1DOING BUSINESS IN KENYAPROCEDURES AND REGULATIONS, OPPORTUNITIES, SOURCESOF FINANCE AND INCENTIVESA handbook for local investorsBooklet prepared by Mary Mbithi and Jamuhuri MaingaforUnited Nations Development Programme (UNDP)January 20062Why this HandbookThe motivation for preparing a handbook for local investors in Kenya is the need
to promote local investments. This arises from the current government efforts to
promote both local and Foreign Direct Investments (FDIs). While there is a
significant material available on foreign investment promotions particularly on
investment opportunities, requirements, procedures and regulations, there is little
of such material on local investments.The recent Government of Kenya (GoK) move to simplify business licenses, the
on going efforts to amend the Companies Act, the enactment of the Investment
Promotion ACT (2004) and the preparation of the Sessional Paper No. 2 of 2005
on ‘Development of Micro and Small Enterprises for Wealth and Employment
Creation for Poverty Reduction’ introduces new opportunities for indigenous Kenyan
entrepreneurs. However, access to and awareness of such legislations as well as
other legal business requirements and information has remained largely confined
to elitist business leaders. Rural entrepreneurs in provinces, districts and other
towns may not have access to such investment information, which they could
take advantage of.
This is particularly true for small-scale entrepreneurs, who, not being well informed
of the necessary legal business requirements they should adhere to with respect to
their enterprises, may often feel that they are harassed by local authorities.
Many local entrepreneurs prefer to run their businesses in an informal state,
which hampers their potential for growth, expansion and innovation. This also
prevents them from taking advantages of the incentives provided by the government
for formal investment businesses.Purpose of the handbookThe purpose of this handbook is to provide information to the local entrepreneurs
and business leaders on the regulations, procedures and requirements, the
opportunities and incentives offered by various laws and regulations, the kinds of
support services they can seek from the government, and widen their access to
information on business opportunities and sources of funding for investment.3TargetThis handbook targets the local investors, particularly the small business
entrepreneurs. Those intending to start a small scale business will find it useful as
it provides a wide range of business and investment opportunities to assist one in
decision making as to where to invest. It also provides an indication of the regulatory
requirements for various businesses. Those already in business will also find it
useful. It provides information on government incentives and other opportunities
that ‘formal’ or businesses registered with the registrar of companies could take
advantage of. This information is important to the entrepreneurs who want to
grow and expand their businesses. It also provides a list of important agencies
and organizations where a local investor could find more information with respect
to their business requirements.The handbook should be taken as a guide only, and more information on the relevant
business should be sought from the relevant agencies.4IN THIS HANDBOOKIntroduction5Starting A Business: What You Should Do6Procedures And Requirements For Establishing A Business7Other Regulatory Requirements In Operating A Business9Regulatory Requirements For The Mses15Where To Invest18Export/Import Business Opportunities21Where To Borrow Money And What You Are Required To Do23The Taxes You Are Required To Pay25Incentives For You26For More Information: Some Useful Contacts295INTRODUCTIONThe Investment Promotion Act (2004) is the main Government of Kenya legislation
with a purpose of promoting and facilitating both local and foreign investments.
The Act particularly states the licenses and other related requirements that a local
or a foreign investor in Kenya should have.Most of the local investment businesses in Kenya fall under the Micro and Small
Enterprise (MSE)1 business sector. The sector employs about 74.2% of the Kenyanworkforce and contributes to about 18.4% of the country’s Gross Domestic Product
(GDP). The government of Kenya therefore considers this sector as an important
sector in the development process, and is in the process of putting in place some
programmes to develop this sector. The Economic Recovery Strategy Paper for
Wealth and Employment Creation (ERS) 2003-2007 identifies SMEs and in
particular jua kali expansion as one of those activities that will assist in economic
recovery and growth.The publication of Sessional paper no. 2 of 2005 on ‘Development of Micro and
Small Enterprises for Wealth and Employment Creation for Poverty Reduction’ is
one of the most important current government efforts to develop the MSE sector.
The Act sets policies for developing the MSEs. Some of these policies include,
among others:• Continued legal and regulatory reforms in the sector,
• Harmonization of trade licensing and regulatory services,
• Decentralization of business registration to the provincial levels andeventually to district levels,• Quickening the process of business registration,
• Reforming and enforcing the local authority Act to limit and maintain itsessential regulatory powers,• Formulating and implementing a MSE Act to provide a framework forimplementing the MSE policies,• Improving market and marketing opportunities for MSEs both locally andinternationally, through improved business linkages, increased
participation of MSEs in public procurement and increased subcontracting,
among other initiatives.• Increasing financial services to MSEs,
• Promoting gender equity by increasing equal access to financial servicesfor women and men, empowering women, improving gender access to
education, technology development and entrepreneurship.• Reforming the tax regime to improve its transparency and efficiency,strengthening tax collection and harmonizing the tax system, and,1 These are businesses employing 1-50 workers in all the sectors of the Kenyan economy.6STARTING A BUSINESS: WHAT YOU SHOULD DOThe formal procedures for starting a business in Kenya are to a great extend
determined by the type of business one wishes to establish and the sector to which
the business belongs.Investment CertificateAs a local investor, does the law require that you must have an investment
certificate?No. It is not a must for a local investor to have an investment certificate. One
however may apply and obtain an investment certificate, from the Kenya Investment
Agency (KIA) provided that:• The amount they want to invest is at least KSh. 1 Million, and,
• The investment and the activities related to it are lawful and beneficial1What is the use of the investment certificate?The investment certificate entitles the investor to licenses which they need to apply,
for a particular investment.Investment registration: is it necessary?The investment promotion Act (2000) requires that local investors without investment
Certificate register their investments with the Kenya Investment Authority (KIA).
