Kenya WT/TPR/S/64
Page 27
III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) OVERVIEW
1. Tariffs have become the main trade policy instrument in Kenya.  The trade reforms
undertaken by Kenya since 1993 have led to the dismantling of most quantitative restrictions on
imports.  Most non-tariff restrictions still in force are maintained for moral, health, security, andenvironmental reasons, and under international conventions to which Kenya is a signatory.  Tariff
protection in Kenya has been reduced since its previous Trade Policy Review in 1993.  The number of
bands carrying ad valorem  rates has been reduced from eight in 1994 to five (0;  5%;  10%;  15%;
and 25%), and maximum ad valorem  rates lowered from 60% in 1992 to 25% in 1999.  Mixed duties
apply to some 10.5% of all tariff lines and specific duties to 30 lines at the eight-digit level of theHarmonized System (HS).
2. In addition to customs tariffs, "suspended" (stand – by) duties ranging up to 70% on maize,
rice, wheat, sugar, and milk are imposed on some 17% of all tariff lines, in agriculture and
manufacturing, the most protected sectors.  The simple average of Kenya's non-specific import duties
(inclusive of applied "suspended" duties) is 18%, with rates ranging from zero to 95% on wheat flour,meslin flour, and sugar.
1  The import declaration fee of 2.75% collected on all imports – even those
not subject to the preshipment inspection required on imports worth at least US$5,000 – raises the
average rate of import duties to 20.75%.  A value-added tax of 15% and excise duties ranging up to
135% (the excise duties are mixed or specific on certain products) are levied both on imports and
locally produced goods.
3. Except on timber and fish, Kenya has abolished export duties and taxes on all products.
Three main incentive schemes, i.e. the Export Processing Zone, the Manufacturing Under Bond, and
the Duty Remission Schemes, are available to export-oriented companies.  However, certain
agricultural products and food are subject to special export licences for self-sufficiency purposes.
Moreover, the slowdown in the im plementation of the parastatal reform programme since 1996 has
meant that several state-owned companies still hold monopolies or exercise exclusive rights in various
areas of Kenya's economy.
4. The Kenyan Government is drafting legislati on on government procurement, and is amending
its legislation on anti-dumping and countervailing measures, and on intellectual property, with a view
to aligning them on the WTO Agreements. In Kenya, counterfeiting mainly affects computer
programs, sound recordings and video cassettes.
(2) MEASURES DIRECTLY AFFECTING IMPORTS
(i) Registration and documentation
5. All operators in domestic or international trade in Kenya must be registered with the Attorney
General Chambers and licensed by the Ministry of Trade under the 1968 Trade Licensing Act, as
revised.  A personal identification number is given to each operator by the Customs Department of the
Kenya Revenue Authority.
6. Trading activities are open to Kenyans and foreigners.  However, under the Act, foreigners
are not allowed to conduct businesses in certain places or in specified goods;  licensing fees vary with
the type of the business and its location (Chapter II(3)(i)).
                                                     
1 Sugar of a polarimeter reading of 99.5° or more.WT/TPR/S/64 Trade Policy Review
Page 28
7. Commercial consignments to Kenya have to be declared on an Import Declaration Form
(IDF).  The form must be submitted, together with the usual commercial documents (the pro-forma
invoice, the bill of lading or air waybill, the sanitary and phytosanitary certificates (where applicable),
certificates of registration for pharmaceutical imports (where applicable), and a certificate of origin
for goods claiming preferential treatment), to the relevant preshipment inspection (PSI) company,
irrespective of the value of the goods (i.e. irrespective of whether the goods will be inspected) or ofthe mode of transportation.  The form is provided at no charge to importers by the PSI company.
(ii) Customs procedures
(a) Customs valuation
8. Customs valuation in Kenya is based on the Brussels Definition of Value (BDV). Kenya has
delayed the transition to the valuation method based on the transaction value in accordance with theprovisions of Article 20 (Special and differential treatment) of the WTO Agreement on the
Implementation of Article VII of GATT 1994.  According to the authorities, the transaction value will
be applied from the year 2000, i.e. at the end of the period allowed to developing countries under the
Agreement's provisions.
9. Imports into Kenya of an f.o.b. value of US$5,000 or more – this minimum f.o.b. value is
raised to US$10,000 if the goods are airlifted by courier services – are subject to a compulsory quality
and quantity inspection, and price comparison.  Three companies have been appointed by the
Government:  Bureau Veritas, Cotecna and Sociét é Générale de Surveillance.  Each company is
allocated an exporting (foreign) region.  Upon receipt of the relevant information from both its liaison
office and the exporter, and before the goods are shipped to Kenya, the PSI company responsible for
the country of supply carries out the physical inspection and issues a clean report of findings (CRF).
The CRF contains, inter alia , an indication of the most appropriate tariff line under the Harmonized
System and the dutiable value of the merchandise for customs purposes.  Except for air-freight and
courier shipments, a final invoice and the shipping documents are required for all modes of transport
before the CRF is issued.  Clearance of the merchandise by the inspecting office is normally within
two days from the receipt of the completed IDF with the relevant documentation.
10. A non-negotiable report of findings is issued by the inspecting office if there are unresolved
problems regarding the quantity, quality, and/or price of the shipment, or if the shipment contains
prohibited goods (section (iv)).  In the case of suspected undervaluation of the goods, the importer is
asked to produce certified invoices, which are verified against catalogues or similar units or
quantities.  A penalty of 15% (25% for motor vehicles) of the f.o.b. value applies in case of
merchandise normally subject to PSI that is shipped without inspection.
2  A PSI fee is included in the
import declaration fee of 2.75% payable on all imports to Kenya, irrespective of their value
(section (iii)(d)).
11. The imports exempt from preshipment inspection include:  goods destined to an approved
duty-free store, to an approved export-processing-zone enterprise or to a manufacturing-under-bond
company;  accompanied or unaccompanied used effects;  unset precious stones and precious metals inbullion form;  objects of art;  explosives and pyrotechnic products;  ammunition, weapons, and
implements of war imported by the Kenyan Government;  live animals;  current newspapers and
periodicals;  post parcels, excluding goods imported for trade;  personal gifts, excluding motor
vehicles, sent by foreign residents to their relatives in Kenya for their personal use;  gifts and supplies
for use by diplomatic and consular missions, and international organizations;  household and personal
                                                     
2 USTR (1999).Kenya WT/TPR/S/64
Page 29
effects, including motor vehicles when exempt under settlers' effects or returning resident entitlement;
and urgent air shipments valued below US$10,000 and imported through a licensed courier service.
(b) Customs clearance
12. Importers must declare the entry of their merchandise to customs on a prescribed form.  They
should also present the import declaration form, the port release order, and the usual commercial
documents.  After physical verification of the goods by customs, the duties are paid and the goodsreleased.  Providing that all documents are in order, customs clearance is normally completed within
two days.
13. Twenty-one days after commencement of unloading, goods inadmissible at the port of entry
are removed to a customs warehouse and sold (after advertisement in the appropriate official gazette)
if not admitted after three months.  Goods admitted in transit are allowed to pass through Kenya undersecurity bond and customs control until they are re-exported.  Goods not lawfully removed within
60 days (depending on the nature of the goods) after deposit in a customs warehouse may be sold by
public auction after 30 days notice of the sale.
3  If an importer fails to pay duties that have become
payable, within one month, or such further period as allowed by the Commissioner of Customs and
Excise, the merchandise is sold at public auction after one month's notice of the sale.4  Importers incur
a penalty of 3% per month (or part thereof) on the amount of duties remaining unpaid after the date
upon which they are payable.5
14. Importers may appeal against a customs decision to the Commissioner of Customs and
Excise, whose ruling is final.
(iii) Tariffs, other levies and charges
(a) General features
15. Goods imported to Kenya may be subject to:  tariffs, suspended duties and the import
declaration fee, which only apply to imports;  and internal taxes, i.e. excise duties and the value-added
tax, which apply equally to imports and domestic products.  The basis for import duties is the c.i.f.
value, and for internal taxes the same value plus the import duties.  However, in order to encourage
the use of air freight, only 50% of its cost is included in the duty base.  For local products, the basis
for internal taxes is the ex-factory price.
(b) Nature and level of MFN duties
16. Kenya accords at least MFN treatment to all trading partners, whether members of the WTO
or not.  It adopted the Harmonized System (HS) nomenclature in 1989.  Since the last Review, Kenya
has simplified its tariff structure:  the number of bands carrying ad valorem  rates has been reduced
from eight in 1994 to five (0;  5%;  10%;  15%;  and 25%) in 1999, and maximum ad valorem  rates
have been lowered from 60% in 1992 to 25% in 1999.  Border charges still represent some 54% of
total tax revenue in Kenya.
17. Based on HS 1996, the import tariff in force at end-August 1999 has 5,950 lines at the eight-
digit level. Some 89% of all tariff lines bear ad valorem  duties, of which about 4.2% (3.7% of the
                                                     
