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  ANNEX 2 KENYA  
 
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  CONTENTS  
1   ECONOMIC ENVIRON MENT  ................................ ................................ ......................  112  
1.1   Main Features of the Economy  ................................ ................................ ...................  112 
1.2   Recent Economic Developments  ................................ ................................ .................  113 
1.3   Developments in Trade and Investment  ................................ ................................ ...... 115 
1.3.1    Trends and patterns in merchandise and services trade  ................................ ..............  115 
1.3.2    Trends and patterns in FDI  ................................ ................................ .....................  118 
2   TRADE AND INVEST MENT REGIMES ................................ ................................ .........  120  
2.1   General Framework  ................................ ................................ ................................ .. 120 
2.2   Trade Policy Formulation and Objectives  ................................ ................................ ...... 122 
2.3   Trade Agreements and Arrangements  ................................ ................................ .........  123 
2.3.1    WTO ................................ ................................ ................................ ....................  123 
2.3.2    Regional and preferential agreements  ................................ ................................ ...... 124 
2.4   Investment Regime  ................................ ................................ ................................ .. 124 
3   TRADE POLICIES A ND PRACTICES BY MEAS URE ................................ ......................  127  
3.1   Measures Directly Affecting Imports  ................................ ................................ ............  127 
3.1.1    Registration, customs procedures and documentation  ................................ ................  127 
3.1.2    Customs valuation  ................................ ................................ ................................ . 129 
3.1.3    Rules of  origin  ................................ ................................ ................................ ....... 129 
3.1.4    Tariffs  ................................ ................................ ................................ ..................  129 
3.1.5    Other charges affecting imports  ................................ ................................ ...............  130 
3.1.5.1    Border taxes  ................................ ................................ ................................ ...... 130 
3.1.5.2    Internal taxes  ................................ ................................ ................................ ..... 131 
3.1.5.2.1    Value added tax  ................................ ................................ ...............................  131 
3.1.5.2.2    Excise duty  ................................ ................................ ................................ ...... 131 
3.1.6    Import prohibitions, restrictions, and licensing  ................................ ..........................  132 
3.1.7    Anti-dumping, countervailing, and safeguar d measures  ................................ ..............  133 
3.1.8    Other measures affecting imports  ................................ ................................ ............  134 
3.2   Measures Directly Affecting Exports  ................................ ................................ ............  135 
3.2.1    Customs procedures and requirements  ................................ ................................ ..... 135 
3.2.2    Taxes, charges, and levies  ................................ ................................ ......................  135 
3.2.3    Export prohibitions, restrictions, and licensing  ................................ ...........................  135 
3.2.4    Export support and promotion  ................................ ................................ .................  136 
3.2.5    Export finance, insurance, and guarantees  ................................ ................................  137 
3.3   Measures Affecting Production and Trade  ................................ ................................ ..... 138 
3.3.1    Incentives  ................................ ................................ ................................ .............  138 
3.3.2    Standards and ot her technical requirements  ................................ .............................  138 
3.3.3    Sanitary and phytosanitary requirements  ................................ ................................ .. 140 
3.3.4    Competition policy and price controls  ................................ ................................ ....... 141 
3.3.5    State trading, state-owned enterprises, and privatization  ................................ ...........  142 WT/TPR/S/384 • Kenya  
 
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  3.3.6    Government procurement  ................................ ................................ .......................  143 
3.3.7    Intellectual property rights  ................................ ................................ ......................  145 
4   TRADE POLICIES B Y SECTOR  ................................ ................................ ...................  147  
4.1   Agriculture, Forestry, and Fisheries  ................................ ................................ .............  147 
4.1.1    Overview  ................................ ................................ ................................ ..............  147 
4.1.2    Agricultural policy  ................................ ................................ ................................ .. 148 
4.1.3    Policy by subsector  ................................ ................................ ................................  151 
4.1.3.1    Food crops  ................................ ................................ ................................ .........  151 
4.1.3.2    Industrial crops  ................................ ................................ ................................ .. 151 
4.1.3.2.1    Tea ................................ ................................ ................................ ................  151 
4.1.3.2.2    Horticulture  ................................ ................................ ................................ ..... 152 
4.1.3.2.3    Coffee  ................................ ................................ ................................ .............  152 
4.1.3.2.4    Sugar  ................................ ................................ ................................ .............  153 
4.1.3.3    Livestock  ................................ ................................ ................................ ...........  154 
4.1.3.3.1    Dairy  ................................ ................................ ................................ ..............  155 
4.1.3.3.2    Beef ................................ ................................ ................................ ...............  155 
4.1.3.4    Fisheries  ................................ ................................ ................................ ............  156 
4.1.3.5    Forestry  ................................ ................................ ................................ .............  157 
4.2   Mining and Energy  ................................ ................................ ................................ .... 157 
4.2.1    Mining products  ................................ ................................ ................................ ..... 157 
4.2.2    Petroleum products  ................................ ................................ ................................  159 
4.2.2.1    Upstream activities  ................................ ................................ .............................  159 
4.2.2.2    Downstream activities  ................................ ................................ .........................  160 
4.2.3    Electricity  ................................ ................................ ................................ .............  161 
4.2.4    Water  ................................ ................................ ................................ ...................  162 
4.3   Manufacturing  ................................ ................................ ................................ ..........  163 
4.4   Services  ................................ ................................ ................................ ..................  164 
4.4.1    Financial services  ................................ ................................ ................................ ... 165 
4.4.1.1    Banking and other credit institutions  ................................ ................................ ..... 165 
4.4.1.2    Insurance  ................................ ................................ ................................ ..........  167 
4.4.1.3    Capital markets  ................................ ................................ ................................ .. 168 
4.4.2    Transpor t ................................ ................................ ................................ ..............  169 
4.4.2.1    Road transport  ................................ ................................ ................................ ... 169 
4.4.2.2    Railway transport  ................................ ................................ ................................  169 
4.4.2.3    Air transport  ................................ ................................ ................................ ....... 170 
4.4.2.4    Maritime transport  ................................ ................................ ..............................  171 
4.4.3    Teleco mmunications and postal services  ................................ ................................ ... 172 
4.4.3.1    Telecommunications  ................................ ................................ ............................  172 
4.4.3.2    Postal services  ................................ ................................ ................................ .... 174 
4.4.4    Tourism  ................................ ................................ ................................ ................  174 WT/TPR/S/384 • Kenya  
 
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  5   APPENDIX TABLES  ................................ ................................ ................................ .. 176  
 
CHARTS  
 
Chart 1.1 Composition of merchandise trade, 2011 and 2017  ................................ ................  117 
Chart 1.2 Direction of merchandise trade, 2011 and 2017  ................................ .....................  118 
 
TABLES  
 
Table 1.1 Selected macroeconomic indicators, 2011 -17 ................................ ........................  112 
Table 1.2 Balance of payments, 2011 -17 ................................ ................................ ............  115 
Table 1.3 FDI, 2011−17 ................................ ................................ ................................ .... 119 
Table 2.1 Selected trade -related laws enacted or amended, 2012 -17 ................................ ..... 121 
Table 2.2 Latest notifications to the WTO by area, 2012 -July 2018  ................................ .........  124 
Table 3.1 Excise stamps fees  ................................ ................................ .............................  131 
Table 3.2 Products subject to an import permit and/or licence, or registration, 2018  ................  132 
Table 3.3 Import prohibitions and restrictions on SPS grounds  ................................ ...............  133 
Table 3.4 Key interventions under the Buy Kenya - Build Kenya Strategy  ................................  134 
Table 3.5 Product -specific export requirements, October 2018  ................................ ...............  135 
Table 3.6 Selected EPZ performance indicators 2012 -16 ................................ .......................  137 
Table 3.7 Routes of certifications and fees, June 2018  ................................ ..........................  139 
Table 3.8 Main elements of Kenya's SPS legal framework  ................................ ......................  140 
Table 3.9 Procurement methods used, Fiscal year 2017 -18 ................................ ...................  144 
Table 3.10 Registration of intellectual property rights in Kenya, 2012 -17 ................................  145 
Table 4.1 Kenya's main agricultural crops: area, production and exports, 2012 -16 ...................  147 
Table 4.2 Livestock Production, 2013 -17 ................................ ................................ .............  154 
Table 4.3 Mining licences  ................................ ................................ ................................ .. 158 
Table 4.4 Evolution of some insurance indicators, 2012 -17 ................................ ...................  167 
Table 4.5 Evolution of air traffic in Kenya, 2012 -17 ................................ ..............................  170 
Table 4.6 Traffic handled at Mombasa Port, 2012 -17 ................................ ............................  171 
Table 4.7 Evolution of key ICT indicators in Ken ya, 2012 -17................................ ..................  172 
Table 4.8 The telecommunications' unified licensing framework  ................................ .............  172 
 
 
APPENDIX TABLES  
 
Table A1. 1 Merchandise exports by group of products, including re -exports 2011 -17 ...............  176 
Table A1. 2 Merchandise imports by product groups, 2011 -17 ................................ ...............  177 
Table A1. 3 Merchandise exports by destination, including re -exports 2011 -17 ........................  178 
Table A1. 4 Merchandise imports by origin, 2011 -17 ................................ ............................  179 
 