All investments should register their business names with the registrar of Companies.• Improving health and safety in workplaces by ensuring that order,occupational safety, health, hygiene and environmental management
principles are observed by all operators.The Procurement and Supplies Act (Cap 412) of the laws of Kenya became
operational in November 2005. This Act recognizes the need to give priority to
local companies in procurement of goods and services. The purpose is to protect
the local companies, particularly the MSEs from unviable competition, increasing
the market opportunities, therefore giving the local enterprises opportunity to grow.Restrictive Trade Practices, Monopolies and Price Control Act (Cap 504) of the
laws of Kenya encourage competition in the Kenyan economy. It also prevents the
abuse of dominance and market entry barriers (both formal and informal); therefore
giving MSE’s a fair chance to do business.2 Activities beneficial to Kenya are those that:·Create employment,·Lead to acquisition of new skills and technology,·Transfer technology,·Contribute to government revenue,·Lead to use of local raw materials, supplies or services,·Lead to value addition of local, natural and agricultural resources,·Increase foreign exchange through export or import substitution,
Utilize, promote, develop and implement information and communication technology.7PROCEDURES AND REQUIREMENTS FOR
ESTABLISHING A BUSINESSThe common procedures and requirements for a local investor establishing a
business in Kenya are presented below.Type of business
EnterpriseMain proceduresCostsRegistered
CompaniesCompanies are
registered as limited
liability companies
and regulated by
the Companies Act
(Cap 486).Two procedures: name
search and registration.
This involves:
• Proposing your companiesname• Applying to the registrar ofcompanies at the Attorney
General's Chambers in
Nairobi to reserve this
name for your company.• Supplying the followingdocuments which are
prepared with the help of
a lawyer:
• Memorandum andarticles of association• Notice of situation ofregistered Office• Particulars of directorsand secretaries• Declaration ofcompliance• Share capital form.Branch offices of
companies
registered outside
KenyaYou should deliver the
following documents to the
Registrar of Companies:
• A certified copy of theCharter, Statutes or
Memorandum and Articles
of Association of the
Company, or other
instruments defining the
constitution of the
company.• A list of the directors andsecretary of the company,
giving full names,
nationality and other
directorships of companies
in Kenya1. For name search,payable fee depends
on companies, share
capital and ranges
between Ksh.
2,800-60,000.2. For registration, astandard fee of Ksh.
6,8008Type of business
EnterpriseMain proceduresCostsRegistered
CompaniesCompanies are
registered as limited
liability companies
and regulated by
the Companies Act
(Cap 486).Two procedures: name
search and registration.
This involves:
• Proposing your companiesname• Applying to the registrar ofcompanies at the Attorney
General's Chambers in
Nairobi to reserve this
name for your company.• Supplying the followingdocuments which are
prepared with the help of
a lawyer:
• Memorandum andarticles of association• Notice of situation ofregistered Office• Particulars of directorsand secretaries• Declaration ofcompliance• Share capital form.Branch offices of
companies
registered outside
KenyaYou should deliver the
following documents to the
Registrar of Companies:
• A certified copy of theCharter, Statutes or
Memorandum and Articles
of Association of the
Company, or other
instruments defining the
constitution of the
company.• A list of the directors andsecretary of the company,
giving full names,
nationality and other
directorships of companies
in Kenya1. For name search,payable fee depends
on companies, share
capital and ranges
between Ksh.
2,800-60,000.2. For registration, astandard fee of Ksh.
6,8009OTHER REGULATORY REQUIREMENTS IN
OPERATING A BUSINESSOnce a business has been registered, there are other legal requirements that
these businesses are required to meet. Some of these requirements are specific to
the business types.RequirementHow often
(frequency)Businesses
applicableBusinesses
applicableEvery yearAll businesses
in KenyaLocal
authorities.Single business PermitIssued under Local
Government Act (Cap
265).Every yearAll businesses.Ministry of
Trade and
IndustryTrade License Issued under Trade
Licensing Act (Cap 497).One has to provide:- A tenancy agreement/lease/ or title deed ofthe business premises;- identity card or passport- Personal IdentificationNumber (PIN);- Certificate of incorpo-ration or certificate ofregistration of businessname.OnceAll businessesKenya Revenue
AuthorityValue added Tax (VAT)
No.OnceAll businessesKenya Revenue
AuthorityPersonal Identification
Number (PIN)OnceAll businesses
employing
more than 5
workers (NSSF),
Ministry of
Labour.National Social Security
Fund (NSSF) NoOnceAll businesses
employing
more than 5
workersNHIF
Ministry of
HealthNational Hospital
Insurance Fund (NHIF)
No.Every yearAll
manufacturing
and processing
businessesNationalEnvironmental
Management
Authority
(NEMA).Environmental Impact
Assessment No.10RequirementHow often
(frequency)Businesses
applicableBusinesses
applicableOnceAll export
businesses.Department of
Customs and
Excise.Exporter’s Code NumberOne has to provide:
- Copy of Certificate ofIncorporation- Copy of Certificate ofRegistration of Business
Name- Copy of Trade LicenseEvery yearBusinesses
which touch on
public and
food security;
conservation of
wildlife and
natural
resources and
preservation of
national
heritage3.Department of
Internal Trade
(Ministry of
Trade and
Industry).Export LicensesIssued under Exports and
Essential Supplies Act
(Cap 502).One has to produceAuthority or permit from
the relevant government
agencyEvery yearImport
businesses of a
few items
restricted for
security, health
or
environmental
reasons.Department of
External Trade
(Ministry of
Trade and
Industry)Import LicensesPlant Import
Permit.