3 Government of Kenya (1996b), Section 33(1).
4 Government of Kenya (1996b), Section 46(3).
5 Government of Kenya (1996b), Section 225A.WT/TPR/S/64 Trade Policy Review
Page 30
total) are duty free.  Mixed duties apply to 622 lines (10.5% of all tariff lines),6 on products such as
wheat, maize, rice, sugar, milk, textiles and clothing, footwear, tobacco, spirits, and other
manufactured products.  The remaining 30 lines of the tariff carry specific duties on petroleum
products (Table III.1).  Virtually the same products have been subject to mixed or specifc duties since
the previous Review of Kenya.
Table III.1
Products subject to specific duties, September 1999
HS line Description Unita Specific duty
(K Sh)
27090000 Petroleum oils and oils obtained from bituminous minerals, crude 1,000 l. 1,000.00
27100010 Petroleum, partly refined (including topped crudes) 1,000 l. 1,000.00
27100021 Aviation spirit (gasoline) 1,000 l. 2,500.00
27100022 Motor spirit (gasolene), premium 1,000 l. 2,500.00
27100023 Motor spirit (gasolene), regular 1,000 l. 2,500.00
27100024 Jet fuel, spirit type 1,000 l. 2,500.00
27100025 Special boiling point spirit and white spirit 1,000 l. 1,250.00
27100029 Other light petroleum oils and preparations 1,000 l. 1,250.00
27100031 Jet fuel (kerosene type) 1,000 l. 5,005.00
27100032 Kerosene 1,000 l. 5,005.00
27100039 Other medium petroleum oils and preparations 1,000 l. 2,400.00
27100041 Diesel oil (industrial, heavy, black, for low-speed marine and stationary engines) 1,000 l. 3,400.00
27100042 Gas oil (automotive, light, amber, for high-speed engines) 1,000 l. 2,704.00
27100043 Other gas oil 1,000 l. 3,400.00
27100044 Residual fuel oils (marine, furnace and similar fuel oils) of 125 centistokes (cSt) 1,000 l. 1,900.00
27100045 Residual fuel oils of 180 centistokes (cSt) 1,000 l. 1,650.00
27100046 Residual fuel oils of 280 centistokes (cSt) 1,000 l. 1,485.00
27100047 Other residual fuel oils 1,000 l. 1,400.00
27111100 Liquefied natural gas other than propane and butanes kg. 3.02
27111200 Liquefied propane kg. 3.02
27111300 Liquefied butanes kg. 3.02
27111400 Liquefied ethylene, propylene, butylene and butadiene kg. 3.02
27111900 Other liquefied petroleum gases and gaseous hydrocarbons kg. 3.02
27112100 Natural gas in gaseous state kg. 3.02
27112900 Other petroleum gases and other gaseous hydrocarbons in gaseous state kg. 3.02
27132000 Petroleum bitumen kg. 1.875
27139000 Other residues of petroleum oils or of oils obtained from bituminous minerals kg. 1.875
27141000 Bituminous or oil shale and tar sands kg. 1.875
27149000 Bitumen and asphalt, asphaltites and asphaltic rocks kg. 1.875
27150000 Bituminous mixtures based on natural asphalt, on natural bitumen, on petroleum kg. 1.875
a The volume (in litres) is measured at 20oC.
Source : Information provided by the Kenyan authorities.
18. The variable duties, introduced in September 1994 on some food products (wheat, rice, maize,
milk, and sugar products), have been replaced by an equivalent system of ad valorem or specific
duties, called "suspended" duties, that apply in addition to customs tariffs.  A parliamentary Actprovides for the ceiling rates of suspended duties on a list of selected products (currently 1,024 tariff
lines at the HS eight-digit level).  On the request of a domestic industry, the Minister of Finance may,
on a discretionary basis, impose a suspended duty on a product on the list.  The applied rate must not
exceed the ceiling set by the Act.  Products on which suspended duties are currently levied
(1,011 tariff lines at the HS eight-digit level, i.e. some 17% of all tariff lines) include motor vehicles,tyres, dry cells, paper and paperboard, tobacco products, alcoholic beverages, certain fruit, vegetable
                                                     
6 The duty applied is either the specific or the ad valorem  rate, whichever yields the higher revenue.Kenya WT/TPR/S/64
Page 31
oils, cosmetics, resins, yarns, footwear, and selected iron and steel products.  The rates of suspended
duties currently applied range up to 70% (the maximum level of the ceilings set by the Act) on maize,
rice, wheat, sugar, and milk.
19. For analytical purposes, specific duties have been ignored;  only ad valorem  duties, including
the ad valorem  components of mixed duties, were used for calculations.  Therefore, the following
analysis is based on 5,920 tariff lines at the HS eight-digit level (some 99.5% of all tariff lines).  Onthe basis of these simplifications, the simple average of Kenya's MFN import tariff, inclusive of
applied suspended duties, is 18% (16.3% without the applied suspended duties), with a standard
deviation of 9.8%. (Table AIII.1).
7  The coefficient of variation is 0.54, indicating that, in general,
tariff rates differ moderately from one type of product to another.  The modal rate (the rate occurring
most frequently) is 15%:  it applies to 39.5% of all tariff lines.  Except for this modal rate, the rate of25% applies to the highest number of tariff lines (23.9% of all lines).
20. Manufacturing (ISIC Rev. 2) is the most protected sector (Chart III.1) with an average tariff
of 18.2%, followed by agriculture (16.7%) and mining and quarrying (13.6%).  However, agriculture
becomes the most protected sector, with a mean tariff rate of 21.3%, when the Uruguay Round
definition is used.  Suspended duties are more frequently imposed on semi- and fully-processed goods(the manufacturing sector under ISIC Rev. 2) than on agricultural products;  they do not apply to
products from the mining and quarrying sector.
Total
Industry
Mining
AgricultureDutyfree
>0-10
>10-20
>20-30
>30010203040506070Chart III.1
MFN tariff distribution by sector, 1999
Source : WTO Secretariat estimates, based on data provided by the Kenyan authorities.Percentage
                                                     