Table A3. 1 Products subject to excise duties, 2018  ................................ .............................  180 WT/TPR/S/384 • Kenya  
 
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  1  ECONOMIC ENVIRONMENT  
1.1  Main Features of the Economy  
1.1.  With a land area of 580,367 km2 and a population of 46.6 million in 2017 , Kenya is one of the 
largest economies in Africa in terms of output and market size. It is the leading economy in the EAC , 
with about 40% of the regional GDP (main report, Section 1.1) . It has 536 km of coastline  on the 
Indian Ocean . Nairobi and Mombasa are Kenya's main centres of commercial activ ities. The Port of 
Mombasa is vital not only for the Kenyan  economy but also for transit to neighbouring countries.  
1.2.  The strong economic performance recorded since 2012 ( Section 1.2) propelled Kenya into the 
lower -middle -income country group in 2014, according to World Bank's country classification by 
income level. The GDP per capita increased steadily to US D 1,701 in 2017. The services sector , 
mainly transport and storage,  real estate, wholesale and retail trade, financial and insurance , 
account ed for almost half of the output over the review period . Agriculture account ed for 37.7% of 
GDP in 2017. The contribution of the relatively diversified manufacturing sector declined from 13.1% 
in 2011 to 8.6 % in 2017. The informal sector dominates the Kenyan economy , with 83% of total 
employment in 2017.  
Table 1.1 Selected macroeconomic indicators, 2011 -17 
  2011  2012  2013  2014  2015  2016  2017  
Nominal GDP (KES billion)  3,727.4  4,261.4  4,745.1  5,402.6  6,284.2  7,194.1  8,196.7  
Nominal GDP ( USD billion)  42.0 50.4 55.1 61.4 64.0 70.9 75.0 
Real GDP (%change at 2009 prices)  6.1 4.5 5.9 5.4 5.7 5.9 4.9 
Inflation (CPI, % change)  14.0 9.4 5.7 6.9 6.6 6.3 8.0 
Population (million)  39.5 40.7 41.8 43.0 44.2 45.4 46.6 
Per capita GDP (nominal US D) 1,062.5  1,238.6  1,318.1  1,429.0  1,448.1  1,561.1  1,701.5  
Per capita GDP (at constant 2009 
prices USD) 1,076.9  1,095.3  1,128.1  1,156.1  1,189.2  1,225.4  1,251.4  
GNI per capita (constant 2010 USD) 999.1  1,013.8  1,037.0  1,060.9  1,096.3  1,132.3  1,156.7  
GDP by type of expenditure (% of current GDP)a 
Government final consumption 
expenditure  14.0 13.9 14.1 13.9 14.1 13.3 13.5 
Private final consumption 
expenditure  78.8 78.7 80.7 79.9 78.8 79.1 81.6 
Gross fixed capital formation  20.2 21.2 20.6 22.9 21.6 17.2 17.8 
Changes in inventories  1.3 0.3 -0.5 -0.4 -0.1 0.1 0.4 
Net exports of goods and services  -15.9 -13.3 -13.3 -14.7 -11.0 -8.8 -10.9 
Exports  22.9 22.2 19.9 18.3 16.6 14.0 13.2 
Imports  38.8 35.5 33.2 33.0 27.6 22.8 24.1 
Discrepancy  1.7 -0.8 -1.7 -1.5 -3.4 -0.9 -2.5 
GDP by economic activity (% of GDP at current basic prices)a 
Agriculture, forestry and fishing  29.3 29.1 29.4 30.4 33.1 35.1 37.7 
Mining and quarrying  1.0 1.2 1.0 0.9 1.0 0.9 0.8 
Manufacturing  13.1 12.2 11.9 11.0 10.3 9.9 8.6 
Electricity and water supply  2.1 2.2 2.2 2.0 2.4 2.8 2.6 
Construction  4.9 5.0 5.0 5.4 5.4 5.5 6.0 
Services  52.4 53.1 53.4 53.1 50.7 48.9 47.5 
Wholesale and retail trade, 
repairs  9.0 8.7 8.9 8.8 8.3 8.0 8.2 
Accommodation and food service 
activities  1.5 1.5 1.4 1.0 0.9 0.8 0.8 
Transport and storage  7.9 8.9 8.9 9.5 8.9 8.5 8.0 
Information communication 
technology  1.8 1.8 1.6 1.3 1.6 1.6 1.5 
Financial and insurance activities  6.3 6.6 7.3 7.5 7.4 7.7 8.1 
Public administration and defence  4.7 4.8 4.9 5.0 4.7 4.5 4.4 
Professional, scientific and 
technical activities  1.1 1.1 1.1 1.1 1.0 0.9 0.9 
Real estate  9.0 9.0 8.8 8.6 8.3 8.1 7.6 
Education  5.9 6.0 5.9 5.7 5.4 4.7 4.3 
Human health and social work 
activities  2.0 1.8 1.8 1.9 1.9 1.8 1.7 
Other  3.0 2.9 2.8 2.7 2.5 2.3 2.2 
Financial intermediation services 
indirectly measured (FISIM)  -2.7 -2.9 -2.9 -2.8 -2.9 -3.0 -3.3 
Public finance (% of GDP) (fiscal year basis)b 
Total revenue  18.7 19.2 19.2 19.0 18.7 18.6 .. 
Ordinary revenue, of which:  17.1 17.2 18.1 17.7 17.7 17.1 .. WT/TPR/S/384 • Kenya  
 
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    2011  2012  2013  2014  2015  2016  2017  
Import duty  1.3 1.3 1.3 1.3 1.2 1.2 .. 
Excise duty  2.0 1.9 2.0 2.0 2.1 2.2 .. 
VAT 4.4 4.1 4.6 4.5 4.4 4.4 .. 
Income tax  7.8 8.3 8.9 8.7 8.6 8.2 .. 
Total expenditure  23.7 25.1 25.6 28.1 27.2 27.6 .. 
Deficit excluding grants  -4.9 -5.9 -6.4 -9.1 -8.4 -8.9 .. 
Public debt (% of GDP)  
(fiscal year basis)b 41.7 42.1 47.5 48.8 55.2 41.9 43.5 
External debt 20.2 18.7 22.2 24.4 27.4 20.9 21.5 
Domestic debt  21.5 23.3 25.3 24.4 27.9 21.1 21.9 
Memorandum         
KES per USD, period average  88.8 84.5 86.1 87.9 98.2 101.5  103.4  
Real effective exchange rate (% 
change - = depreciation)  -4.3 13.7 3.6 3.6 4.5 3.8 3.2 
Nominal effective exchange rate (% 
change - = depreciation)  -11.0 8.7 0.9 -0.4 0.5 -0.4 -1.8 
Total reserves (including gold, USD 
billion)  4.3 5.7 6.6 7.9 7.5 7.6 7.4 
in months of imports  3.0 3.7 4.1 4.5 4.9 5.4 4.4 
Commodity price:         
Coffee, Arabica ( USD/kg) 5.98 4.11 3.08 4.42 3.53 3.61 3.32 
Tea (USD/kg) 2.92 2.90 2.86 2.72 2.71 2.64 3.10 
.. Not available.  
a Provisional for 2017.  
b Fiscal year runs from July to June, i.e. 2011 is FY2011/12 ending June 2012.  
Source:  Kenya National Bureau of Statistics (KNBS) online information. Viewed at: https://www.knbs.or.ke/ ; 
Central Bank of Kenya. Viewed at: https://www.centralbank.go.ke/ ; Keny a's National Treasury 
Statistical Annex to the Budget Statement for the Fiscal Year 2018/2019 ; IMF online information. 
Viewed at: http://elibrary -data.imf.org/DataExplorer.aspx ; and World Bank' s data bank. Viewed at: 
http://databank.worldbank.org/data/home.aspx . 
1.3.  Launched in 2008, Kenya Vision 2030  aims to transform Kenya into an industrializ ed middle -
income country.1 Kenya has a young and relatively well -educated labour force. The reforms under 
way (Section 4. 4.2) are likely to make Kenya into a major regional financial centre. However,  country 
still faces several socio -economic challenges, including high levels of pov erty and income inequality. 
Progress on the human development side was relatively slow , and contrasts with the strong 
economic performance : in 201 7, Kenya had a Human Development Index (HDI) of 0.5 90 (compared 
to 0.5 55 in 201 5), and ranked 14 2nd out of 188  countries. It is classified in the medium human 
development category, according to the UNDP's HDI.2 
1.4.  Based on the international poverty line value of USD 1.90 a day , 42.8% of the population lives 
in poverty .3 In Nairobi  (the capital city) , the expenditure  level of the top income quintile is about 
691 times that of the bottom quintile.4 Poverty is even more prevalent in north -eastern counties , 
with eight out of ten people living below the poverty line . Unemployment is prevalent and affects 
about 12% of the active population. Net enrolment rates in p rimary school improved over the years , 
to 91% in 2017, but remains weak at 51%  in secondary schools . The 2010 Constitution, through its 
decentralization sche me, aims to improv e the country's governance and the delivery of social 
services.   
1.2  Recent Economic Developments  
1.5.  Supported by Vision 2030, Kenya's economic performance was strong during the review period. 
Its real GDP growth rate averaged 5.5% per year (out performing the 2008 -12 average of 4.7%) . 
With favourable weather conditions, the GDP share of a griculture reached a peak of 3 7.7% in 201 7 
(up from 29.1% in 2012) , largely supported by tea and  horticulture  production . The share of 
                                                