Plant export
Permit.
Phytosanitary
CertificateEvery yearEvery timeimport orexport is madeKEPHIS.Plants and plant products
import or export.Drugs and
Pharmaceuticals
Import permit.Every time
imports are
made.Pharmacy and
Poisons Board.Drugs and
Pharmaceuticals imports.Registration of
premises.OncePharmacy and
Poisons Board.Buying and selling of
Pharmaceuticals.Stock trader’s
license.Every yearCity/County
CouncilsLivestock tradingRequirementHow oftenResponsible AgencyBusiness typeAdditional requirements for specific businesses3 These include: military equipment, antiquities and works of art, wood-charcoal and timber, productsrelated to endangered species such as rhino horns, and live animals other than livestock and domestic pets.11- Export permit
- Compliance
to traceability
of produce,
hygiene,
Maximum
Residue Level
(MRL), Good
Agricultural
Practices (GAP)
and proper
post harvest
handling
procedures.Every time
exports are
madeHorticultural
Crops
Development
Authority
(HCDA)..Horticultural products.Health
Clearance
CertificateEvery time
exports are
madeDepartment of
Veterinary
Services.Live animals exportDealers licenseEvery year.City CouncilsMotor vehicle components
or accessories.Buying or
selling business
license.-Certificat ofRoadworthiness
for used
vehicles
originating
from Japan
and Dubai.Every year.Every time
imports are
made.City CouncilsMinistry of
TransportUsed motor vehicles.- Publiccarriers
license- Road license- Transport BusinessLicense (TBL)Every yearEvery yearEvery yearMinistry of
Transport/Kenya Revenue
Authority (KRA)
Kenya Revenue
authority (KRA)Public transportLicense under
Scrap Metal
Act.Every yearMinistry of
Trade and
IndustryScrap metalRequirementHow oftenResponsible AgencyBusiness typeAdditional requirements for specific businesses12- Certificate ofregistration
of fishing
vessel.- License tocatch fish
under
Fisheries Act.Every yearEvery yearDepartment of
fisheries.Fishing- Processinglicense- Fishmovement
permit- Certificate ofcompliance
with KEBS for
fish handling
and
processing- Export permit
- Healthcertificate.Every yearEvery time
exports are
made.Department of
fisheries.Processing and Export of
Fish.- Hotel/restaurantlicense.- Restaurantmanger’s
license- Generalretail liquor
license.Every yearCity/Town
Council after
providing a
certificate of
health.Hotel/ restaurant
business.License to use
premises for
that purpose.Every yearCity /County
CouncilFood business (selling,
preparing)Miller’s licenseEvery yearNational
Cereals and
Produce Board.Milling of MaizeManufacturing
licenseEvery yearMinistry of
AgricultureTea FactorySugar or
jaggery mill
licenseEvery yearMinistry of
AgricultureSugar millRequirementHow oftenResponsible AgencyBusiness typeAdditional requirements for specific businesses13License to carry
out the relevant
transactions.Movement
permit.Every yearMinistry of
agricultureCoffee buying, selling,
milling, warehousing or
exporting- Registrationunder the
Dairy
Industry Act.- Dairymanager
license.- Registrationof premises
as a dairy.- MilkPurveyor
license.Every yearDepartment of
Veterinary
Services.Dairy- Buyer’slicense.- Exporter orimporter
license.- Registrationcertificate for
the premises
under Hides,
Skin and
Leather
Trade Act.Every yearDepartment of
Veterinary
Services
(Ministry of
Livestock and
Fisheries
Development)Hides, skin and leather. Licenseunder Pig
industry.- License toslaughter
Pigs.- License tokeep pigs.Every yearDepartment of
Veterinary
Services
(Ministry of
Livestock and
Fisheries
Development)Bacon factoryRequirementHow oftenResponsible AgencyBusiness typeAdditional requirements for specific businesses14- License tooperate a
slaughter
house.- Licenseunder the
Kenya meat
Commission
Act.- License toslaughter
Pigs.- License tokeep pigs.Every yearDepartment of
Veterinary
Services
(Ministry of
Livestock and
Fisheries
Development)Slaughter house- Licenseunder Kenya
Meat
Commission
Act.- Certificate ofHealth.Every yearEvery time one
has to exportDepartment of
Veterinary
Services
(Ministry of
Livestock and
Fisheries
Development)Export of meatLicense for
premises.Every yearPest Control
Board (PCB)Pest control productsLicense to
trade in
unwrought
precious
metals.Every yearEvery yearMinistry of
Trade and
industryDealing in precious
metalsDiamond
dealer’s
license.Ministry of
Trade and
industryDiamond dealingEvery year- Filminglicense- Authorizationto make film
in a national
park.Ministry of
Information
and
Telecommunica
tionsMaking of filmsRequirementHow oftenResponsible AgencyBusiness typeAdditional requirements for specific businesses15REGULATORY REQUIREMENTS FOR THE MSEsMost of the MSEs are not registered businesses under the registrar of Companies
and are therefore referred to as ‘informal’. To take advantages of the government
incentives and access the formal financial services, the businesses need to be
registered.