7 The 1999 average MFN import duties (inclusive of applied suspended duties) is lower than the 1992
mean tariff rate of 33.6% (excluding suspended duties).WT/TPR/S/64 Trade Policy Review
Page 32
21. Duty-free items (3.7% of all tariff lines) are:  live fowl of the species Gallus domesticus
weighting not more than 185g;  medicine;  fertil izers, fungicides and herbicides;  maps and
hydrographic or similar charts, and printed matter, e.g. books, brochures, dictionaries, encyclopaedias,
newspapers, journals, and periodicals;  some agricultural and horticultural machinery and appliances;
medical, surgical, dental, and veterinarian appliances;  ambulances and hearses;  fire-fighting and
street-cleaning vehicles;  aircraft, spacecraft and their launch vehicles;  mobile radiological units,mobile clinics, invalid carriages and their parts;  and contact lenses.  Some 38% of all tariff lines carry
rates higher than 15%.  Tariff rates higher than 35% apply to 2% of all tariff lines, including certain
cereals;  fats and oils;  sugar;  vegetables, fruit, and their preparations;  nuts;  beverages;  and paper,
paperboard, cards, and office stationery.  The maximum rate of 95% (the maximum rate of 25% of the
basic tariff plus the maximum applied suspended duty of 70%) is levied on wheat flour, meslin flour,and sugar of a polarimeter reading of 99.5° or more.
22. Kenya's tariff generally displays positive escalation;  average rates range from 15.2% on first-
stage processed and 17.9% on semi-finished products to 18.6% on finished goods.  Tariffs are
progressive on all products with the exception of  paper products;  printing and publishing;  fabricated
metal products;  machinery and equipment, on which duties show negative escalation from semi-finished to finished goods;  and "other manufacturing industries", on which negative escalation is
present from the first stage of processing to finished products.  Tariff escalation is most pronounced
on:  textiles, wearing apparel, and leather industries, with mean rates ranging from 14.9% on the first-
stage of processed goods to 29.2% on finished products;  basic metal industries, with average rates
increasing from 10.6% on the first-stage processed items to 25% on finished goods;  and on
chemicals, petroleum, coal, rubber, and plastics, with mean rates rising from 7.7% to 17.3%
(Table AIII.2).
23. Kenya's tariff bindings cover 15.1% of all its tariff lines.  In the Uruguay Round, Kenya
bound six tariff lines (at the HS four-digit level) on non-agricultural products (1.6% of its total tariff
lines on non-agricultural products).  The bound rates are:  62% on fresh, chilled, or frozen fish
(HS 03.02 and 03.03), excluding fish fillets and other fish meat which is minced;  35% on
medicaments (HS 30.03);  18% on pharmaceutical goods (HS 30.06);  62% on mineral or chemicalfertilizers (HS 31.05) containing two or three of the fertilizing elements, potassium, phosphorus and
nitrogen;  and 31% on polymers of ethylene in primary form (HS 39.01).  The tariff on "other
tractors" (HS 87.01.90) was also bound at 62%.  Kenya also bound all its tariffs on all agricultural
products, at a ceiling rate of 100%.  "Other duties and charges" on all these agricultural and non-
agricultural products were bound at zero.
(c) Tariff preferences
24. Kenya grants preferential tariff treatment (70% duty reduction on all products), on a
reciprocal basis, to other members of the Common Market for Eastern and Southern Africa
(COMESA), subject to a Certificate of Origin (Chapter II(2)(ii)).
25. Under the framework of the East African Cooperation (EAC), preferential tariff treatment is
also to be granted by Kenya to other members – Tanzania and Uganda – by 2004 (Chapter II(2)(ii)).Kenya WT/TPR/S/64
Page 33
(d) Other duties, levies, and charges
26. An import declaration fee of 2.75% is collected on the customs value of all imports to Kenya,
irrespective of their source, final use, and value.  An additional fee of 1% is collected on the c.i.f.
value of agricultural imports to support the Kenya Plant Health Inspectorate Service (KEPHIS).8
27. Excise duties, ranging from 10% on mineral waters, essential oils, and cosmetic products, to
135% on tobacco products, apply both to imports and locally produced goods.  These duties arecharged on the ex-factory price of domestic goods and on the import value (including customs duties)
of imported items.  The excise duties are specific on mineral fuels and oils, and mixed on certain
spirits  (Table III.2).
Table III.2
Products subject to excise duties, September 1999
HS code Description Excise duty
2106.9050 Powdered beer 15%
2201.1010 Mineral waters, not containing added sugar or other sweetening matter nor flavoured 10%
2201.1090 Aerated waters, not containing added sugar or other sweetening matter nor flavoured 10%
2201.9000 Ice and snow; other natural or artificial waters not containing added sugar or other
sweetening matter nor flavoured20%
2202.1000 Waters, including mineral waters and aerated waters, containing added sugar or other
sweetening matter, or flavoured20%
2202.9000 Other non-alcoholic beverages 20%
2203.0010 Stout and porter 60%
2203.0020 Beer of an original gravity not exceeding 1060 degrees 90%
2203.0090 Other beer (including ale) of an original gravity exceeding 1060 degrees 90%
2204.1010 Champagne 45%
2204.1090 Other sparkling wine 45%
2204.2100 Other wine; grape must with fermentation prevented or arrested by the addition of
alcohol in containers of 2 litres or less45%
2204.2910 Other wines; grape must with fermentation prevented or arrested by the addition of
alcohol in containers of more than 2 litres but not more than 5 litres45%
2204.2920 Other wines; grape must with fermentation prevented or arrested by the addition of
alcohol in containers of more than 5 litres45%
2205.1000 Vermouth and other wine of fresh grapes flavoured with plants or aromatic substances
in containers of 2 litres or less45%
2205.9010 Vermouth and other wine of fresh grapes flavoured with plants or aromatic substances
in containers of more than 2 litres but not more than 5 litres45%
2205.9090 Vermouth or other wine of fresh grapes in containers of more than 5 litres 45%
2206.0010 Beer not made from malt 60%
2206.0021 Cider in containers holding 2 litres or less 35%
2206.0029 Cider in containers holding more than 2 litres 35%
2206.0030 Other fermented beverages (for example Chibuku) 15%
2206.0090 Other fermented beverages; mixtures of fermented beverages and non-alcoholic
beverages not elsewhere specified or included60%
2207.1000 Undenatured ethyl alcohol of an alcoholic strength by volume of 80% volume or higher Per proof litre:  KSh. 60 or 35%
2208.2011 Brandy in containers holding 2 litres or less Per proof litre:  KSh. 100 or 65%
2208.2019 Brandy in containers holding more than 2 litres Per proof litre:  KSh. 100 or 65%
Table III.2 (cont'd)
                                                     