1 Online information . Viewed at http://vision2030.go.ke/ , 20 August 2018.  
2 UNDP (2015), Human Development Index 2015.  Online information . Viewed at 
http://hdr.undp.org/en/countries/profiles/KEN , 24 July 2018.  
3 World Development Indicators, The World Ban k. Viewed at 
https://data.worldbank.org/indicator/SI.POV.DDAY , 27 August 2018. 
4 KNBS and Society for International Development (SID) (2013), Exploring Kenya's inequality. Pulling 
apart or pooling together?  National Report, Nairobi.  
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  manufacturing is on a decl ining trend , reflecting the low availability of raw materials, high costs of 
production, and stronger competition from imported goods .5 Major public projects were implemented 
to improve the country's infrastructure. These include: the USD 3.6 billion railw ay network 
connecting Mombasa to Nairobi ( the Standard Gauge Railway Project);  the USD 4.5 billion transport 
project to connect South Sudan and Ethiopia to the port of Lamu  (LAPSSET Northern Corridor 
Project); two geothermal plants, raising the country's power generation capacity by 16% (Okaria I 
and Okaria IV projects ); and expansion works at the port of Mombasa and the Jomo Kenyatta 
International Airport.  
1.6.  The review period was also characterized by the speedy roll -out of the decentralization plan , 
which resulted in, inter alia , large transfers from the national Government to the 47 count y 
governments.6 However , revenue mobilization efforts did not yield significant gains, with total tax 
revenues fluctuating around 16% of GDP (well below the target of 25% set by the EAC 
macroeconomic convergence framework). Consequently, public finances deteriorated , with the 
deficit (including grant s) as a share of GDP doubling to 8.9% during fiscal year (FY) 2016-17 (against 
a ceiling of 3 .0% under the EAC framework) . 
1.7.  The Government regularly resort s to foreign and domestic borrowing to finance its spending 
and investments.  In 2014 alone, Kenya issued USD 2 billion of sovereign bond s to finance 
infrastructure projects, and signed loans for USD 3.6 billion to finance the Standard Gauge Railway 
Project.7 As a result, public debt increased from 41.7% of GDP in 2011 to 55.2% in 2015 , before 
declining to 43.5% in 2017.  The relatively higher reliance on domestic financing ( Table 1.1) likely 
contributed to the crowding -out of private investment. According to the IMF, Kenya faces  a low risk 
of external debt distress .8 
1.8.  The consumer price index ( CPI) inflation rate flirted with double -digit levels in 2011 and 2012 , 
under the pressure of high food and energy prices. However, it eas ed in subsequent years , and 
remain ed broadly under control , thanks to the prudent monetary policy of the Central Bank of Kenya 
(CBK) , which targets price stability (with the inflation rate target set at 5% , with a margin of 2.5 
percentage points on either  side).9 Over the review period, the CBK has regularly adjusted its policy 
rate to keep the inflation rate within the margin. In 2017, however, i nflationary pressures re-
emerged because of drought. Despite the implementation of the Government's food subsidy  
programmes , inflation reached 8%.  
1.9.  Over the period, domestic credit to the private sector increased gradually , to a peak of 34.2% 
of GDP in 2015, before declining to 31% in 2017 as non -performing loans (NPLs) hit a 10 -year 
high.10 The ratio of NPLs to total  gross loans increased from 4.4% in 2011 to 6% in 2015 , and then 
to 10.1% in 2017. The credit slowdown was further exacerbated by the enactment of an interest 
rate cap law in 2016. In an attempt to reduce the cost of borrowing, the authorities capped 
comme rcial lending rates at 4 percentage points above the CBK's policy rate , and set a floor for 
deposit rates. This resulted in less credit to the economy , as banks, which were already struggling 
with NPLs, became reluctant to extend lending to riskier businesses.  
1.10.   Kenya operates a floating exchange rate regime , with CBK interventions limited to preventing 
excessive volatility in exchange rates. During the review period, the  Kenyan Shilling (KES)  remained 
broadly stable against the currencies of the country's  major trading partners , thanks to robust export 
earnings from, inter alia , tea, horticulture, tourism, and strong diaspora remittances.  The real 
                                                
5 KNBS (2018), Kenya Economic Survey 2018.  Viewed at https://www.knbs.or.ke/download/economic -
survey -2018/ , 20 August 2018.  
6 Under the revenu e sharing rule, the Government is required to transfer at least 15% of resources 
collected at the national level to the counties.  
7 IMF (2014), Kenya 2014 article IV consultation.  Viewed at 
http://www.imf.org/external/pubs/ft/scr/2014/cr14302.pdf , 20 August 2018.  
8 IMF (2017), Kenya: First Review Under the Twenty -Four Month Stand -By Arrangement and the 
Arrangement Under the Standby Credit Facility and Requests for Waivers of Applicabil ity, Rephasing of 
Disbursements, and Modification of Performance Criterion . Staff Report; and Statement by the Executive 
Director for Kenya . Viewed at http://www.imf.org/en/Countries/KEN , 20 August 2018.  
9 Under the Central Bank of Kenya Act, the inflation target is set at least once every 12 months by the 
Cabinet Secretary responsible for finance.  
10 World Bank Group, World Development Indicators.  WT/TPR/S/384 • Kenya  
 
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  effective exchange rate has appreciated since 201 2, point ing to a possible drop in the country's 
competitiveness , in relation to its relatively high inflation target.  
1.11.   Kenya's current account is structurally in deficit (Table 1.2). The deficit reached a peak of 
KES 560.8 billion in 2014  (10.4% of GDP) , due to, inter alia , increased imports of capital goods in 
connection with infrastructure projects. Kenya's  financial account continues to be in deficit over the 
review period, although inflows in portfolio investments have been in surplus since 2015.  Kenya's 
foreign  exchange reserves amounted to USD 7.3 billion in 2017, equivalent to 4.9 months of imports.  
Table 1.2 Balance of payments, 2011 -17  
(KES billion)  
  2011  2012  2013  2014  2015  2016  2017a 
Current account  -339.2  -356.4  -417.0  -560.8  -421.1  -375.3  -518.9  
Balance on goods and services  -564.9  -567.2  -630.3  -794.4  -692.9  -633.7  -894.1  
Goods: exports f.o.b.  518.1  525.1  503.5  546.8  587.3  583.4  599.0  
Goods: imports f.o.b.  1,260.1  1,312.5  1,385.7  1,488.4  1,409.6  1,361.5  1,653.9  
Services: credit  367.2  422.1  442.0  441.7  455.4  421.7  480.6  
Services: debit  190.0  201.9  190.1  294.5  326.0  277.4  319.7  
Primary income  -11.6 -26.7 -51.7 -76.3 -67.2 -69.4 -84.8 
Credit  24.3 29.3 28.7 43.6 48.3 44.0 41.2 
Debit 35.9 56.0 80.4 120.0  115.5  113.4  126.0  
Secondary income  237.2  237.5  264.9  310.0  339.0  327.8  460.0  
Credit  241.3  240.9  268.9  327.9  345.2  333.0  465.8  
Debit 4.1 3.4 4.0 17.9 6.2 5.2 5.8 
Capital account  20.9 19.9 13.6 24.2 25.7 20.9 19.0 
Financial account  -304.1  -471.9  -448.1  -650.4  -383.7  -420.0  -476.1  
Direct investment: net  -121.2  -96.5 -79.3 -65.6 -37.1 -23.9 -42.9 
Portfolio investment: net  0.2 -18.4 -23.3 -326.8  15.2 38.9 80.2 
Other investment: net  -183.1  -357.0  -345.5  -258.0  -361.9  -435.0  -513.4  
Net errors and omissions  -65.4 -32.0 -13.0 14.0 -13.3 -52.5 6.9 
Overall balance  79.6 -103.4  -31.8 -127.8  24.9 -13.1 16.9 
Reserves and related items -79.6 103.4  31.8 127.8  -24.9 13.1 -16.9 
Reserve assets  21.8 122.9  73.9 117.4  -35.4 3.9 -24.9 
Credit and loans  from the IMF  25.2 16.3 15.3 -10.5 -10.5 -9.2 -8.0 
Exceptional financing  76.2 3.2 26.9 0.0 0.0 0.0 0.0 
Indicators (%)         
Current account balance/GDP  -9.1 -8.4 -8.8 -10.4 -6.7 -5.2 -6.3 
Overall balance/GDP  2.1 -2.4 -0.7 -2.4 0.4 -0.2 0.2 
a Provisional.  
Source:  KNBS  online information. Viewed at: https://www.knbs.or.ke/ . 
1.12.   According to African Development Bank  (ADB) estimations, Kenya's economic growth is 
forecasted to remai n strong, at 5.6% in 2018 and 6.2% in 2019.11 The economic outlook over the 
medium term is to be marked by the Government 's Big Four  agenda , which targets the following : 
building affordable housing; raising the contribution of the manufacturing sector to 15% of GDP;  
achieving food and nutrition security; and providing universal healthcare coverage. This outlook is 
mired by challenges related to, inter alia , governance issues , high cost s of energy, and infrastructure  
constraints . High reliance on rainfall will continu e to impede the performance of the agriculture 
sector.  
1.3  Developments in Trade and Investment  
1.3.1   Trends and patterns in merchandise and services trade  
1.13.   Kenya is a small open economy with international trade in goods and services equivalent to 
37.3% of GDP in 20 17 (down from 61.7% in 2011, Table 1.1). According to WTO estimates, Kenya 
accounted for 0.03% of the world's total exports of goods, and 0.09% of its imports in 2017.12 
1.14.   Kenya's total exports fluctuated around USD 6 billion annually over the revi ew period  
(Table A1.1 ). Agriculture remains the largest  contributor to Kenya's exports, accounting for 60. 4% 
                                                