The regulatory requirements for MSEs are presented belowRequirementHow often
(frequency)Businesses
applicableBusinesses
applicable- LicenseGivenonproduction
of:• Identity Card
• Certificate ofgood
conduct- A fee of Ksh.25 daily.- Hawking tobe done on
designed
areasEvery yearCity/ County
CouncilHawking.- License- Pay a fee ofKshs. 100- Oneoperates in a
designated
market in
cities or
towns e.g.
Wakulima
Market in
Nairobi.Every yearEvery time one
sells from the
markets.City/ County
CouncilBulk agro businesses
Including• Vegetables
• Fruits
• Grains
• Potatoes
• Tomatoes- Singlebusiness
permit- Fee
- Oneoperates in
designated
areas, or in,- Jua kalishedsEvery yearMonthly fee of
Ksh: 200
Or
weekly fee of
Ksh. 50City/ County
CouncilJua kali products including:Motor mechanic
Engineering
Manufacturing industries16RequirementHow often
(frequency)Businesses
applicableBusinesses
applicable- SingleBusiness
Permit given
on
production
of:• Physicaladdress• Certificate ofgood
conductEvery yearCity/ County
CouncilPaper & paper products,
printing & publishing- SingleBusiness
Permit given
on
production
of physical
addressEvery yearCity/ County
CouncilTextile, wearing apparels
& leather product shopsSingle Business
PermitEvery yearMinistry of
EnvironmentWood, wood products
and carpentry- SingleBusiness
Permit- TradeLicenseEvery yearCity/
County CouncilWhole sale & retail trade- SingleBusiness
Permit- TradeLicenseEvery yearCity/
County Council
and Ministry of
health.Restaurant and hotels- SingleBusiness
Permit- TradeLicenseEvery yearCity/
County CouncilTextile and tailoring- TradeLicense- Weekly fee ofKsh. 50- Sell indesignated
areasEvery yearCity/
County CouncilTextile and tailoring17RequirementHow often
(frequency)Businesses
applicableBusinesses
applicable- SingleBusiness
Permit- TradeLicenseEvery yearCity/County
CouncilDepartment of
Veterinary
ServicesMeat and meat products- Fee of Ksh.50- Operate indesignated
market areasOn entry to the
designated
market areasCity/
County CouncilLive animals- Fee: Ksh. 70- TransportBusiness
License- Certificate ofgood
conduct- Road license
- Insurance
- Root numberDailyEvery yearCity/
County CouncilMinistry of
TransportTransport and
communication
(Matatu business)Single Business
Permit Issued
on provision of
location detailsEvery yearCity/
County CouncilReal estate, and
businesses services,
brokers, auctioneers- Tradinglicense- Fee: Ksh:100- Operate indesignated
market areas
or placesEvery yearCity/
County CouncilHandicrafts and carvings
(curios)Single business
Permit Issued
on provision of
location detailsEvery yearCity/
County CouncilOther small business e.g.
Barber shops Hair
dressing18WHERE TO INVESTRequirementSectorMaize, potatoes, wheat, various
horticultural crops, sorghum, millet, peas,
coconuts, cashew nuts, sugar.Agriculture and agro-processingFood cropsMarket opportunities exist in local,
EAC and COMESA region.Tea, coffee, pyrethrum, flowers, Fruits and
vegetables, cashew nuts, cotton, barley,
Macadamia nuts, oil crops (sunflower).Commercial crops4Market opportunities exist in local
and export markets in Europe
and United States of America as
well as in other developed
countries.- Planting of softwood plantations,
- Manufacture of paper products, Value addition of hard and soft woodproducts such as: furniture and joinery flooring and panelling, veneer andplywood, organic honey-processing
industry, manufacturing of beekeeping
equipment, beeswax processing,
development of bee-pollination-based
industries, production and promotion of
bee products such as royal jelly, provision
of services for the certification of organic
honey production, planting for herbs and
medicinal purposes.Forestry and related activities4 Opportunities exist in organic and inorganic production, as well as in value additionactivities related to these products. In horticultural sector for instance opportunities in related
activities include:• Export of produce,
• Provision of transport facilities,
• Production of propagation materials,
• Establishment of soil-analysis services,
• Manufacture of greenhouse plastics,
• Production of inputs such as fertilizers, herbicides and pesticides,
• Production of packaging materials.