8 USTR (1999).WT/TPR/S/64 Trade Policy Review
Page 34
HS code Description Excise duty
2208.2091 Other spirits obtained by distilling grape wine or grape marc in containers holding 2
litres or lessPer proof litre:  KSh. 100 or 65%
2208.2099 Other spirits obtained by distilling grape wine or grape marc in containers holding more
than 2 litresPer proof litre:  KSh. 100 or 65%
2208.3010 Whiskies in containers holding 2 litres or less Per proof litre:  KSh. 100 or 65%
2208.3090 Whiskies in containers holding more than 2 litres Per proof litre:  KSh. 100 or 65%
2208.4010 Rum and tafia in containers holding 2 litres or less Per proof litre:  KSh. 100 or 65%
2208.4090 Rum and tafia in containers holding more than 2 litres Per proof litre:  KSh. 100 or 65%
2208.5010 Gin and Geneva in containers holding 2 litres or less Per proof litre:  KSh. 100 or 65%
2208.5090 Gin and Geneva in containers holding more than 2 litres Per proof litre:  KSh. 100 or 65%
2208.6010 Vodka in containers holding 2 litres or less Per proof litre:  KSh. 100 or 65%
2208.6090 Vodka in containers holding more than 2 litres Per proof litre:  KSh. 100 or 65%
2208.7010 Liqueurs and cordials in containers holding 2 litres or less Per proof litre:  KSh. 100 or 65%
2208.7090 Liqueurs and cordials in containers holding more than 2 litres Per proof litre:  KSh. 100 or 65%
2208.9020 Fruit brandy not made from distilling grape wine or grape marc in containers holding
more than 2 litresPer proof litre:  KSh. 100 or 65%
2208.9030 Other spirits and other spirituous beverages in containers holding 2 litres or less 60%
2208.9040 Other spirits and other spirituous beverages in containers holding 2 litres or less Per proof litre:  KSh. 100 or 65%
2208.9090 Other spirits and other spirituous beverages in containers holding more than 2 litres Per proof litre:  KSh. 100 or 65%
2402.1000 Cigars, cheroots and cigarillos, containing tobacco 30%
2402.2010 Cigarettes containing tobacco, not exceeding 72 mm in length, including filter tip 135%
2402.2090 Other cigarettes containing tobacco 135%
2402.9010 Other cigars, cheroots and cigarillos containing tobacco substitutes 30%
2402.9020 Other cigarettes containing tobacco substitutes, not exceeding 72 mm in length
including filter tip135%
2402.9090 Other cigarettes containing tobacco substitutes 135%
2403.1000 Smoking tobacco, whether or not containing tobacco substitutes in any proportion 135%
2403.9100 Homogenised or reconstituted tobacco 135%
2403.9920 Tobacco extracts and essences 135%
2403.9990 Other manufactured tobacco and manufactured tobacco substitutes 135%
2710.0021 Aviation spirit (gasolene) Per 1,000 litre 20°C KSh. 14,945
2710.0022 Motor spirit (gasolene), premium Per 1,000 litre 20°C KSh. 14,945
2710.0023 Motor spirit (gasolene), regular Per 1,000 litre 20°C KSh. 14,555
2710.0024 Jet fuel, spirit type Per 1,000 litre 20°C KSh. 14,945
2710.0025 Special boiling point spirit and white spirit Per 1,000 litre 20°C KSh. 5,800
2710.0029 Other light petroleum oils and preparations Per 1,000 litre 20°C KSh. 5,800
2710.0039 Other medium petroleum oils and preparations Per 1,000 litre 20°C KSh. 2,600
2710.0042 Gas oil (automotive, light, amber, for high speed engines) Per 1,000 litre 20°C KSh. 7,301
2710.0043 Other gas oil Per 1,000 litre 20°C KSh. 2,600
2712.1000 Petroleum jelly 10%
3303.0010 Toilet waters 10%
3303.0090 Perfumes 10%
3304.1000 Lip make-up preparations 10%
3304.2000 Eye make-up preparations 10%
3304.3000 Manicure or pedicure preparations 10%
3304.9100 Beauty and skin care powders, including sunscreen or sun tan preparations whether or
not compressed10%
Table III.2 (cont'd)Kenya WT/TPR/S/64
Page 35
HS code Description Excise duty
3304.9900 Other beauty or make-up preparations and preparations for the care of the skin (other
than medicaments), including sunscreen or sun tan preparations10%
3305.1000 Shampoos 10%
3305.2000 Preparations for permanent waving or straightening of hair 10%
3305.3000 Hair lacquers 10%
3305.9000 Other preparations for use on the hair 10%
3307.1000 Pre-shave, shaving or after-shave cream 10%
3307.2000 Personal deodorants and anti-perspirants 10%
3307.3000 Perfumed salts and other bath preparations 10%
3307.4900 Other preparations for perfuming or deodorizing rooms, including odoriferous
preparations used during religious rites10%
3307.9020 Perfumed petroleum jelly 10%
3307.9030 Perfumed papers and papers impregnated or coated with perfumes or cosmetics 10%
3307.9040 Wadding, felt and non-woven impregnated, coated or covered with perfumes or
cosmetics10%
3307.9090 Other depilatories and other performery, cosmetic or toilet preparations, not elsewhere
specified or included10%
8703.2322 Passenger motor cars, with spark-ignition internal combustion reciprocating piston
engine, assembled, of a cylinder capacity exceeding 1,800 cc but not exceeding 2,000 cc10%
8703.2332 Passenger motor cars, with spark-ignition internal combustion reciprocating piston
engine, assembled, of a cylinder capacity exceeding 2,000 cc but not exceeding 2,250 cc20%
8703.2342 Passenger motor cars, with spark-ignition internal combustion reciprocating piston
engine, assembled, of a cylinder capacity exceeding 2,250 cc but not exceeding 2,500 cc20%
8703.2352 Passenger motor cars, with spark-ignition internal combustion reciprocating piston
engine, assembled, of a cylinder capacity exceeding 2,500 cc but not exceeding 3,000 cc20%
8703.2420 Passenger motor cars, with spark-ignition internal combustion reciprocating piston
engine, assembled, of a cylinder capacity exceeding 3,000 cc40%
8703.3222 Assembled passenger motor cars, with compression- ignition internal combustion piston
engine (diesel or semi-diesel) of a cylinder capacity exceeding 1,800 cc but not
exceeding 2,000 cc10%
8703.3232 Assembled passenger motor cars, with compression- ignition internal combustion piston
engine (diesel or semi-diesel) of a cylinder capacity exceeding 2,000 cc but not
exceeding 2,250 cc20%
8703.3242 Assembled passenger motor cars, with compression- ignition internal combustion piston
engine (diesel or semi-diesel) of a cylinder capacity exceeding 2,250 cc but not
exceeding 2,500 cc20%
8703.3312 Assembled passenger motor cars, with compression- ignition internal combustion piston
engine (diesel or semi-diesel) of a cylinder capacity exceeding 2,500 cc but not
exceeding 3,000 cc20%
8703.3322 Assembled passenger motor cars, with compression- ignition internal combustion piston
engine (diesel or semi-diesel) of a cylinder capacity exceeding 3,000 cc40%
Source: Information provided by the Kenyan authorities.
28. A value-added tax (VAT) is levied at a standard rate of 15% on the sale price of locally
produced goods and services, or on the customs value (section (ii)(a)) plus border charges of imports.
29. Unprocessed agricultural products (including fishery, forestry, and livestock) and processed
foodstuffs are exempt from VAT.  Pharmaceuticals, medical equipment, fertilizers, agricultural
machinery and equipment, educational textbooks, and all exports of goods and taxable services are
zero-rated for duty refund purposes.  The combined minimum turnover level of taxable goods and
services for VAT registration is KSh. 2.4 million per year.  The VAT can also be waived by the
Minister of Finance under specific programme conditions detailed in the Value-Added Tax Act.WT/TPR/S/64 Trade Policy Review
Page 36
(e) Duty and tax exemptions and refunds
30. A number of regulations provide for duty reductions or refunds, or full exemption from duty.
However, all importers enjoying exemption/remission of duties pay a minimum of 5%, regardless of
the destination or final use of the imports.
31. Imports currently exempt from duty payments include goods for use by the President and by
charitable bodies, churches, and approved educationa l institutions;  by the military and police;  in
official aid-funded projects;  in emergency situations;  and by diplomatic and international
organizations.  Samples and exhibits/displays for trade fairs may be imported to Kenya duty free.
However, after use, the items should be re-exported or destroyed;  failure to present the relevant
customs certification that the goods are re-exported or destroyed implies the imposition of the relevant
duties on the presumed value of the items.
32. The Minister of Finance may remit duties payable on imports if the Minister is convinced that
it is in the public interest to do so.  Imports on which payable duties are remitted include  sowing
seeds;  motor vehicles and specified spare parts for use in the Safari Rally;  stainless steel tubes, bars
and fittings;  raw materials for use in the manufacture of insecticides, fungicides and similar products,
including component parts used in the manufacture of agricultural and horticultural equipment;  goodsimported or purchased by a company that has been granted an oil-exploration or oil-prospecting
licence in accordance with a production-sharing contract with the Government and in accordance with
the provisions of the Petroleum (Exploration and Production) Act;  crude pyrethrum extract imported
by the Pyrethrum Marketing Board;  pulp imported by Kenya Paper Mill Limited;  dairy salt and tetra
pak containers imported by Kenya Co-operative Creameries Limited for the manufacture of butter and
milk;  and specified raw materials for the sole use of certain industries manufacturing medicaments.
33. Some 70% of the import duties payable on unassembled trailers and semi-trailers
(HS 87.14010;  87.14021;  and 87-14027), and 10% of duties payable on petroleum products
(HS 27.10) are also remitted.
9  Remissions, rebates and refunds of import duties are also available,
under export incentive schemes, on raw materials, capital equipment, machinery, and other
components used in the manufacture and packing of goods destined for export (section (3)(v)).
(iv) Import prohibitions and licensing
34. In May 1993, Kenya abolished its import licensing regime for all but a negative list of
products grouped in three categories (an import schedule):10  products falling under the first category
(Part A of the Schedule) are prohibited;  Part B items are restricted, subject to approval from relevant
authorities;  and Part C goods are subject to technical, phytosanitary, health and environmental
standards on their arrival to Kenya (Table AIII.3).11
35. For the importation of items in Parts B and C of the Schedule, an import declaration form
should be completed, even if the f.o.b value of the items is lower than US$5,000.  The relevant
authorities, whose prior approval is required, are indicated against the items in Parts B and C of the
Schedule.
36. According to the authorities, Kenya maintain s import prohibitions, restrictions and controls
only for moral, health, security, and environmental reasons, and under international conventions.
Kenya delayed application of the provisions of subparagraphs (a)(ii) and (a)(iii) of Article 2 of the
                                                     
9 The Customs and Excise Act, Laws of Kenya, Chapter 472.
10 Legal Notice No. 135, 14 May 1993.
11 WTO document G/LIC/N/3/KEN/1, 4 December 1997.Kenya WT/TPR/S/64
Page 37
WTO Agreement on Import Licensing Procedures in respect of those products still subject to import
restrictions on the basis of health and environmental considerations.12  However, in accordance with
Article 2(2) of the Agreement, the delayed application lapsed in 1997.
(v) Trade sanctions
37. According to the authorities, Kenya applies no trade sanctions, either nationally or
internationally, except those endorsed by the United Nations Security Council, the Organization ofAfrican Unity (OAU), the Common Market for Eastern and Southern Africa (COMESA) or other
regional organizations of which it is a member.
(vi) Contingency trade remedies
38. Kenya has never applied anti-dumping, countervailing or safeguard measures.
(a) Anti-dumping and countervailing measures
39. Sections 125 and 126 of the Customs and Excise Act provide the legal basis for anti-dumping
and countervailing measures in Kenya.
13  Under Section 125, a dumping duty may be imposed on
dumped or subsidized goods if their importation causes or threatens to cause material injury to an
established industry or is such as to retard materially the establishment of an industry in Kenya.
40. Section 126 of the Act defines dumped goods as those with export prices lower than their fair
market prices in the countries they originated or in the countries from which they were exported to
Kenya;  or sold in Kenya at a price below the "cos t of importing", i.e. the cost of the goods in the
country from which they were exported inclusive of insurance, freight, duties, taxes and any other
charges.  Subsidies are defined as any bounty (e.g. grant, loan, tax relief) given, directly or indirectly,
on production or export:  for example, a special subsidy on the transport of a particular product, or
favourable treatment to producers or exporters in the course of administering any governmental
control over the exchange of currencies where that treatment has the effect of reducing the price ofgoods offered for export.
41. Industries that consider themselves to be affected by dumping are required to contact the
Ministry of Finance and to supply evidence of the nature and source of the dumped imports as well as
substantiation that their industry is being damage d by the dumped imports.  On the basis of this
information, the Treasury will take action where it is convinced that dumping has actually taken placeand that the industry in question has actually suffered injury, by imposing anti-dumping duties on the
imports in question.  The anti-dumping duties are decided upon by the Treasury.  Once the Minister of
Finance approves the imposition of anti-dumping dutie s, a notice is issued in the Government Gazette
by the Attorney General's Chambers.
14  Kenya is amending its legislation on anti-dumping and
countervailing measures to ensure conformity with WTO rules.  It has requested technical assistance
from the WTO in this regard.
                                                     