11 ADB (2018), African Economic Outlook, 2018 . Abidjan – Cote d'Ivoire.  
12 WTO (2018), Trade Profiles 201 8. Viewed online at: 
https://www.wto.org/english/res_e/booksp_e/trade_profiles17_e.pdf . 
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  of the total in 2017 (Chart 1.1) . Tea, the top export commodity, accounted for 24.8% of total 
exports. Other major agricultural exports are  cut flowers and f oliage  (9.4%) and coffee (3.9%). 
Kenya's exports of manufactured products declined to 28.4% of the total in 2017 (compared to 
36.9% in 2011). Exports of chemical s and other semi -manufactures also continued to decline.13 At 
the same time , exports of fuels, ores and other minerals increased substantial ly to 10.8% of total 
exports in 2017 (against 6.1% in 2011), as the country started exporting new ores in 2014  
(Table A1.1) Re-exports account ed for 12.4% of total exports , and consist ed mainly of fuels, 
industri al inputs, motor vehicles and equipment.   
1.15.   The market structure of Kenya's export s remained broadly unchanged over the review  period . 
The bulk of exports is still destined to Africa: 37.7% of total exports in 2017 compared to 48.3% in 
2011. There is , howeve r, a shift from African partners towards Asian countries ( Table A1.3 ). Pakistan 
is currently the top market, accounting for 10.8% of Kenya's exports in 2017, followed by Uganda 
and the United States (Chart 1.2). Exports to EAC partners declined from 26.8% in 2011 to 19.3% 
in 2016.  
1.16.   Kenya's imports increased from USD 14.6 billion in 2011 to a peak of USD 18.4 billion in 2014 , 
before declining to USD 16.7 billion in 2017 ( Table A1.2 ). Kenya's imports of manufactured goods 
increased steadily to 61.8% of total imports in 2017, reflecting large import s of machinery and 
transport equipment  related to infrastructure projects.  The fuels imports bill declined to 16.3% of 
total imports , owing to lower oil prices. Imports of agricultural products , largely  food products, 
increased to reach 20.2% of the total . 
1.17.   Asia remains the leading source  of Kenya's imports  (Chart 1.2) . Its share in total imports rose 
from 39.4% in 2011 to 47.5% in 201 7. China doubled its share , and outranked India to beco me the 
top source of  Kenya's imports  (22.6%). This dynamic reflects the growing presence of Chinese firms  
in various infrastructure -related projects in Kenya. Other major sources of imports are the EU -28 
(12.0%) and India (9.9%). With lower oil prices, Kenya's imports from the Middle  East declined to 
13.6% of the total in 2016, but have rebounded to 17 .0% in 2017. The share of imports from Europe 
and the United States remained constant  (Table A1.4 ). Imports from EAC countries, although low, 
increased to about 3.5% in 2017 from 2.3% in 2016. The share of Kenya's imports from other 
African countries increased to 11.6% in 2017, after having recovered from a declining trend since 
2012.  
1.18.   Kenya is a net expo rter of services, owing to its tourism and air transportation subsectors. 
The surplus in trade in services increased to a peak of KES  251.9 billion  in 2013 , before declining in 
the following years. However, at 18.5% of GDP, the services surplus is relative ly high . Travel and 
tourism recorded robust growth over the past three years thanks to improvements in infrastructure 
and security conditions .  
                                                
13 KNBS  (2018), Kenya Economic Survey 2018 . Viewed at https://www.knbs.or.ke/download/economic -
survey -2018/ , 20 August 2018. WT/TPR/S/384 • Kenya  
 
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  Chart 1.1 Composition of merchandise trade, 2011 and 2017  
 
Note:  SITC Rev. 3. for product groups.  
Source:  WTO Secretariat calculations, based on data provided by the authorities; and UNSD, 
Comtrade  database.   
Chart 1.[KEN] Composition of merchandise trade, 2011 and 2017
2011 2017
Exports (f.o.b.), including re -exports
Manufactures
36.9%Manufactures
28.4%Chemicals 
8.0%
Iron & steel
2.1%
Agriculture  
60.4%Machinery and 
transport 
equipment 
3.2%
Coffee 3.9%Other manufactures 5.3%
Fuels 
6.2%
Tea 24.8%Clothing
5.5%Other semi -
manufactures 
4.3%
Other 0.5%
Cut flowers 
and foliage
9.4%Other agriculture
22.2%Ores and 
other 
minerals 
4.6%
Total:   USD 5,771.9 million Total:  USD 5,747.9 million
Imports (c.i.f.)
Other mining
1.4%Chemicals 13.2%Electrical 
machines
7.7%
Food 13.1%
Iron and steel 
4.8%Other 0.5% 
Other mining
1.3%Chemicals 
13.8%Electrical 
machines
8.0%
Food 18.9%
Iron and steel 
4.8%Other 0.4% 
Agri-
culture
20.2%
Mining
17.6%Manufactures
61.8%
Fuels
16.3%Non-electrical 
machinery 
9.4%
Other semi -
manufactures
7.3%Transport
equipment
10.8%Other manufactures
7.6%
Agri.raw 
material 
1.3%
Total:   USD 14,646.3 million Total:   USD 16,690.2 millionChemicals 
10.4%
Non-electrical 
machinery 8.3%Iron & steel
3.6%
Agriculture  
55.3%
Agri-
culture
14.5%Machinery and 
transport 
equipment 
4.8%
Coffee 4.1%Other manufactures
5.9%
Fuels 4.3%Tea 20.0%Clothing
4.3%
Mining
28.7%Other manufactures
6.3%Other semi -
manufactures 
7.8%
Transport
equipment
9.2%
Manufactures
56.4%
Fuels
27.3%Other semi -
manufactures
6.9% Agri.raw 
material 1.4%Other 1.7%
Note:      SITC Rev. 3. for product groups.Cut flowers 
and foliage 
7.7%Other agriculture
23.4%Ores and other 
minerals 
1.8%
Source:  WTO Secretariat's calculations, based on data provided by the authorities; and UNSD, 
Comtrade database.WT/TPR/S/384 • Kenya  
 
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  Chart 1.2 Direction of merchandise trade, 2011 and 2017  
 
Source : WTO Secretariat calculations, based on data provided by the authorities; and UNSD, Comtrade 
database.   
1.3.2   Trends and patterns in FDI  
1.19.   Over the review period , the Kenyan authorities have embarked on various reforms 
(Section  2.4) with a view to positioning the  country as a gateway to Sub-Saharan African markets. 
The country improved its Doing Business ranking by 28 positions , to 80th out of  190 countries  in 
2018.14 However, this improvement is not reflected in the country's performance in attracting foreign 
                                                
14 World Bank Group  (2018), Ease of Doing Business Report 2018 . Viewed at 
http://www.doingbusiness.org/reports/global -reports/doing -business -2018, 02 August 2018. 
Chart 1.[KEN] Direction of merchandise trade, 2011 and 2017
2011 2017
Exports (f.o.b.), including re -exports (f.o.b.)
Democratic 
Rep. of the 
Congo
3.2%
United States
8.0%Other Asia
8.5%
Tanzania
4.8%Africa 
37.7%
EU-28
21.2%Egypt
3.2%Middle East
8.6%
Uganda
10.4%Other Africa
12.8%Pakistan 10.8%
Asia 
19.2%
Other 5.3%
Somalia
3.3%
Total:   USD 5,771.9 million Total:  USD 5,747.9 million
Imports (c.i.f.)
India 
11.4%
United States
3.4%Other Asia
9.2%Japan 
4.4%
Africa 
11.6%
EU-28
14.9%United Arab 
Emirates 
15.3%Indonesia 3.3%
Asia 
39.4%
Other 5.6%
CIS 2.1%China
11.1%
Other Middle East
3.6%
Saudi Arabia, 
Kingdom of
4.1%Middle East
23.0%
South Africa 
5.4%Other Africa 
6.2%India 
9.9%
United 
States
3.3%Other Asia
7.0%Japan 
4.7%
Africa 
11.6%
EU-28
12.0%
United Arab 
Emirates 
8.0%Indonesia 3.3%
Asia 
47.5%Other 5.9%
CIS 2.7%China
22.6%
Other Middle East
2.3%
Saudi Arabia, 
Kingdom of
6.6%Middle 
East
17.0%
South Africa 
3.6%Other Africa 
8.0%
Total:   USD 14,646.3 million Total:   USD 16,690.2 millionDemocratic Rep. of 
the Congo
3.4%
United States
5.0%Other Asia
8.3%
WTO Secretariat's calculations, based on data provided by the authorities; and UNSD, 
Comtrade database.Tanzania
8.1%Africa 
48.3%
EU-28
22.6%Egypt
4.6%Middle East
6.4%
Uganda
14.8%Other Africa
14.1%
Pakistan 4.1%
Asia 
12.4%
Other 5.2%
Source:  Somalia
3.2%WT/TPR/S/384 • Kenya  
 