• Processing,
• Certification services,
• Provision of chilling, freezing and cold-storage facilities,19RequirementSectorCattle (both beef and dairy), goats and
sheep, Pig, poultry, wildlife farming (e.g.
Ostrich and crocodiles).Livestock and related activitiesOpportunities exist in production,
processing, forage feed
production, animal feed
processing, transport, export and
provision of related services such
as breeding, provision of veterinary
drugs and certification services.Market opportunities exist in local,
regional and other export marketsNile perch, Freshwater crayfish, local fish
species, Shrimps, Ornamental fish, fish skin
leather, Fish meals, Tilapia, Mollusks,
Crustaceans (lobsters, prawns, crabs), dry
shark fins, Marine shellsFisheries and related activities.Market for fisheries products exists
locally, regionally, and in other
export markets including European
countries, Israel and Japan.OpportunitiesFishing, fisheries processing and
export of both processed and
ornamental fisheries, fish farming,
local and regional cold distribution
facilities including production of
ice and drying and smoking of
fish.
Other opportunities include
processing of :- Fish skins into leather,
- Fish oil
- Fish meal production
- Nile Perch fish bladder
- Skin and carcasses to gelatin.Accommodation facilities, tour operator
services, eco-tourism, development of
cultural heritage sites and historical
locations, development of water sports such
as boat cruising and skiing, events and
exhibition facilities and services.Services sectorTourismOpportunities exist in road development
and rehabilitation, water transport services,
Public transport, goods transport.Transport infrastructureProvision of conventional cargo operations,
container transport and cruise ships.Port facilities20RequirementSectorInternet-related hardware and software,
Provision of value-added services in voice
and imaging products, teleconferencing,
data capture and processing, call centres,
radio paging, and broadband wireless.• Processing accounting data,
• Provision of e-business services,
• Printing and publishing media andtelevision,• Provision of high-level ICT trainingfacilities.Information and communication
technologies (ICT)Internet-related hardware and software,
Provision of value-added services in voice
and imaging products, teleconferencing,
data capture and processing, call centres,
radio paging, and broadband wireless.• Processing accounting data,
• Provision of e-business services,
• Printing and publishing media andtelevision,• Provision of high-level ICT trainingfacilities.Information and communication
technologies (ICT)Telecommunications machinery and
equipments and the related services in
urban and rural areas.Telecommunications Banking, insurance, brokerageFinancial servicesProvision of electrical appliances and
gadgets and the related services such as
repairs.ElectricityProvision of solar gadgets and related
services.Solar energyMining of cement, stone, refractory bricks,
paint and glass, special stones for
preparation of artefacts, phosphates for
agriculture,
Salt for domestic and chemical uses, and
gravel iron ore for the iron and steel
industry.MiningLPG, motor fuels and related services
mainly in rural areas.EnergyPetroleum and related products21RequirementSectorManufacturingManufacture and making of textiles and
garments, cotton ginning,
Assembly of automotive components and
electronics,
Manufacture of tires, and vehicle spare
parts, Manufacture of paper, chemicals,
pharmaceuticals, animal-feed processing,
beverages, cement and ceramics,
chemicals, canning, bottling and glassware,
packaging and tins, for both the domestic
and the export markets, plastic articles and
agro processing.EXPORT - IMPORT BUSINESS OPPORTUNITIESThere are opportunities to do export /import business. These opportunities are as
a result of Kenya being a member of a regional trading group or due to agreements
and special provisions Kenya has obtained from developed countries. Some of
these opportunities and the relevant benefits are presented below:5 Goods from Tanzania and Uganda are now imported to Kenya duty-free. Goods from Kenya toTanzania and Uganda will be taxed on a yearly declining basis, with the taxes expected to be eliminated
by the year 2010. Goods from countries, other than the EAC to Kenya, Tanzania or Uganda will face
similar import duties (The Common External Tariff, CET) of 0%, 10% and 25% for raw materials or capital
goods, Semi-processed or intermediate goods and finished goods respectively.Regional group/agreement
or initiativeProvisionBenefiting productsEast African Community
(Kenya, Tanzania and
Uganda)5The region is now a
Customs union.Declining tariff on
Kenyan exports to
Tanzania and Uganda,
with tariff—elimination
expected in year 2010.Imports from Tanzania
and Uganda to Kenya
are duty-free.All productsCommon Market for
Eastern and Southern
Africa (COMESA) group.
Kenya has opportunities
to trade with 19 other
COMESA member
countries.Duty free trading
between Kenya and other
10 COMESA countries:
Burundi, Djibouti, Egypt,
Madagascar, Malawi,
Mauritius, Rwanda,
Sudan, Zambia and
Zimbabwe.All products22Regional group/agreement
or initiativeProvisionBenefiting productsAfrican Caribbean Pacific
–European Union
(ACP-EU) Agreement.