12 WTO document WT/LET/1/Rev.1, 2 March 1995.
13 WTO document G/ADP/N/1/KEN/1 - G/SCM/N/1/KEN/1, 22 May 1996.
14 WTO document G/ADP/N/1/KEN/1 - G/SCM/N/1/KEN/1, 22 May 1996.WT/TPR/S/64 Trade Policy Review
Page 38
(b) Safeguard measures
42. Kenya has no specific legislation on safeguard measures; safeguard measures can be applied
on an ad hoc and case-by-case basis.15  Kenya had not taken any actions under GATT Article XIX on
safeguards, as described in Article 10 of the WTO Agreement on Safeguards.
43. Kenya retained the right to use the transitional safeguard mechanism of Article 6.1 of the
WTO Agreement on Textiles and Clothing.16  However, it has not so far notified the lists of products
it was to integrate into GATT during Phases I and II.  Kenya has not reserved the right to invoke the
special safeguard clause of Article 5 of the WTO Agreement on Agriculture.
(vii) Rules of origin
44. Kenya has no national rules on the origin of goods;  there have been no judicial decisions or
other administrative rulings in this regard.17  However, rules of origin exist (for preferential treatment
purposes) in trade agreements to which Kenya is a signatory (Chapter II(2)(ii)).
(viii) Local-content schemes
45. According to the authorities, no local-content requirements are in force in Kenya.
(ix) Standards and other technical requirements
(a) Standardization, testing, and certification
46. Established under the 1974 Standards Act, the Kenya Bureau of Standards (KBS) is a
government regulatory body (under the Ministry of Industrial Development) mandated to, inter alia ,
promote standardization in industry and commerce;  make arrangements or provide facilities for
testing, examination, and calibration;  control the use of standardization marks and distinctive marks;
and prepare, frame, modify or amend specifications and codes of practice, or assist in this regard.  The
National Standards Council (NSC) supervises a nd controls the administration and financial
management of the KBS, advises the Minister of Industrial Development, and formulates policies inareas related to standardization.
47. According to the authorities, the setting of Kenya standards follows international norms.
KBS develops standards – specifications or codes of practice – in collaboration with a technical
committee comprising representatives of interested parties;  comments are accepted from the public.
Under Section 9(i) of the Act, by notice in the Government Gazette, NSC may declare anyspecification or code of practice framed or prepared by KBS to be a Kenya standard;  it may, in the
same manner, notify any amendment to, or replacement of, a Kenya standard.  On the advice of the
NSC, the Minister of Industrial Development prescribes, by order in the Government Gazette, a date
after which the standard becomes compulsory.  Compulsory standards apply equally to imports and
locally produced goods.  Exemption from compliance with a compulsory standard may be granted bythe Minister of Industrial Development on a case-by-case basis.
18
48. KBS tests and inspects products (random checks on imports) to ensure conformity to national
standards, and issues certificates.  A KBS mark is placed on the certified product. The inspection fee
                                                     
15 WTO document G/SG/N/1/KEN/1, 10 May 1996.
16 WTO documents G/TMB/N/109 and 110, 10 July 1995.
17 WTO document G/RO/N/9, 19 April 1996.
18 Section 9 (iii) of the Standards Act, as revised in 1981.Kenya WT/TPR/S/64
Page 39
is 1% of the c.i.f. value of imports or the sale price of locally produced goods.  All locally
manufactured consumer products destined for sale should bear the KBS mark.19  Infringements of
provisions of the Act may lead to confiscation and prohibition of the manufacture or sale of the goods.
Infringers are liable to a fine not exceeding KSh. 10,000 or imprisonment for a term not exceeding
twelve months, or to both.
49. KBS is reviewing its standards that are ten or more years old.
50. Kenya is a member of the International Organization for Standardization (ISO), and of the
African Regional Organization for Standardization (ARSO), which is mandated to promote
standardization activities in Africa, and to elaborate and harmonize regional standards.
(b) Health, sanitary, phytosanitary, and environmental protection measures
51. The importation of plant materials (e.g. seeds, cuttings, budwood, plantlets, fresh fruit,
flowers, timber), and animals and animal products is subject to a permit issued by the Kenyan
Department of Agriculture for plant materials, live insects or invertebrate animals, and by the
Department of Veterinary Services for animals, animal products and "biologicals", prior to shipment
from their country of origin and regardless of whethe r they are duty free, gifts, or for commercial or
experimental purposes.  The original permit which must be sent to the relevant authorities in theexporting country for strict adherence to Kenya's requirements, specifies the requirements and
indicates prohibitions, "restricted quarantine" importation, and declaration with regard to preshipment
treatment.  The permit is not required for the importation of grain for consumption, processing, or
manufacture.  However, all foodstuffs must have over 50% of their shelf life remaining upon arrival.
20
Imports of plant materials and animal products (including live animals) must be effected throughdesignated points of entry.
52. Under the Plant Protection Act, the Kenya Plant Health Inspectorate Service (KEPHIS)
coordinates all matters relating to plant quarantine regulations;  it issues a phytosanitary certificate
(also required for the importation of plant materials, including plants) after having verified that the
shipment meets the entry requirements.  Plants, se eds, and fruit, other than canned or bottled fruit,
imported to Kenya, must be inspected.  Imported plants may, if necessary, be detained in quarantine
or in special nurseries.  The process of seed certification, which is mandatory before its local sale,takes four years.
21  Plant materials arriving in Kenya without authority and accompanying documents
(including a phytosanitary certificate signed by an appropriate government official in the exporting
country) may be destroyed or reshipped at the owne rs' cost.  An importer who contravenes or fails to
comply with the Act is liable to a fine or imprisonment, or to both.
53. There is a specific veterinary import permit for each species (e.g. cattle, goats, sheep, pigs,
birds).  All animals for export to Kenya must be held for 21 days in approved quarantine facilities that
must be regularly inspected by the veterinary authorities of the exporting country, subject to
inspection by the veterinary officer from Kenya, where necessary.  All the tests, clinical examinations
and treatment, which must be carried out during the quarantine period, must be stated in the veterinary
certificate to confirm freedom from diseases.  The animals may be held for 14 days in quarantinefacilities at the port of entry at the cost of the importer.  All costs of post-arrival selection, testing,
treatment, transport, quarantine, and services must be borne by the importer.  The veterinary officer at
the port/airport of entry issues a health clearance certificate if inspection shows the animals to be
healthy and all accompanying health certificates are in order.  The 1972 Meat Control Act, revised in
                                                     
19 Dun and Bradstreet (1998).
20 Dun and Bradstreet (1998).
21 USTR (1999).WT/TPR/S/64 Trade Policy Review
Page 40
1977, provides standards for storage and transportation of meat and of animals intended for slaughter,
and for the manufacture of meat products (e.g. name or description of the manufacturer, composition,
additives or contaminant, labelling and packaging).  Ante and post mortem inspections are required;
prior to packing, the meat must be re-inspected.
54. The Kenya Standing Technical Committee for Imports and Exports (KSTCIE) advises the
Directors of KEPHIS and of Agriculture on technical areas related to quarantine regulations:  itconsiders applications for "open quarantine" and application and use of biocontrol agents.  The
importation of agricultural chemicals is subject to prior authorization by the Pest Control Products
Board (PCPB), which inspects and licenses all premises involved in the production, distribution, and
sale of agricultural chemicals, and registers all agricultural chemicals imported or distributed in
Kenya.  Local testing of the chemicals by an appointed research agency is required before theirregistration.  The 1963 Fertilizers and Animal Foodstuffs Act, as revised in 1977, provides for
technical standards to be met by fertilizers for use in Kenya.  A Code of Conduct, based on the U.N.
Food and Agriculture Organization Code, and requiring, inter alia , controls in manufacture,
packaging, labelling, and distribution of agricultural chemicals, must be signed by persons involved in
such activities.
22
55. Endangered or rare species may be imported only after approval by the relevant authorities in
the exporting country and in accordance with the Convention on International Trade in Endangered
Species of Wild Fauna and Flora (CITES).  In addition to products listed in Table AIII.3, import
prohibitions also apply to any plant rooting medium th at consists either wholly or in part of soil,
whether or not it is attached to any plant;  and fruit grown in, or consigned from, countries where the
Mediterranean fruit fly is common.  Imports of animals and animal products from countries with
groups A and B diseases (as per the classification of the International Office of Epizootics) and withbovine spongiform encephalopathy (BSE) are also banned.  Imports of timber from Tanzania are
subject to controls because of European aphid (Cerna ria cypressi).  Fruit grown in all countries other
than Tanzania or Uganda must be accompanied by a certificate issued by an authorized officer of the
exporting country to the effect that a stated percen tage of the packages in the consignment have been
examined by him and found to be free from insect pests.  "High risk biologicals" may only beimported by laboratories with high biosecurity facilities and with express authority from the Director
of Veterinary Services.  Moreover, the Kenya National Biosafety Regulations Committee has been
formed, and guidelines for imports, tests, and releases of genetically modified organisms (specifically
transgenic plants) are being discussed.
56. The Plant Protection Act also contains provisions to restrict the spread of insect pests and
pathogens that occur in isolated areas of Kenya.
23
(c) Marking, labelling, and packaging
57. All foodstuffs must be labelled in English or Kiswahili;  manufacturers must indicate on the
labels of all consumables the date of manufacture and of expiry.  Except for paints packed in tubes or
                                                     