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  direct investment s (FDI) . Indeed, FDI inflows declined steadily from a high of USD 1.4 billion in 2011 
to a mere USD 390 million in 2016 (Table 1.3). They rebounded by 71% in 2017 to USD 672 million, 
driven by the information and communications technology (ICT) sector. According to UNCTAD, the 
availability of new tax incentives under the Special Economic Zones Act of 2015 has contributed to 
this performance.15  
Table 1.3 FDI, 201 1−17 
(USD million)  
 2011  2012  2013 2014  2015  2016  2017  
FDI inflows         
Flow 1,450.5  1,380.2  1,118.8  820.9  619.7  394.0  672.0  
% of GDP  3.5 2.7 2.0 1.3 1.0 0.6 0.8 
Stock  6,899.2  8,279.4  9,398.2  10,219.1  10,838.9  11,232.9  11,904.0  
% of GDP  16.4 16.4 17.1 16.6 16.9 15.8 15.0 
Source : UNCTAD (2018),  World Investment Report 2018 – Investment and new industrial policies . United 
Nations Conference on Trade and Development, Geneva; and information provided by the Kenyan 
authorities.  
1.20.   The main  sources of FDI inflows are South Africa,  China,  the United Kingdom, and the United 
States of America. The se inflows were mainly in the form of long -term debt instruments, equity and 
investment fund shares. Telecommunications, tourism, and agro -processing are among the top 
recipient sectors . FDI from Chi na was largely channelled in to the construction,  mining and quarrying  
sectors .  
1.21.   Kenya is a  non-negligible  source  of outward investments, mainly to its EAC partners. In 2016, 
Kenya contributed 46. 2% to the USD 254 million of intra -EAC FDI flows ( main r eport, Table 1.4). 
An increasing number of Kenya -based  firms are  expanding in to the rest of the EAC and other 
countries such as Ethiopia, Mauritius, and South Africa. The main destination sectors for Kenya's 
cross-border investments in the EAC are: banking  and insurance; oil distribution; and wholesale and 
retail trade.16  
 
                                                
15 UNCTAD (2018), World Investment Report 2018 – Investment and New Industrial Policies. Geneva.  
16 KNBS (2016), Kenya Foreign Investment Survey 2016 . Viewed at https://www.knbs.or.ke/foreign -
investment -survey -2016-report/ , 20 August 2018. WT/TPR/S/384 • Kenya  
 
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  2  TRADE AND INVESTMENT  REGIMES  
2.1  General Framework  
2.1.  Under the 2010 Constitution, Kenya has a presidential regime , with the separation of power 
between  the Executive, the Legislative, and the Judiciary.  A major development during the period 
under review was the implementation of  the devolved system of governance , which establishes two -
tier distinct levels of governments: the national Government and 47 c ounty governments.  
2.2.  At the national level, the Executive power is vested in the President, the Deputy President, the 
Attorney General, and Cabinet Secretaries  (heading ministries) . The President is Head of both the 
State and the Government. He is elected di rectly with the Deputy President as a running mate, for 
a five -year term , renewable once. He appoints the Attorney -General and Cabinet secretaries , subject 
to National Assembly approval. The latest presidential election was held in October 2017 .1 At count y 
level, the Executive power is exercised by governors and their deputies. The last gubernatorial 
elections were held as part of the general elections in August 2017.  
2.3.  The legislature exists at both national and county levels. The national legislative authority is 
vested in a Parliament of two chambers: the National Assembly , with 349 members, and the Senate , 
with 67 members. Members of both chambers are elected for a five -year term.  The National 
Assembly enacts legislation and represents Kenya's constituencies and special interests, whereas 
the Senate represents the interests of counties and their governments. The legislative authority of 
counties is exercised by county assemblies.  
2.4.  The national legislative authority prevails in areas such as national and international economic 
policy,  environment prot ection, norms and standards, and security interests. Income tax, VAT, 
customs duties and excise tax are exclusively the national Govern ment's responsibility. Counties can 
establish their own law over matters under their responsibilit y, including domestic trade 
development and regulation. In particular, county government s are responsible for issuing business 
permits and licences, and can i mpose local taxes , such as property tax and entertainment tax , under 
the guidelines provided by the Constitution .  
2.5.  The legislative process involves many stages, including public consultations . Bills are drafted 
mainly by the Attorney General in collaborati on with the Commission for the implementation of the 
Constitution, and the Kenya Law Reform Commission  (KLRC) .2 After public consultation and possible 
amendments, the bill is introduced to the relevant chamber of the Parliament (or both  chambers ). 
If the b ill passes the Parliament stage, it must be assented to within 14 days by the President , to 
become an Act of Parliament. It is then published in the Kenyan Gazette.   
2.6.  The Legislative process involves , inter alia , public consultation , as provided for by in the 
Constitution. A government ministry, department or agency (MDA), a Member of Parliament , or a 
private interested party may initiate a bill on a n issue of public interest . The draft ed legislative 
proposal is forwarded to the Cabinet for approval by the relevant Cabinet Secretary. The approve d 
proposed bill is forwarded to the Attorney General for legal drafting , after which it is published for 
public participation. The bill is then introduced to the relevant chamber of the Parliament  and, i f 
passed , it must be assented to within 14 days by the President , to become an Act of Parliament. 
After Presidential assent, it is then published in the Kenyan Gazette as law.  
2.7.  The Judiciary power is exercised through superior courts (Supreme Court, Court of Appeal, and  
High Court); and subordinate courts (Magistrates ' Courts, Kadhi 's Courts,3 and Courts Martial).4 The 
                                                
1 General elections were held in Kenya  on 8 August 2017. T he Opposition did not recogni ze the result of 
the presidential election , and appealed to the Supreme Co urt. After investigation, the C ourt overturned the 
verdict and ordered a new presidential election , which was held  in October 2017.  
2 KLRC (2015),  Guide to the Legislative Process in Kenya 2015 . Viewed at: 
http://www.klrc.go.ke/images/images/downloads/klrc -a-guide -to-the-legislative -process -in-kenya.pdf , 7 March 
2018.  
3 Khadi 's courts have jurisdiction over issues involving questions of Muslim law relating to personal 
status, marriage, divorce or inheritance.  
4 Apart from these courts, the Constitution , in Article 162(2) , empowers the Parliament to establish 
special courts on disputes related to employment and labour relations, and land issues. These special courts 
can be equal in status to the High Court or the subordinate courts.  
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  Supreme Court is headed by the Chief Justice, who is appointed by the President. Economic and 
commercial matters are dealt with primarily by commercial courts. Labour matters are dealt with by 
the Kenyan Employment and Labour Relations Court. In 2013, Kenya established the Nairobi Centre 
for International Arbitration (NCIA) as an alternative independent structure for international 
commercial arbitration.5 At the Kenya Revenue Authority, an Alternative Dispute Resolution (ADR) 
mechanism has been established to handle tax disputes ; it is operational .6 
2.8.  The Constitution is the supreme law of Kenya. It provides that all international laws, treaties 
and conventions (including WTO agreements) must be  ratified by the Parliament  to form part of 
Kenya's laws. During the review period, Kenya reviewed or enacted many laws, mainly to align them 
with the 2010 Constitution (Table 2 .1).  
Table 2.1 Selected trade -related laws  enacted or amended, 2012 -17 
Law Year  
Business environment   
Private Security Regulation Act (No. 13 of 2016)  2016 
Bribery Act (No. 47 of 2016)  2016 
Business Registration Service Act (No. 15 of 2015)  2015 
Companies Act (No. 17 of 2015)  2015 
Micro and Small Enterprises Act (No. 55 of 2012)  2012 
Land Registration Act (No. 3 of 2012)  2012 
Competition Act, 2010; last amended in 2016  2016 
Taxation   
Finance Act, No. 15 of 2017  2017 
Customs and Excise Act (Cap. 472); last amended in 2013  2013 
Value Added Tax Act (No. 35 of 2013); last amended in 2016  2016 
Tax Procedures Act (No. 29 of 2015)  2015 
Excise Duty Act (No. 23 of 2015)  2015 
Miscellaneous Fees and  Levies Act (No. 29 of 2016)  2016 
Contingency measures   
Sanitary and phytosanitary measures   
Kenya Trade Remedies Act (No . 32 of 2017)  2017 
Health Act (No. 21 of 2017)  2017 
Alcoholic Drinks Control Act (No. 4 of 2010); last amended in 2015  2015 
Fertilizers and Animal Foodstuffs Act (Cap. 345); last amended in 2015  2015 
Kenya Plant Health Inspectorate Service (No. 54 of 2012)  2012 
Investment   
Companies Act (No. 15 of 2015); last amended in 2017  2017 
Companies and Insolvency Legislation (Consequential Amendments) Act (No. 19 of 2015)  2015 
Insolvency Act (No. 18 of 2015)  2015 
Special Economic Zones Act (No. 16 of 2015)  2015 
Capital Markets (Derivative Markets) Regulations Act (2015)  2015 
Public Private  Partnerships Act (No. 15 of 2013)  2013 
Capital Markets Act (No. 48 of 2013)  2013 
Partnerships Act (No. 16 of 2012)  2012 
Privatization Act (No. 2 of 2005); last amended in 2017  2017 
Government procurement   
Public Procurement and Asset Disposal Act, (No. 33 of 2015)  2015 
Justice   
Access to Information Act (No. 31 of 2016)  2016 
Nairobi Centre for International Arbitration Act (No. 26 of 2013)  2013 
Tax Appeals Tribunal Act (No. 40 of 2013)  2013 
Foreign Judgments (Reciprocal Enforcement) Act No. Cap.  43, revised in 2012  2012 
Agriculture and related activities   
Land Act (No. 3 of 2012); last amended in 2016  2016 
Fisheries Management and Development Act (No. 35 of 2016)  2016 
Forest Conservation and Management Act (No. 34 of 2016)  2016 
Agriculture and Food Authority Act (No. 13 of 2013); last amended in 2013  2013 
Crops Act (No. 16 of 2013)  2013 
Kenya Agricultural and Livestock Research Act (No. 17 of 2013)  2013 
Wildlife Conservation and Management Act (No. 47 of 2013)  2013 
The Fisheries Act (Cap. 378), revised in 2012  2012 
Financial services   
Nairobi International Financial Act, (No. 25 of 2017 ) 2017 
Insurance Act (Cap. 487); last amended in 2017  2017 
Banking Act (Cap. 488); last amended in 2016  2016 
National Payment System Act (Cap. 493e)  2014 
Microfinance (Amendment) Act (No. 41 of 2013)  2013 
                                                