Through this agreement,
Kenya has access to the
markets of the 25 EU
member countries.Duty-free market access
until 2008, when these
trading arrangements will
change.A wide range of
agricultural products
(such as fruits,
vegetables, flowers,
coffee, tea, spices,
natural honey) as well as
some industrial products.African Growth and
Opportunity Act (AGOA Duty-free access to the
Unites states of America
(USA) marketA wide range of products
including agricultural
products, manufactures,
textile and apparels
provisions, among
others.Generalised System of
Preferences (GSP).Through this scheme,
businesses in Kenya can
export to: Australia,
Canada, Japan, New
Zealand, Switzerland and
United States of America.Preferential duty
treatment to a wide
range of products
originating in developing
countries.Most products including
agricultural products and
manufactured products.23WHERE TO BORROW MONEY AND WHAT YOU ARE
REQUIRED TO DOType of institutionBenefiting productsCommercial banks- Provide short-term finances.• There are about 40 commercialbanks in Kenya. Examples of these
banks are: Kenya Commercial
Bank• Barclays Bank
• National Bank of Kenya
• Standard Chartered Bank
• Cooperative Bank
• Citibank
• Commercial Bank of Africa
• Stanbic
• First American Bank- You need to be a customer of thebank,- A completed loan application formfrom the respective bank.- A business proposal on what youwant to do.- Bank statements for 6 months or less.
- Collateral or security. This could be:• Title deeds
• Chattels mortgage over machineryand equipment• Motor vehicles log books
• Debenture over company assets
• Non supported guaranteesExport-Import Banks (EXIM)- These banks have organized creditfacilities with some banks in Kenya. More information on these credits isobtainable from Central Bank of
Kenya, Industrial Development Bank
(IDB) and from Commercial banks.You must be exporting or importinggoods or services to or from the
sponsor country.Countries such India and China aresome of the key sponsors of such
banks.Development Banks- Provide long-term developmentfunding Theyinclude:• Industrial and CommercialDevelopment Corporation (ICDC).• Industrial Development Bank (IDB)• Copy of Certificate of Incorporation
• Copy of Certificate of Registration ofBusiness Name• Copy of Trade LicenseExternal Finances- These include global facilities tofinance private sector establishment
in various sectors such as the
European Investment Bank (EIB)
facility operated through all major
commercial banks. More information
is available from Central Bank of
Kenya, commercial banks, and
Ministry of Trade and Industry.- Businesses must be registered withthe registrar of Companies.- Requirements depend on the specificinvestment facility.24Type of institutionBenefiting productsMicro-finance institutionsThese include:
• K-REP
• Faulu Kenya
• NGOs such as Action Aid, CareKenya• Equity bank
• SACCOs
• Cooperatives• Copy of Certificate ofIncorporation• Copy of Certificate of Registrationof Business Name• Copy of Trade License25THE TAXES YOU ARE REQUIRED TO PAYType of TaxRate %Tax levied onIncome taxIncome such as from business,
employment, rent, dividends,
interest and pensionsRate depends on taxband:Income of KSh / year Rate (%)First:121 968 10Next: 11491215Next: 11491220Next: 11491225Over:466 704 30Corporate taxCorporate bodies such as
limited companies, trusts,
clubs, societies, associations
and cooperatives.30Withholding
taxesDividends and royalties5Value Added
Tax (VAT)Designated goods and services
(locally produced or imported)
for all registered businesses
with thresholds of Ksh 3 M per
year.16Excise taxesSome products including
alcoholic beverages, tobacco
products, petroleum products,
motor vehicles, carbonated
drinks and mineral water,
cosmetics, jewellery and cell
phone airtime.Alcoholic drinks: 15-85
Tobacco products: 130Import dutyGoods imported into the
countryInline with the East African
Customs Union’s Common
External Tariff (CET):
Raw materials/ capital goods:
0%
Semi-processed/intermediate
goods: 10%;
Finished goods: 25%
Import duties 'sensitive
products6 ’ can however behigher than these rates.6 Sensitive products to Kenya and indeed to the EAC region according to the EAC Common ExternalTariff (CET) include: dairy, maize, wheat, rice, sugar, tobacco products, cement, second hand clothes and
cotton fabrics among other products.26INCENTIVES FOR YOUIncentives for export and import oriented businesses7 This includes manufacturers who import goods for use in the domestic market under the following categories:• Pharmaceutical & medicament manufacturers. • Official aid funded projects. • Publishers of educational books.
• Manufacturers of supplies to international airlines. • Importers of white refined sugar. • Manufacturers of paperfor packing liquids.IncentivesMain requirements for
qualificationMain provisionsDuty drawbacksProvided for
under the East
African Customs
Management
ActDraw back of import duty on
materials imported for the
manufacture of goods which
are to be: exported,
transferred to a free port or
transferred to an Export
Processing Zone.• Authorization from theCommissioner of Customsbefore one startsmanufacturing.• The goods for export mustbe a direct result of theimported material used intheir manufacture.• Present the goodsdestined for export for anexamination by an officer.• Declare that theconditions under whichdrawback may be allowedhave been fulfilled andthat the goods haveactually been exported.• Present the claim fordrawback within a periodof 12 months from thedate of exportation of the
goods.Manufacturing
Under Bond
(MUB)A scheme aimed
at promoting
industrial
production for
export.• Exemption fromcustoms/excise duty and
VAT on imported plant,
machinery, equipment, raw
materials and other
imported inputs.• 100% investmentallowance on plant,
machinery, equipment and
buildings.A license from
theCommissioner of
Customs to operate a
bonded factory.Tax Remission for
Exports Office
(TREO) schemesAims at
encouraging
local
manufacturers to
export by
remitting duty
and VAT on raw• Remission of import duty oninputs.• Exemption of (ImportDeclaration Form (IDF) fees
on inputs except for
payment of processing fee
of Kshs. 5,000.• Remission of VAT on inputs.
