry and as they apply to your product or services. You should also decide whether there is need for local legal representation. In some cases it may not be necessary or even worth the trouble to obtain intellectual property rights.

Trade incentives you can take advantage of

The Government of Kenya offers the following export promotion incentives:

Duty/VAT Remission Scheme

An exporter can have Duty and VAT inputs related to any export sale redeemed. The exporter can opt for single order arrangement relating to one specific importation or a 6-month continuous arrangement for on-going imports. Those eligible are manufacturing companies registered in Kenya, which import raw materials, that are directly or indirectly utilised in production for export. Applications for this facility should be made to the Tax Remission for Export Office (TREO) located at the Ministry of Finance.

For more information on the Duty/VAT remission scheme, contact the Ministry of Finance, Treasury Building, Harambee Avenue, P.O. Box 30007 Nairobi 00100, Tel: 020 252299, Fax: 020 310833, Website: www.treasury.go.ke

Export Processing Zones (EPZ) Programme

This programme provides: 10-year corporate tax holiday and a flat 25% corporate tax rate for the next 10 years; exemption from all withholding taxes on dividends and other payments to non-residents during the first 10 years; no restrictions on management or technical arrangements, i.e. work permits for technical, managerial, and training staff; exemption from stamp duty and VAT; customs inspection of goods at zone rather than at port; exemption from import duties on machinery, raw materials, and intermediate inputs; and operation on one license for most goods. Those eligible are companies incorporated in Kenya for the sole purpose of rendering the following services: export-oriented manufacturing or processing; commercial activities related to exports or preceding export manufacture e.g. break of bulk, re-labelling, packing, etc; export services including brokerage, consulting, information services, repair, etc. The administering agency is the Export Processing Zones Authority.

For more information on the EPZ programme, contact the Export Processing Zones Authority (EPZA), Athi River EPZ, Viwanda Road off Nairobi-Namanga Highway, P.O. Box 50563, Nairobi, City Square, 00200, Tel: 045 26421-6, Fax: 045 26427, Email: This email address is being protected from spambots. You need JavaScript enabled to view it., Website: www.epzakenya.com


Manufacturing Under Bond (MUB)

The exporter is exempted from Duty and VAT on imported machinery and raw materials used in manufacturing goods for export. Those eligible are manufacturing companies registered in Kenya that export all or part of their products. Bonded manufacturing enterprises can be licensed to operate within a 30km radius of a Customs office. This programme is facilitated by the Kenya Investment Authority and administered by the Kenya Revenue Authority.

For more information on the MUB scheme, contact the Kenya Investment Authority, National Bank Building, 8th floor, Harambee Avenue, P.O. Box 55704 Nairobi 00200, Tel: 020 221401-4, Fax: 020 243862, Email: This email address is being protected from spambots. You need JavaScript enabled to view it., Website: www.investmentkenya.com

Formal barriers to market entry vs informal barriers

The formal barriers to exporting, such as tariffs, quotas and standards, can cause challenges for exporters. However, many of the difficulties stem from informal barriers. Obtaining the right documentation, such as certificates of origin, delays at customs offices, harassment of smaller firms, complicated procedures and unofficial “fees” are examples of informal barriers.

Smaller firms dealing with these issues may want to work through a local association or join hands with other small firms to try to resolve difficulties. There are many examples of smaller firms forming successful joint export groups or associations to improve their ability to cope with costs and interchange with policy officials to make better use of their potential.

Classic mistakes made by exporters, related to regulation and day-to-day operations include the following:

  • Failure to conduct research on regulations in export markets. One may discover when it is too late that the product is prohibited after shipping is done.
  • Assuming domestic product or marketing strategies are compatible with foreign regulations.
  • Failure to modify products to meet foreign requirements or failure to take advantage of foreign regulations (for example, by modifying a product to classify for a lower tariff).
  • Failure to ensure that the packaging or labelling of products conforms with the legal standards of the export market.
  • Failure to take sufficient precaution with respect to intellectual property rights in foreign markets.
About KEPROBA

The Kenya Export Promotion and Branding Agency (KEPROBA) is a State Corporation established under the State Corporations Act Cap 446 through Legal Notice No.110 of August 9th, 2019 after a merger between Export Promotion Council and Brand Kenya Board.The Agency’s core mandate is to implement export promotion and nation branding initiatives and policies to promote Kenya’s export of goods and services
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