5 Nairobi Centre for International Arbitr ation Act (No. 26 of 2013).  
6 Online information viewed at: http://www.revenue.go.ke/index.php/notices/speeches/cgs -speech-on-
launch -of-alternative -dispute -resolution -adr-framework , 7 March 2018.  WT/TPR/S/384 • Kenya  
 
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  Law Year  
Central Bank of Kenya Act (Cap. 491); last amended in 2012  2012 
Mining, energy and water   
Mining Act (No. 12 of 2016)  2016 
Scrap Metal Act (No. 1 of 2015)  2015 
Natural Resources (classes of transactions subject to  ratification) Act (No. 41 of 2016)  2016 
Water Act (No. 43 of 2016)  2016 
Transport   
Civil Aviation Act (No. 21 of 2013); last amended in 2016  2016 
International Interests in Aircraft Equipment Act (No. 27 of 2013)  2013 
National Transport and Safety Authority Act (No. 33 of 2012)  2012 
Postal, information, and communication services   
Kenya Information Act (No. 2 of 1998); last amended in 2013  2013 
Source:  Information provided by the authorities.  
2.9.  During the review period, Kenya strengthened its anti-corruption framework , through the 
enactment of the Bribery Act , 2016 and the creation of specialized anti -corruption and economic 
crimes courts , which  are operational .7 The Act reinforces corruption  fighting by criminalizing bribery 
acts, including those committed outside Kenya . It requires companies to establish  bribery prevention 
mechanisms, and includes obligations on individuals holding a "position of authority" to report 
knowledge or suspicion of bribery within 24 hours to the Kenyan Ethics and Anti-Corruption 
Commission, the institution responsible for the administration of the Act.  
2.10.   The enactment of the Insolvency Act in  2015 is ano ther development  in Kenya's legal 
framework. The Act applies to the insolvency of natural persons, and incorporate d and 
unincorporated bodies, including government -owned enterprises. With the adoption of the 
legislation, Kenya became the 40th State in the world to implement the United Nations Commission 
on International Trade Law (UNCITRAL) Model Law on Cross -Border I nsolvency. The legislation 
allows foreign creditors access to courts in Kenya.  
2.2  Trade Policy Formulation and Objectives  
2.11.   The Ministry of  Industry,  Trade and Cooperatives (MITC) is the main ministry  in charge of 
trade policy formulation and implementation  in Kenya . According to the Constitution, the MITC 
develops trade policy in consultation with county governments and other stakeholders. The MITC 
consults with the county governments through the council of governors , which meets twice a year. 
Ministries dealing with sectoral policies and strategies touching upon trade include : the Ministry of 
Foreign  Affairs ; the Ministry of E ast African Community (EAC) and Regional Development , for the 
overall coordination and monitoring of EAC activities; the  National T reasury and Planning , regarding  
fiscal and financial matters; and the Ministry of Agriculture , Livestock, Fisheries  and Irrigation. In 
fulfilling its mandate, the MITC also collaborates with other agencies , such as: the Kenya Revenue 
Authority; the Export Promotion Council; the Special Economic Zones Authority ; and the Kenya 
National Chamber of Commerce and Industry  (KNCCI) . 
2.12.   The private sector, through the Kenya Private Sector Alliance (KPSA), the Kenya Association 
of Manufacturers and the KNCCI,  is involve d in trade and investment policy formulation , both at the 
national and county levels.  The Presidential Round Table  is the main public -private dialogue forum. 
It is a platform where the President and various arms of the G overnment meet bi-annually with key 
private sector players to discuss the general economic climate in the country and areas of concern . 
Other pub lic-private dialogue frameworks  include the Ministerial Stakeholders ' Forum, the Speaker 's 
Round Table Meetings, and the Council of Governors ' Forum.  
2.13.   Launched in  2017, Kenya's National Trade Policy (NTP) aims to enhanc e the efficiency of 
domestic markets and increas e the competitiveness of the exports sector .8 In the domestic market, 
                                                
7 Online information . Viewed at: http://www.statelaw.go.ke/anti -corruption -courts -launched , 7 March 
2018.  
8 MITC (2017), National Trade Policy 2017: Transforming Kenya into a competitive export -led and 
efficient domestic economy.  May. Viewed at: 
http://www.trade.go.ke/sites/default/files/Kenya%20National%20Trade%20Policy%20%282016%29_0.pdf , 
28 August 2018.  WT/TPR/S/384 • Kenya  
 
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  the NTP focuse s on revitali zing wholesale and retail trade, an d micro, s mall and medium enterprise  
(MSME)  trade. Regulatory  development s in the retail sector are to  be supported by law.  
2.14.   On the external trade side, t he Government's objective is to further enhance market access 
through , inter alia , the elimination of export restrictions; and negotiations with trade partners for 
the removal of non-tariff barriers ( NTBs) against Kenyan exports. Under the CET,  the following are 
to be established:  a duty -free regime for raw materials and intermediate i nputs not available 
regionally; and rules of origin that may further promote  regional trade . 
2.15.   Market and product diversification is another pillar of Kenya's NTP. This is to be achieved 
through the promotion of value chains, the establishment of an export/i mport financing bank, and 
the promotion of bilateral agreements with target markets. In the area of trade facilitation, the 
objective of the Government is to improve customs procedures and enhance the domestic capacity 
for compliance with international sta ndards. Specific measures include: establishing a national 
enquiry point for trade -related information; enhancing the functioning of the single window for trade; 
and expanding and modernizing Kenya's points of entry and exit. With regards to trade in servi ces, 
the Government is seeking to expand its share in the regional and global markets. This entails: 
aligning domestic legislation with commitments at the regional and multilateral levels ; establishing  
a unit dedicated to trade in services; and adopting a tax regime that is conducive to the expansion 
of trade in services. The NTP is complemented by various sectoral policies.  
2.3  Trade Agreements and Arrangements  
2.16.   Kenya is a member of the WTO and several regional agreements ( main report, Section 2).  
2.3.1   WTO  
2.17.   Kenya ha s been a WTO Member since 1 January 1995 , and a contracting party to  GATT since 
5 February 1964.9 It has been reviewed three times under the WTO Trade Policy Review Mechanism: 
first in 2000, and then twice , jointly with all the EAC WTO Members , in 2006 and  2012. Kenya has 
not been directly involved in any dispute at the WTO. It has been  a third party in three  disputes 
cases .10 
2.18.   Kenya participates actively in the WTO at several levels. It was the coordinator of the Africa -
Caribbean -Pacific (ACP) Group in 2014. It currently leads the WTO Accession negotiations for the 
Greater Horn of Africa, and hosted a regional dialogue in this regard in August 2017.11 It ratified the 
WTO Trade Facilitation  Agreement  in December 2015  and notified its category A commitments.12  
2.19.   Kenya hosted the 10th WTO Ministerial Conference (MC10) from 15 to 19 December 2015. At 
the MC10, Kenya asserted its commitment to the multilateral trading system ; it supports developin g 
countries and especially LDCs in negotiations. At MC11, it called for the full implementation of the 
"Nairobi Package" .13 For Kenya,  the elimination of agricultural export subsidies by more -developed 
Members remains a priority.  
2.20.   During the review period, Kenya submitted a large number of  notification s, covering mainly 
its TBT measures (Table 2.2). Notifications in many other areas remain outstanding.  According to 
the authorities, efforts are being made to submit  the outstanding notifications.  
                                                