• Remission of excise duty onfuel oil and kerosene.• You must either be a:- Direct Exporter,
- Indirect Exporter,
- Approved Supplier,
- Indirect Manufacturer,
- Importers under theEssential Goods
Production Support
Programme (EGPSP)7 .- Oil Refiner.• You must be gazettedbefore being allowed to27IncentivesMain requirements for
qualificationMain provisionsmaterials used
in the
manufacture of
goods for
export. It also
provides for tax
remission on
inputs to make
goods defined
as essential for
the domestic
market participate in the TREOscheme.• One has to apply for theremission and provide the
following:- An export order orcontract for specified
export goods or a letter
of credit.- A detailed productionplan.- A list of goods to beimported.- Tariff classification,quantity, value and
amount of duty/VAT to
be waived.• One has to undertake topay duty on the imported
goods that have not been
used in the production of
approved exports or
indirect exports or have
not been transferred to an
approved bonded factory
or to the next production
phase.• A security bond will needto be posted covering the
taxes and is cancelled only
after the reconciliation
declaration has been
verified and approved by
the TREO office and any
unused imported goods
have been re-exported or
duty has been paid.Export
Processing
Zones (EPZ)
The aim of this
programme is to
promote export
oriented
industrial
investments
within designated
areas.• Tax incentives- Exemption fromCorporate Tax for a 10
-year period after which
one pays taxes of 25%.- Exemption fromWithholding Tax on
dividends for a 10-year
period.- Duty and VAT exemption • One should have eitherone of these two licenses
issued by the Export
Promotion Zones Authority
(EPZA).
- The enterprise licence.For firms engaged in
export oriented
manufacturing or
processing; commercial
activities such as bulk28IncentivesMain requirements for
qualificationMain provisions on raw materials,machinery and other
inputs.- Stamp duty exemption.
- 100% investmentdeduction over 20 years
on initial investment.• Procedural incentives- Rapid project approvaland licensing (30 days).- Operation underessentially one license
issued by EPZ Authority.- No minimum investmentlevel- Access to offshoreborrowing.- Exemption from IndustrialRegistration Act, Factories
Act, Statistics Act, Trade
Licensing Act and
Imports, Exports and
Essential Supplies Act.• On-site Customsdocumentation and
inspection.• One-stop-shop service bythe EPZ Authority for
facilitation and after care.• Physical InfrastructureBenefits
- Ready factory buildingsfor rent or purchase.- Serviced land forconstruction of buildings.- Office premises.
- Water, sewerage andelectricity supply.- Landscaping, garbagedisposal, street cleaning
services.- Illuminated perimeterfence and 24-hour
security.- Accessible Customsoffices. • One should have eitherone of these two licenses
issued by the Export
Promotion Zones Authority
(EPZA).
- The enterprise licence.For firms engaged in
export oriented
manufacturing or
processing; commercial
activities such as bulk
breaking, re-labelling,
grading, repackaging
and services including
brokerage and
consultancy. To obtain this licence,you will need to submit
a project proposal
outlining, among other
things, your intended
activity, the production
process, the target
market and the
proposed level of
investment.- The developer/ operatorlicence. Here you will
need to apply for
designation of the land
area as an EPZ as well
as for a
developer/operator
licence. You should
own the land or lease it
for a minimum of 30
years.29FOR MORE INFORMATION: SOME USEFUL CONTACTSName of InstitutionT
ype of informationavailableAddressT
e
lephoneF
axEmailW
ebsiteAssociation of Jua Kal
iSmall and MicroEnterprises(2) 44481600724 751 831Association of MicroF
i
nance InstitutionsInformation onMicro- finance(2) 576799Ministry of Labour andHuman DevelopmentSmall and MicroEnterprisesP
.
O
.Box40326,Nairobi(2) 2729800Ministry of Livestock andF
i
sheries developmentLivestock and relatedtrade requirementP
.
O
.Box30028,Nairobi(2) 632231 /632413 /4(2) 2720586Africa Trade InsuranceAgencyExport creditguaranteeP
.
O
.Box10620,Nairobi(2) 2719727(2)2719701i
nfor@ati-aca.comAssociation of Fi
shP
r
ocessors and Exportersof KenyaP
r
ocessing andexport of fish andfish productsP
.
O
.Box 345– 00600,Nairobi(2) 4440858(2) 4440858(2) 4445344afipek@accesskenya.comEastern and SouthernAfrica Leather IndustriesP
r
oduction andexport of leather andleather productsP
.
O
.Box1391 00606Nairobi(2) 446490/1(2) 4445344admin@esalia.org(045) 26427Export Processing ZonesAuthoritySetting up a businessin EPZP
.
O
.Box50363,Nairobi(045) 26421-6epzahq@africaonline.co.kewww.epz
akenya.co
m(2) 218013 /228539Export PromotionCouncilExport opportunities,market informationP
.