22 All persons involved in the manufacture, distributi on, and sale of agricultural chemicals are members
of the Pesticide Chemical Association of Kenya (PCAK).
23 Currently, there is a domestic quarantine on larger grain borer ( Prostephanus truncatus ) confined to
south-eastern Kenya;  serpentine leaf minor ( liriomyza trifolii ) confined to eastern Kenya;  cassava bacterial
blight ( Xanthomanas manihotisi ) confined to cassava growing areas of western Kenya;  banana nematode
(Radophilus simulus ) confined to central Kenya;  and ascochyta blight of cowpeas ( assochyta rabiei ) introduced
in Kenya in 1990 and confined to Machakos District.Kenya WT/TPR/S/64
Page 41
boxes, commonly sold as artists' or children's paints, imports of pre-packaged paints and allied
products must be sold by metric weight or metric fluid measure.24
58. Banana leaves, maize, rice, sorghum or wheat st raw, and bags containing or having contained
malt, soil or leaf mould must not be used as packing material.  Plant residues may be used as packing
material if they are accompanied by a certificate stating that all seeds, pathogens, and insects have
been killed.
(x) Government procurement25
59. Kenya is neither a signatory nor an observer to the WTO Plurilateral Agreement on
Government Procurement.26  Booklets and Treasury circulars set guidelines for government
procurement in Kenya.  A Government Procurement Act is being drafted.
60. Government procurement procedures in Kenya include open tenders, selective tenders, and
direct purchases.  Accounting officers are responsible for procurement in their respective ministries.
The Supplies Services in the Treasury assist the accounting officers.  Goods and services worth
KSh. 5,000 or less may be procured during a financial year without written quotations or agreement.
Procurement over KSh. 5,000 and up to KSh. 30,000, is allowed without reference to a tender board;
however, adjudication of at least three competitive quot ations by at least three responsible officers is
required.27
61. Supplies of goods and services above KSh. 30,000 and up to KSh. 300,000 may be procured
through adjudication of at least five quotations.  Purchases valued at KSh. 300,000 and above must be
made through open tenders.
62. There are four main tender boards in Kenya:
(a) The Central Tender Board (CTB), an interministerial body whose members are
appointed by their respective ministries, adjudicates on tenders for goods and servicesworth at least KSh. 2 million, except for district-specific projects.
(b) Ministerial Tender Boards (MTB) (one per ministry), are in charge of contracts
between KSh. 30,000 and KSh. 2 million.  An exception is the Ministry of Defence
whose tender board, the Department of Defence Tender Board (DDTB), has powers
similar to those of the CTB;  it adjudicates on all defence and related contracts andfollows the same procurement regulations as the MTB.
(c) Departmental Tender Boards, operate within the larger departments of major
ministries, normally within the same financial limits as the MTB;  and
(d) District Tender Boards (41 in total), are inter-ministerial bodies chaired by the
district's commissioner; members are drawn from relevant ministerial departments in
the district.  Each board adjudicates on specific projects within its district, up to the
                                                     
24 Dun and Bradstreet (1998).
25 The present section is based on Government of Kenya (1996).
26 Kenya had observer status in the previous Agreement on Government Procurement;  it has not
applied for similar status in the new Agreement.
27 Special provisions apply to contracts for procurem ent of spares and/or repairs of motor vehicles,
plant and technical equipment.  Tendering for co nsultancy services may require prequalification.WT/TPR/S/64 Trade Policy Review
Page 42
maximum financial allocation for the project, and also on purchases of other goods
and services (for its district) valued  at between KSh. 30 0,000 and KSh. 2 million.
63. Purchases valued above KSh. 2 million are recommended by other boards for adjudication by
the Central Tender Board through open tenders advertised in the Government Gazette.  However, in
"special cases" and subject to prior written approval of the chairman of the relevant tender board or
the Permanent Secretary to the Treasury, selective tendering may be used.
64. In fact, most public procurement is made through local Kenyan-based firms.  International
competitive bidding is used where it is obvious that the goods or services are not available in Kenya.
Procurement procedures are also specified in credit agreements signed between the Government and
donors.  A price preference of 10% is granted to local tenderers (firms with at least 51% of capital
held by Kenyans).
65. In the area of government procurement, the highest appeal body is the Permanent Secretary to
the Treasury.
(xi) Other measures
66. Insurance for imports must be taken out with companies licensed in Kenya.28  T h e
Government has no policies on countertrade.  According to the authorities, no official countertradeagreements or agreements designed to influence the quantity or value of goods and services exported
to Kenya are currently in force.  Likewise, the authorities are not aware of the existence of such
agreements between Kenyan and foreign enterprises.   Except for companies or marketing boards with,
inter alia,  legally conferred exclusive or preferential trading privileges, import and export cartels are
prohibited in Kenya (section (4)(iii)(a)).
67. The WTO Secretariat is not aware of any trade measure taken by Kenya for balance-of-
payments purposes.
(3) M
EASURES DIRECTLY AFFECTING EXPORTS
(i) Registration and documentation
68. The registration formalities required for the importation of goods for commercial purposes
(section (2)(i)) also apply to exports;  these formalities confer the title of trader.  Specifically, all
exports must be carried out on the basis of a certificate.  Exporters must complete a form and presentit with the invoice to the Customs Department of the Kenya Revenue Authority;  on the basis of these
documents, the department issues the certificate.  According to the authorities, these formalities are
required for statistical purposes.
(ii) Export taxes, charges, and levies
69. Kenya levies export tax on timber and on fish.  The tax rate on fish is 0.5%;  the WTO
Secretariat has not been informed of the rate on timber.  Other export duties and taxes collected on
certain goods, including agricultural and mineral products, were abolished in June 1994.  According
to the authorities, Kenya has no other export duties, taxes, charges, and levies.
                                                     
28 International Trade Reporter (1998);  and  Dun and Bradstreet (1998).Kenya WT/TPR/S/64
Page 43
(iii) Export prohibitions, licensing, and other restrictions
70. Kenya prohibits the exportation by post of firearms and ammunition of all types, and of other
articles having the appearance of lethal weapons.29  A licence is required for the exportation of most
agricultural products, food, minerals and mineral products.  For agricultural products exported
through marketing boards (coffee, tea, and horticultural produce), proof of the financial capability of
the exporter is required before the licence is issued by the relevant board.  Exports of certainagricultural and food products are subject to special licences for self-sufficiency purposes.  Minerals,
precious stones, and "other essential strategic materials" are also subject to special export licensing.
30
71.  In the case of products considered as having aesthetic value or security importance to Kenya,
prior authorization by the relevant ministries is required before the licence is issued by the Ministry of
Trade.  Prior authorization by relevant ministries is also required for products subject to exportlicensing for environmental reasons or under international conventions to which Kenya is a signatory
(e.g. CITES).  Products currently subject to prior authorization military equipment and munitions;
antiques and works of art; bullion and coins; archives; live animals other than livestock  and pets;
wood charcoal and lumber; ivory, rhino horn and other products related to endangered species; human
bones; and specially built transport equipment and automotive vehicles (e.g. armoured cars andtanks).  Moreover, medicaments (including vete rinary medicaments) and motor vehicle components,
parts or accessories, not manufactured in Kenya, are subject to prior approval by the Treasury.
31
72. Exports of plants are subject to a phytosanitary certificate and those of animals and animal
products to a health and sanitary certificate.   Measures imposed on imports for health, sanitary, and
phytosanitary reasons, especially certificate requirements (section (2)(ix)(b)), apply equally to
exports.
73. Kenya does not apply export quotas.  Except for the above-mentioned restrictions, the
authorities are not aware of any retention requirements or restrictive practices (e.g. voluntary
restraints) operating on exports from Kenya.
(iv) Export subsidies
74. According to the authorities, Kenya does not subs idize any of its exports of goods or services.
The Export Compensation Scheme, under which compensation for duties paid on imported inputs wasgranted on the basis of export performance, was eliminated in August 1993.
(v) Duty and tax concessions
75. Three incentive schemes are available to Kenyan companies producing for export:  the Duty
Remission Scheme;  the Manufacturing-Under-B ond (MUB) Scheme;  and the Export Processing
Zone (EPZ) Scheme.
32  In addition, exports are zero-rated  for VAT refund purposes (refunds of VAT
on all goods and services incorporated in their production).  Because of delays related to refunds, the
number of applications for schemes involving drawbacks is actually low.
76. Under the Duty Remission Scheme introduced at the end of 1990, the Minister of Finance
grants remission of duties and VAT on goods imported for use in the production of manufactured
goods for export, or for the production of raw materials for use in manufactured products for export,
                                                     