9 Online information . Viewed at: https://www.wto.org/english/thewto_e /countries_e/kenya_e.htm , 20 
February 2018.  
10 Online information . Viewed at: 
https://www.wto.org/english/tratop_e/dispu_e/dispu_by_country_e.htm , 20 February 2018.  
11 Online  information . Viewed at: https://www.wto.org/english/news_e/news17_e/acc_29aug17_e.htm , 
20 February 2018. 
12 Online information . Viewed at: 
https://www.wto.org/english/news_e/arch ive_e/country_arc_e.htm?country1=KEN , 21 February 2018.  
13 The "Nairobi Package " contains a series of six Ministerial Decisions adopted at MC10 on agriculture, 
cotton, and issues related to LDCs.  WT/TPR/S/384 • Kenya  
 
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  Table 2.2 Latest notifications to the WTO by area, 2012 -July 2018  
Area  Symbol  Date  Title 
Anti-dumping (1)  G/ADP/N/193/KEN  2.07.13 Notification under Arts. 16.4 
and 16.5 of the Agreement  
Rules of origin (1)  
G/RO/N/85  28.09.12 Notification under paragraph 4 
of Annex II of the Agreement on 
Rules of Origin  
Sanitary and phytosanitary 
measures (45)  G/SPS/N/KEN/32  24.07.18 Notification - animal welfare  
Services (1)  
S/C/N/655  1.10.12 Council for Trade in Services - 
Notification of Regional Trade 
Agreement  
Subsidies and countervailing 
measures (1)  G/SCM/N/202/KEN  27.06.13 Notification under Arts 25.11 
and 25.12 of the Agreement on 
SCM 
Regional trade agreement s 
(1) WT/COMTD/N/14/Add.2  15.10.12 Notification of the Accession of 
the Republic of Rwanda and the 
Republic of Burundi to the EAC 
Trade facilitation (1)  WT/PCTF/N/KEN/1  13.05.15 Notification of category A 
commitments under the TFA  
Technical barriers to trade 
(418)  G/TBT/N/KEN/593  31.07.18 Notification – food and animal 
welfare  
Source:  WTO Secretariat.  
2.3.2   Regional and preferential agreements  
2.21.   Kenya is a member of the East African Community (EAC), the Common Market for Eastern 
and Southern Africa (COMESA), the Intergovernmental Authority on Development (IGAD), and the 
Indian Ocean Rim  - Association of Regional Cooperation (IOR -ARC). Kenya was among the first 
countries to ratify the African Continental Free Trade Area Agreement  (AfCFTA) .14 Kenya views these 
regional blocs as market opportunities.  
2.22.   Kenya has been part of the negotiations for an Economic Partnership Agreement (EPA) 
between the EAC and the E uropean Union (main report, Section 2. 4), which were concluded in 2014. 
Kenya ratified t he EPA on 20  September 2016 , and maintains its preferential access to the EU 
market. Subject to ratification by other EAC member s, reciprocal preferences between Kenya and 
the E uropean Union have not yet taken place. Kenya benefits from trade preference s under the 
United States' African Growth and Opportunity Act (AGOA) , under which  it exports mainly apparel 
and accessories, coffee, tea, and nuts.  
2.4  Investment Regime  
2.23.   Over the review period, Kenya's ranking on the World Bank 's Ease of Doing Business Index 
improved from 109 (out of 183 economies) in 2012 to 80 (out of 190 economies) in 2018.15 This 
reflects the numerous reforms undertaken in areas such as business creation, resolving insolvencies , 
tax payments, and trading across borders.  The Govern ment's priority sectors for investment 
promotion include : e-commerce , energy, the extractive  industry , manufacturing, financial services, 
health care, infrastructure, construction, transportation, tourism , and housing . Local and foreign 
investors receive the same  treatment in terms of incentives, promotion,  and research funding.  
However, limited access to financing, and a heavy tax burden remain among the most problematic 
constraints facing investors.16 
2.24.   The core laws steering investment are: the 2010 Constitution; the Investment Promotion Act, 
2004; and the Foreign Investment Protection Act, last revised in 2012. The Constitution provides 
guarantees to foreign investors with respect to the protection of private property, capital 
                                                
14 The AfCFTA will come into force once ratified by at least 2 2 parties.  
15 World Bank  (2018), Ease of Doing Business Report 2018. Viewed at  
http://www.doingbusiness.org/reports/global -reports/doing -business -2018, 2 August 2018.  
16 World Economic Forum  (2018), The Global Competitiveness Report, 2017 -2018. Switzerland. Viewed 
at: http://www3.weforum.org/docs/GCR2 017-
2018/05FullReport/TheGlobalCompetitivenessReport2017%E2%80%932018.pdf , 20 August 2018.  
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  repatriation, and the remittance of d ividends and interests. Investors can also insure against political 
risks through the World Bank 's Multilateral Investment Guarantee Agency (MIGA), or the Africa 
Trade Insurance Agency. Investors in Kenya have recourse to the International Centre for Settlement 
of Investment Disputes (ICSID)  and UNCTAD 's international network of transparent investment 
procedures. Kenya has signed bilateral investment promotion or protection treaties with about 50 
countries.17 
2.25.   The Investment Promotion Act aim s to promote  and facilitate investment by assisting 
investors obtaining the applicable licen ces and access various  incentives.18 The Kenya Investment 
Authority ( KenInvest ) is the investment promotion agency. In 2015, KenInvest launched 
"eRegulations ", an online  step-by-step guide  on investment -related procedures in Kenya. A number 
of government agencies are involved at different stages in the investor's establishment, regarding 
various permits and licensing requirements  at the  national and county level s. 
2.26.   There  are four main steps for establishing a business in Kenya : company name reservation  
and registration with the Registrar of Companies; request for a personal identification number (PIN)  
from the tax authorities ; issuance of the relevant  business permit by host county  authorit ies; and 
registr ation with social security institutions ( the National Hospital Insurance Fund  and the National 
Social Security Fund ). Opening a local company takes between 11 and 24 days , and costs  
KES 34,700 (about USD 343).  
2.27.   Kenya has a two -tier tax system, reflecting the two levels of the Government ( Section 2.1). 
Under the 2010 Constitution, the national Government has authority over taxes , such as the income 
tax; VAT; customs duties and other charges on imports and exports; and excise tax. Cou nty 
governments have prerogative over property and entertainment taxes, and they also obtain 
revenues from issuing business permits and licences.  
2.28.   In addition to indirect taxes collected at the border ( Section s 3.1.4 and 3.1.5 ), the other main 
taxes collected by the national Government are: the 30% corporation tax  (37.5% for non -resident 
companies ); personal income  tax, which is progressive , with five brackets (10%, 15%, 20%, 25%, 
and 30%) ; and withholding tax , levied on a wide  range of payments , at rates varying from 3% to 
25%.  Kenya reintroduced capital gains tax in 2015 after three decades of suspension. It applies to 
transfers of property (land, buildings and shares) at a rate of 5% of the profit or capital gain made 
during the transaction.  
2.29.   There are two mandatory social security contributions for employed persons in Kenya : the 
National Social Security Fund (NSSF), which is a pension fund; and the National Hospital Insurance 
Fund (NHIF ), destined to subsidize hospitalization costs. In 2014, the rate of contributions to the 
NSSF was raised from 10% to 12% of the pensionable remuneration, and is divided equally between 
employers and their employees.19 Contributions to the NHIF were also re vised upwards in 2015, and 
range  from a monthly payment of KES 150 to KES 1,700. Self -employed persons pay KES 500 per 
month.   
2.30.   In 2015, Kenya introduced a Special Economic Zones (SEZ) regime , which is open to both 
manufacturers and service providers , unlike the Export Processing Zones regime (Section 3.2 .4), 
which is open to manufacturers only.  There are three types of SEZ licences: the SEZ operator  licence , 
the SEZ developer  licence , and the SEZ enterprise  licence . All SEZ operators are required to 
incorpo rate in Kenya,  regardless of whether they are fully or partly owned by Kenyan citizens.   
2.31.   In addition to the various business -enabling policies  and facilities , SEZ operators are eligible 
for a host of tax and non -tax incentives, including: a full exemption from, or preferential rates  for, 
most taxes  and duties; work permit facilitation; and a guarantee for the protection and repatriation 
of profits . SEZ operators are exempted  from all border and internal taxes on their SEZ transactions;  
and can deduct 100% of the cost of investments in buildings  and machinery within the first year of 
                                                
17 China, Finland, France, Germany, Iran, Italy, Libya, Mauritius, the Netherlands, Switzerland, and the 
United Kingdom. Kenya has concluded bilateral double -taxation  treaties with: Austria, Bangladesh, Belgium, 
Canada, China, Denmark, France, Germany, Greece, India, Indonesia, Iran, Ireland, Japan, Mauritius, the 
Netherlands, Norway, South Africa, Sweden, Thailand, the United Kingdom, and Zambia.  
18 Online information.  Viewed at: 
http://www.kenyalaw.org/lex//actview.xql?actid=No.%206%20of%202004 , 26 February 2018.  
19 NSSF Act  No. 45 , 2013. WT/TPR/S/384 • Kenya  
 