O
.Box40247 –00100,Nairobi(2) 228534 -8chiefexe@epc.or
.kewww.epcke
n
y
a.or
g30Name of InstitutionT
ype of informationavailableAddressT
e
lephoneF
axEmailW
ebsite(2) 445148/9F
r
esh Produce ExportersAssociation of KenyaHorticulturalproduction andexportP
.
O
.Box40312 –00100,Nairobi(2) 4451488info@fpeak.org(2) 827264Horticultural CropsDevelopment AuthorityV
e
getables, cutflowers and fruitsexportsP
.
O
.Box42601,Nairobi.(2) 822570 /827260/1hcdamd@wananchi.com.www.hcda.or.
k
e(2) 336663Investment PromotionAuthorityInvestmentregulationsrequirements,procedures andincentivesP
.O.Box55704Nairobi(2) 221401 – 4ipckenya@nbnet.co.kewww.inv
estmentke
n
y
a.com(2) 822078K
enya Airports AuthorityAirport operations,flight informationP
.
0. Box19001-00501, Nairobi(2) 825400 – 10i
n
f
o
@kenyaai
rports.co.kewww.k
enyaairpor
ts
.c
o
.
k
e(2) 3746028,3746030K
enya ApparelManufacturers ExportersAssociation (KAMEA)Apparel and textilemanufacturing andexportsP
.O.Box30225 –00100,Nairobi(2) 3746005/7,3746021 /220721-201368/0734-646005info@kam.co.kewww.
k
am.co
.k
e(2) 3746028/3746030K
enya Association ofManufacturersManufacturingactivitiesP
.O.Box30225-00100 GPO,Nairobi(2) 3746005/7,3746021 /22Cell:0721-201368 or0734-646005info@kam.co.kewww.
k
am.co
.k
e(2) 503293 /609660K
enya Bureau ofStandardsQuality standardsP
.
O
.Box54974 –00200,Nairobi(2)600034 / 66602350 / 1info@kebs.orgwww.
k
ebs.org31Name of InstitutionT
ype of informationavailableAddressT
e
lephoneF
axEmailW
ebsiteK
enya Flower CouncilFlower productionand exportingP
.
O
.Box56325 –00200,Nairobi(2) 576597/5606120733 639523T
e
l/Fax:254-20-883041kfc@africaonline.co.kewww.kenyaflowers.co.ke(2) 827854K
enya InternationalF
r
eight and WarehousingAssociationClearing and freightforwardingwarehousingP
.
O
.Box57969 –00200,Nairobi(2) 827704 /0722 883953kifwa@nbnet.co.ke(041) 220831K
enya Maritime AuthorityMaritime transportand relatedP
.
O
.Box95076Mombasa,K
e
nya.(2)0721 393458(2) 334293K
enya NationalChamber of Commerceand IndustryT
r
ade and marketinformation forpotentialimporters/exportersP
.
O
.Box47024Nairobi(2) 220867kncci@swiftkenya.com(2) 882265K
enya Plant HealthInspectorate Services(KEPHIS)Sanitary andPhytosanitarymatters,Information onregulations onimport ad export ofplant and plantrelatedmaterial/products importers/exportersP
.
O
.Box49592,Nairobi(2) 884545 /882308 /882933kephis@nbnet.co.kewww.kephis.org(2) 4449072P
e
st Control ProductsBoardP
e
st control productsP
.
O
.Box13794, 00800, Nairobi(2) 4450242 /4446115pcpboard@todays.co.ke32Name of InstitutionT
ype of informationavailableAddressT
e
lephoneF
axEmailW
ebsite(2) 2311867K
enya Ports AuthorityP
o
rt operations,maritime information,shipping guideP
.
O
.Box95009,Mombasa(041) 2312211/ 2221211Kpa-md@africaonline.co.kewww.kpa.co.ke(2) 340049 /224156K
enya Ra
ilwaysCorporation LtdR
a
il transportP
.
O
.Box30121,Nairobi.(2) 221211www.revenue.go.ke(2) 318197K
enya Revenue Authority-
C
ustoms matters-
T
axesP
.
O
.Box48240-00100, Nairobi(2) 310900executive@ktamsa.com(041)2312015K
enya TransportAssociationR
o
ad haulageP
.
O
.Box88502,Mombasa(041) 2311958/ 2312015www.agriculture.go.ke(2) 2720586Ministry of AgricultureAgricultural importsand exportsP
.
O
.Box30028,Nairobi(2) 2718870www.treasury.
go.keMinistry of Fi
nanceT
a
x Re
mission forExport OfficeP
.
O
.Box30007,Nairobi(2) 252299www.health.go.keMinistry of HealthCertificateofhealthand related mattersP
.
O
.Box30016,Nairobi(2) 2717077(2) 2721007Ministry of Livestock andF
i
sheries DevelopmentLivestock and related products trading,processing and export informationP
.
O
.Box34188,Nairobi(2) 2718870 /2720306Samakisaamn et.com(2) 3743699Department of Fi
sheriesF
i
shing,processingtrade, export requirementP
.
O
.box58187Nairobi(2) 3742320/3742349kextrade@afric aonline.cgo.kewww.tradeandindustry.go.ke(2) 315011Ministry of Trade andIndustryT
r
ade policy, bilateraland multilateral tradeP
.O.Box30430Nairobi(2) 315001 - 7

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