29 Customs and Excise Act, Eighth Schedule, Part C.
30 IMF (1998).
31 Customs and Excise Act, Eighth Schedule, Part D.
32 See Investment Promotion Centre (1995) for more details.WT/TPR/S/64 Trade Policy Review
Page 44
or for the production of "duty-free items" for sale domestically.  The scheme is administered by the
Export Promotion Programme Office (EPPO).33  The remission is subject to the posting of a bond to
cover the amount of unpaid duty.  In order to recove r the bond, exporters must demonstrate, within six
months, that the imports have been incorporated into the production of final goods that they have
exported.  Under the scheme, exporters of horticultural goods and agri-based products enjoy remission
of import duties and of value-added tax on imports used in their production.
77. Under the Manufacturing-Under-Bond (MUB ) Scheme, operational since 1989, firms
exporting their total output are exempted from payment of import duties and VAT on inputs,
including plant, equipment, and raw materials.  The exemption is subject to the posting of a customs
bond;  firms must cover all costs related to services provided by customs officers and guards on site.
Eligible firms also enjoy an investment allowance of 100% on immovable fixed assets.34
78. Licences for premises for MUB are issued by the Commissioner of Customs and Excise;  the
applications are processed by the Investment Prom otion Centre, which coordinates the scheme.  The
current designated locations for the scheme are Nairobi, Mombasa, Kisumu, Thika, Eldoret, Nakuru,
and Nyeri.  With the approval of the Commissione r of Customs and Excise, MUB companies may sell
their products on the domestic market, subject to the payment of normal duties and taxes plus a 2.5%surcharge to be levied on the dutiable value.
79. The Export Processing Zone (EPZ) Authority was established as a "one-stop shop" under the
1990 EPZ Act to promote export-oriented industrial investment within designated zones.
35  T h e
Authority (with half the membership being private sector representatives) administers the Act and
issues the necessary licences.  The Act provides for four categories of EPZ enterprise licences:  the
EPZ developer/operator licence (the licensees develop and manage industrial parks for sale or lease to
EPZ enterprises);  the manufacturing enterprise licen ce;  the commercial enterprise licence;  and the
services enterprise licence.
80. In addition to high-quality infrastructure and support services, EPZ enterprises enjoy duty and
VAT exemption on imported machinery (except motor vehicles) and raw material inputs;  a ten-year
income-tax holiday and a rate of 25% (instead of the normal rate of 32.5% for resident companies and
of 40% for branches of non-resident companies) for the following ten years;  exemption fromwithholding tax (during the first ten years) and from stamp duty;  100% investment allowance;
exemption from the provision of the Factories Act, Statistics Act, and Industrial Registration Act;  and
single licensing.  However, EPZ firms must pay import duties on inputs used in the production of
goods they sell on the domestic market.
81. Kenya has one public EPZ (the Athi River Zone) and nine privately developed zones.  A
second public EPZ in Mombasa is planned, as well as several private zones in other regions.
                                                     
33 See GATT (1994), for details on the administration of the scheme.
34 To be eligible to the MUB scheme, an investor must provide firm documentary evidence showing
financial ability, technical know-how and market availability;  or prove that the total value of exports will be in
excess of US$440,000 per year;  or demonstrate that the enterprise can create employment for at least 50
Kenyans.
35 The objectives of the EPZ programme include the creation of jobs and the transfer of skills and
technology to the economy.  Kenyan labour laws, including the right to organize and bargain collectively, applyto EPZ companies.Kenya WT/TPR/S/64
Page 45
(vi) Export finance, promotion and assistance
82. Several agencies contribute to the promotion of exports, especially of non-traditional
products.  The Export Promotion Council (EPC) prov ides advisory services to the export sector
(Chapter II(1)(iii)).  EPC assists exporters in th eir participation in, and organization of, fairs and
exhibitions and sales missions;  the development of marketing and management skills;  and the
improvement of product quality.  Users of EPC services pay 50% of the related costs;  the rest issupported by the EPC.
83. Financial, technical and marketing support services are provided under the Kenya Exporter
Assistance Scheme (KEAS) to small and medium-scal e export manufacturing units of non-traditional
products.  KEAS is a World Bank-funded project aimed at raising the quality of exports to
international standards.
84. The United States Agency for International Development (USAID) provides financial and
technical assistance to public and private institutions (basically export-oriented small or medium-scale
firms in manufacturing, agri-business, and trading services) to support the development of non-
traditional exports in Kenya.
85. The Horticultural Crops Development Authority (HCDA) identifies export markets,
disseminates market information, and licenses horticultural exporters.  Moreover, under the Export
Preshipment Scheme, the Central Bank of Kenya rediscounts (at normal discount rates) commercial
bank credits for preshipment financing of non-traditional exports.
86. Following the restructuring of the banking sector, government bodies such as the Industrial
Development Bank (IDB) and the Industrial and Commercial Development Corporation, which were
promoting export-oriented investment, stopped providing loans at below-market rates.
(vii) Other provisions
87. Since the repeal of the Exchange Control Act in 1995, all exporters have a 100% foreign-
exchange retention right.  Before 1995, a number of export proceeds requirements were applied
especially on traditional goods.
36
88. Several agricultural marketing boards, such as the Coffee Board, the Tea Board, and the
Horticultural Crops Development Authority, which still hold monopolies in exports of certainproducts, may be seen as export cartels.  Moreover, export collusion is not prohibited under the 1988
Restrictive Trade Practices, Monopolies and Price Control Act.
(4) M
EASURES AFFECTING PRODUCTION AND TRADE
(i) Subsidies and other concessions
89. Several incentive schemes (e.g. tax holidays, remission and refunds of import duties,
accelerated depreciation, and investment allowance) are in place to encourage investment in Kenya
(Chapter II(3)(ii)).  More specifically, import du ties on inputs used in the manufacture of certain
specified products are fully or partially remitted (section (2)(iii)(e)).  An investment allowance
(deduction of up to 60%) is provided in the manufacturing and hotel sectors.  VAT paid on inputs
                                                     
36 GATT (1994).WT/TPR/S/64 Trade Policy Review
Page 46
used in business activities of registered companies is refunded.37  Inputs into health care, education
and agricultural products are generally zero-rated for VAT refund purposes.
90. Irrigation facilities are provided by the National Irrigation Board, mainly for the production of
rice.  Several development financial institutions, such as the Industrial Development Bank, the
Industrial and Commercial Development Corporation, the Kenya Tourism Development Corporation,
the Kenya Industrial Estates, and the Development Finance Company of Kenya, provide term loans(with grace periods) and working capital finance to industrial and commercial enterprises.  Moreover,
several incentive schemes are available to companies producing for export (section (3)(v)).
(ii) Assistance to adjustment, research and development
91. A number of government agencies, including certain agricultural marketing boards, provide
extension services (e.g. promotion of the use of certain species, veterinary services, artificialinsemination, tractor-hire services to small farmers) and carry out research in various areas
(e.g. agriculture, forestry, livestock, fisheries, health, and manufacturing).  Moreover, the research
activities in agriculture, livestock, forestry, and fisheries have focused on tree improvement, disease
controls, animal feed and drugs;  domestic support ("Green Box" measures) was estimated at
KSh. 3,791 million (Chapter IV(2)(ii)).
92. Industries located outside Nairobi and Mombasa enjoy an 85% investment allowance on
plant, machinery, and equipment.  Furthermore, lower business licensing fees apply to companies
located in rural areas (Chapter II(3)(i)).
(iii) Competition policy
(a) Legislation
93. The 1988 Restrictive Trade Practices, Monopolies and Price Control Act (revised in 1990)
regulates competition issues in Kenya.  Under the Act, a restrictive practice is defined as "an actperformed by one or more persons engaged in production or distribution of goods and services which:
(a)  in respect of other persons offering the skills, motivation and minimum seed capital required in
order to compete at fair market prices in any field of production or distribution, reduces or eliminates
their opportunities so to participate;  or (b) in respect of other persons able and willing to pay fair
market prices for goods or services, either for production, for resale or final consumption, reduces oreliminates their opportunities to acquire those goods or services".
94. Predatory trade practices to repress competition, collusive bidding at auction sales, and
collusive tendering are prohibited under the Act.  The approval of the Minister of Finance is required
for mergers between two or more independen t enterprises engaged in manufacturing or
distributing/supplying substantially similar commodities or services.  However, trade practices,"directly and necessarily" associated with the exerci se of exclusive or preferential trading privileges
legally conferred, or with the licensing of participants in certain trades and professions, are exempted
from the provisions of the Act.
95. Under the Act, the Minister may fix maximum prices or any maximum charge in respect of
the sale of goods or the supply of services produced by monopoly undertakings.  Moreover, producer
prices of certain agricultural goods (e.g. rice, milk, and pyrethrum) are set by marketing boards
(Chapter IV(2)(iii)).
                                                     
37 Companies with combined turnover of taxable goods and services exceeding KSh. 2 million per year
must be registered for VAT purposes.Kenya WT/TPR/S/64
Page 47
96. Complaints regarding restrictive trade practices may be submitted to the Minister of Finance
through the Monopolies and Price Commission established under the Act.  Established under the
control of the Minister, the Commission has investigatory powers.38  Appeals against an order of the
Minister must be lodged with the Restrictive Trade Practices Tribunal (also established under the Act)
within 28 days of the making of the order.39  Appeals against decisions of the Tribunal are made to the
High Court whose decisions are final.  Infringers are liable to a fine or imprisonment or to both.
(b) Restructuring of state assets
97. Government intervention in Kenya's economy has been reduced since the launch of the Public
Enterprise Restructuring Programme in 1992.  Under the programme, 207 "non-strategic" parastatals
were earmarked for privatization, while another 33, considered as "strategic" parastatals, were to be
restructured and maintained in the government portfolio.  The Parastatal Reform ProgrammeCommittee, chaired by the Minister of Finance, administers the programme with the assistance of a
coordination and managing body, the Executive Secretariat and Technical Unit.
98. The basic principles set out in the Policy Paper on Public Enterprises Reform and
Privatization (PERF) include:  divestiture, in an op en and transparent manner (under fair and equitable
bidding procedures), into competitive markets;  the non-transfer of intact or unregulated monopoliesto privatized companies;  no special protection or access to credit on concessionary terms will be
granted to purchasers;  all sales will be on a cash-only basis;  and no new parastatal will be established
in the productive sector, except for investments made for venture capital assistance.
40  T h e  P E R F
provides for the following methods of privatization:
(a) public offering of shares on the Nairobi Stock Exchange;
(b) sale of shares by private placement;
(c) negotiated sales;(d) sale of enterprise assets (including liquidation);
(e) new private investments in enterprises;
(f) employee/management buy-out;  and
(g) leasing or award of management contract.
99. The implementation of the parastatal reform programme has slowed since 1996.  In
consequence, several state-owned companies still exercise monopoly powers or hold exclusive rights
in various areas of Kenya's economy (Table III.3).
Table III.3
State-owned companies (SOCs), September 1999
Company Activity
Agriculture Development Corporation Agriculture
National Cereals and Produce Board (NCPB) Agriculture
Coffee Board of Kenya Agriculture
Pyrethrum Board of Kenya Agriculture
Kenya  Seed Company Agriculture
Table III.3 (cont'd)
                                                     
38 The Monopolies and Price Commission is headed by a Commissioner appointed by the Minister of
Finance.
39 The Restrictive Trade Practices Tribunal consists of a Chairman (an advocate) and between two and
four other members appointed by the Minister of Finance.
40 See IPC (1995b) for more details.WT/TPR/S/64 Trade Policy Review
Page 48
Company Activity
Kenya Cooperative Creameries Agriculture
Tea Board of Kenya Agriculture
Kenya Tea Development Authority Agriculture
Kenya Meat Commission Agriculture
National Irrigation Board Agriculture
Horticultural Crops Development Authority Agriculture
Mumias Sugar Company Manufacturing
Chemelit Sugar Company Manufacturing
Kenya Power and Lighting Company Manufacturing
Kenya Electricity Generating Company Manufacturing
Kenya Petroleum Refineries Manufacturing
Agriculture Finance Corporation Banking
Agriculture Development Bank Banking
Kenya Commercial Bank Banking
Kenya Reinsurance Company Insurance
Kenya Railways Corporation Transport
Uchumi Supermarket Commerce
Kenya Ports Authority Transport
Africa Tours and Hotels Tourism
Telekom Kenya Communication
Postal Corporation Communication
Kenya Airways Transport
Kenya Pipeline Company Energy
Source: Information provided by the Kenyan authorities.
(iv) Protection of intellectual property rights
100. The intellectual property legislation of Kenya consists of:  the 1989 Industrial Property Act
(revised in 1991), which covers patents and industrial designs;  the 1957 Trade Marks Act, revised in1982;  the Merchandise Marks Act;  the 1972 Seeds and Plant Varieties Act;  and the 1983 Copyright
Act, revised in 1991.
101. The Industrial Property Act (IPA) covers all fields of technology.  The Industrial Property
Office, established under the IPA, is responsible for granting industrial property rights, screening
technology transfer agreements and licences, and providing patent information to the public.  Theoffice also provides patent, utility model, and industrial design certificates, and acts as a receiving
office for international applications.  Patent protection under the IPA is for a term of seven years,
which may be extended for ten years.  A further five-year extension is possible, provided that,
inter alia , the patented invention, is being worked in Kenya on the date of the request.  The grounds
for revocation of patent include its non-working w ithin two years of being granted.  Non-patentable
inventions are:  plant varieties as provided for in the Seeds and Plant Varieties Act, but not parts
thereof or products of biotechnological processes;  inventions contrary to public order, morality,public health and safety, principles of humanity, and environmental conservation;  and any other
inventions that may be declared non-patentable by the relevant Kenyan authority.  Temporary
exclusion from patentability for periods not exceeding ten years is possible under the Act.  The Act
also provides for compulsory licences for products and processes declared to be of vital importance;
for non-working and similar reasons;  and on the basis of interdependence of patents.Kenya WT/TPR/S/64
Page 49
102. Under the IPA, the term of protection of indust rial designs is five years, renewable for two
consecutive periods of five years each.  The regist ration of an industrial design (ID) confers upon its
registered owner the right to preclude third parties from reproducing the ID in the manufacture of a
product;  importing, offering for sale, and selling a product reproducing the ID;  and stocking of such
a product for the purposes of offering it for sale or selling it.  Items that cannot be registered are:
works of sculpture, architecture, painting, engraving, enamelling, embroidery, photography, and anyother inventions of a purely artistic nature;  inventions contrary to public order, morality, public health
and safety, principles of humanity, and environmental conservation;  designs whose features
correspond to or are determined by the functions to be performed by the products;  and designs thatconsist solely in a change in the colour of designs already known.
103. The 1962 Trade Marks Act (revised in 1982) provides for a term of protection of seven years
renewable for periods of 14 years.  Trade marks for services are not protected.  The Office of the
Registrar-General is responsible for receiving trade mark applications.  The Register is divided into
two parts, on the basis of distinctiveness:  trade marks registered in Part A (distinctive) must containor consist of at least one of specified essential particular, while those registered in Part B are deemed
capable of becoming distinctive.  Section 30 of the Act provides for defensive registration of marks
that have become well-known in respect of the goods for which they have been registered and used.Registration may be cancelled if the mark is not used within a continuous period of at least five years.
104. The 1977 Seeds and Plant Varieties Act, revised in 1991, provides for the regulation and
control of the production, processing, testing, certification, and marketing of seeds.  Under the Act,the Minister of Agriculture may grant plant breeder's rights for a period of up to 25 years to persons
who have bred or discovered a plant.  Kenya is not a member of the Union for the Protection of New
Varieties of Plants (UPOV).
105. The 1983 Copyright Act, revised in 1991, protects literary, musical, artistic,
41 and audio-
visual works;  sound recordings;  broadcasts;  and programme-carrying signals.  The copyright is
valid for at least 50 years.  The Office of the Attorney-General is responsible for issues relating to
copyright.  Kenya's intellectual property legislation does not provide protection for geographical
indications, layout-designs of integrated circuits, and undisclosed information.
106. Except for industrial designs, a right holder cannot prevent unauthorized imports into Kenya.
Counterfeiting mainly concerns computer programs, sound recordings, and video cassettes.
Infringements of intellectual property rights are actionable in courts at the instigation of the owner.
Counterfeit copies, and articles used or intended to be used for making them may be destroyed,
delivered up to the owner of the copyright, or dealt with as the court may think fit.  Infringers are
liable to a fine of up to KSh. 200,000 or to imprisonment for a term of up to five years, or to both.Nevertheless, enforcement of intellectual property legislation in Kenya remains an issue of concern.
42
107. Kenya is a member of the World Intellectual Property Organization (WIPO);  the African
Regional Industrial Property Organization (ARIPO)43;  the Paris Convention;  the Berne Convention;
and the Universal Copyright Convention.  Kenya is amending its intellectual property legislation with
a view to conforming to the WTO Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS) and to other international agreements or conventions to which it is a signatory.
Kenya, as a developing country, benefits from a transition period up to 1 January 2000 to bring its
legislation into conformity with the TRIPS Agreement.
                                                     
41 To be eligible for copyright, literary, musical or artistic works must have an original character, must
be written down, recorded or otherwise reduced to a material form.
42 USTR (1999).
43 ARIPO registered industrial designs for which Kenya is a designated State have, in principle, the
same protection in Kenya as industrial designs registered under the Industrial Property Act of Kenya.