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  utilization . They are also exempted from acquiring cer tain licences specific to their businesses  that 
would otherwise apply under the common regime . They are exempted from the im port declaration 
fee and various export taxes. T heir workforce can contain up to 20% expatriates.   
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  3  TRADE POLICIES AND P RACTICES BY MEASURE  
3.1  Measures Directly Affecting Imports  
3.1.1   Registration, customs procedures  and documentation  
3.1.  Customs pr ocedures in Kenya are governed mainly by the provisions of the EAC Customs 
Management Act (Common Report , Section 3.1.1 ). The Kenya Revenue Authority (KRA), through its 
Customs  Services Department (CSD), is responsible for c ustoms administration . At the border, KRA 
enforces various import and export  control s in collaboration with  other government agencies : Kenya 
Bureau of Standards, Kenya Plant Health Inspectorate Service, Directorate  of Veterinary Services, 
National Biosafety Authority, Port Healt h Services, Kenya Police Services, and Kenya Fisheries 
Service.  
3.2.  Any registered business (S ection 2.5 ) can import goods for commercial purposes, upon 
registration with KRA. An Export/Import Code Number is issued to the trader. Excisable goods and 
products that are subject to a licensing requirement can only be imported by licensed traders 
(Section 3.1.7).  
3.3.  The importer is required to fill an import declaration form (form C17). A simplified form is 
available for informal traders and small cross -border traders.  The C17 form is filled and submitted 
electronically together with the other required documents which may include a certificate of 
conformity, for goods subject to technical regulations; an import permit and/or licence may be 
required for the importation o f some goods (Section 3.1.7).  
3.4.  Customs procedures are to be carried out by licensed customs clearing agents . There are two 
categories of agents: those who can operate nationwide  only, and those who can operate in any 
other EAC country too ( main report, sec tion 3.1.1). National -level clearing agents are licensed by 
the Commissioner of Customs. Licences are valid for one year and renewable. KRA maintains and 
updates regularly the list of clearing agents licensed to operate at national and regional levels. As 
at end 2017, there were 868 clearing agents licensed to operate at the national level.  
3.5.  Most of customs declarations are processed through the 2005 SIMBA system. A new system, 
the Integrated Customs Management System (iCMS), was introduced in 2017 but is s till limited to 
air cargo clearance. Modules include risk assessment for Pre -Arrival Clearance and Authorized 
Economic Operators (AEOs).  
3.6.  Customs declarations are assigned to one of the following channels: the red lane for cargos to 
be subjected to a full examination and document verification; the yellow lane for cargos destined to 
undergo a partial physical verification and scanning; the green lane for cargos to be cleared without 
any inspection; the blue lane for cargos to be subject to an expedited docum ent clearance; and the 
purple lane for cargos to be released immediately. Assignment to the first three lanes is performed 
randomly with 60% of consignments going to the red channel , 20% to the yellow channel, and 20% 
to the green  channel. The blue and pur ple channels are reserved for importers with the Authorized 
Economic Operator (AEO) status. The blue channel is for consignments  for which both the importer 
and the clearing agents are registered AEO. The purple channel is for consignments for AEOs that 
are registered for pre -clearance. Exceptionally, consignments with high risk are manually directed 
into the red channel.   
3.7.  Customs documents are submitted through the TradeNet  System , a single window for customs -
related procedures. Launched in 2013, the platf orm also allows traders to track and monitor the 
status of their cargo, receive approved documents and make electronic payments. Since July 2015, 
all import and export related documents have been processed through TradeNet . The National 
Electronic Single Window System Draft Bill is currently at the stage of public consultation. The bill 
aims to  provide the legal framework for the National Electronic Single Window System (Kenya 
TradeNet) in Kenya through an Act of parliament. Currently, the System is  supported by a legal 
notice which is a subsidiary legislation compared to an Act of Parliament.  To date there are thirty -
five Partner Government Agencies (PGAs) using the System to process and approve cargo clearance 
documents. The KenTrade is working wit h the National Quality Control Laboratory  (NQCL ), 
Agriculture and Food Authority (AFA ), the Food Crop Directorate and the AFA Pyrethrum Directorate 
to automate their import/export processes. A progressive programme is in place to bring other WT/TPR/S/384 • Kenya  
 
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  stakeholders u nder the Single Window System.  A separate portal (Port health Services e -Portal)  has 
been established for the processing of import and export health certificates. The portal is connected 
to TradeNet . According to the authorities, the portal has contributed  to reducing the processing time 
of health permits from six days to 12 hours on average .  
3.8.  Kenya's Authorized Economic Operator (AEO) programme was implemented in 2010. There are 
two categories of AEOs: national AEOs whose benefits are limited to the jurisd iction of Kenya, and 
East African Regional AEOs ( see Common report, section 3.1.1). National AEOs' benefits may 
include: expedited customs clearance; self-assessment and audit based controls; client relationship 
management; and self -management . As at July 2018, there were 65 importers/exporters, 44 
clearing agents, and one transporter  with the AEO status .  
3.9.  Kenya ratified the WTO Trade Facilitation Agreement (TFA) in December 2015 and has notified 
its category A commitments, which represent around 7.1% of th e total measures under the TFA.1 
The authorities indicated that they were in the process of selecting category B and C measures. In 
2017, the authorities launched two trade portals: KenyaTradePortal , providing information on 
market access requirements for exports and imports; and InfoTradeKenya , providing information on 
applicable trade procedures. InfotradeKenya  was launched to ensure compliance with provisions 
under Article 1.2 of the TFA regarding the availability and publication of information.  
3.10.   Accordin g to the authorities, Kenya's pre -shipment inspection programme is not for customs 
purposes, but rather used to verify conformity with national standards and technical regulations 
(Section 3.3.2 ). Since December 2015, the programme has applie d to virtually all finished  goods 
imported into Kenya. The programme is operated by six companies on behalf of the Kenyan Bureau 
of Standards  (KEBS)  and covering different  regions. They issue a Certificate of Conformity, which is 
mandatory for customs clear ance. The inspection is subject to a fee ranging from 0.35% to 0.75% 
of the f.o.b. value of the consignment, with a minimum charge of US D 265. In general, goods 
delivered to Kenya without a Certificate of Conformity are denied entry into the country. The K EBS 
may, at its own discretion, subject such consignments to a destination inspection at a fee of 15% of 
their c.i.f. value.   
3.11.   In 2014, Kenya enhanced the management of its borders through the establishment of a 
Border Control and Coordination Committee. Th e Committee brings together the main agencies 
involved in the management of borders.2 Its functions include the formulation of policies and 
programmes for border control, and the exchange of information between the agencies.  
3.12.   An advanced ruling scheme is i n place for tariff classification.  Complaints related to customs 
issues are handled internally by the Customs and Information Centre. Complaints can escalate 
successively to the Valuation Section, the Policy Division, an internal appeal committee, and the 
alternative dispute resolution (ADR) division which was established in 2016 . Further appeal can be 
brought before the court. According to the authorities, most disputes are on valuation and tariff 
classification issues. The authorities indicated that the A DR mechanism has contributed to reducing 
the number of cases that went to courts.   
3.13.   Kenya's Northern Corridor which runs from the Port of Mombasa to the Ugandan border is a 
major route for cargos in transit to hinterland countries. Procedures and delays for  cargos destined 
to other EAC countries such as Burundi, Rwanda and Uganda have been greatly facilitated with the 
implementation of the Single Customs Territory and the regional bond system (Common Report, 
section 3.1.1). For these cargos, the importer is required to lodge the customs declaration in the 
destination countries. For goods in transit, customs duties are assessed at the first point of entry in 
Kenya. The Kenyan authorities release the cargo for transit once the payment is made in the country 
of destination. The cargo is monitored by a tracking system and remains under the regional bond 
system. Cargos in transit to other hinterland countries (mainly the Democratic Republic of Congo 
and South Sudan) continue to be regulated under the Northern Corri dor Transit and Transport 
                                                
1 WTO document WT/PCTF/N/KEN/1 , 13 May 2015 and WT O Trade Facilitation Agreement Facility 
website https://www.tfadatabase.org/notifications/list?notificationtype=a  
2 The Committee is established under the Security Laws Amend ment Act, 2014. It comprises the heads 
of the following institutions: Ministry of Interior and National Coordination; Kenya Revenue Authority; National 
Police Service; National Intelligence Service; Immigration Department; Kenya Plant Health Inspectorate; 
Kenya Wildlife Services; Kenya Ports Authority; Ministry of Health; Kenya Maritime Authority; and Kenya 
Airports Authority.  WT/TPR/S/384 • Kenya  
 
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  Agreement. Under the Agreement, the importer is required to secure a customs bond equivalent to 
the value of applicable customs duties and charges in Kenya. The bond may be issued by an 
insurance company. A bank guarantee or cash deposit rather than a bond is required for cargos 
containing goods considered as "sensitive" ( clothes, wines and spirits, tyres and tubes, shoes, 
electronic goods, second -hand clothes, sugar and rice ). The bond is cancelled upon presentation of 
the transit  document stamped by customs officers at the post of exit.  
3.14.   Kenya acceded to the International Convention on the Simplification and Harmonization of 
Customs Procedures ( Revised Kyoto Convention) in May 2010.  
3.1.2   Customs valuation  
3.15.   According to the authorities,  customs valuation rules are based on the provisions of the EAC 
Customs Management Act, which are aligned on the WTO CVA (Common Report, section 3.1.2). 
Customs duties are assessed on the c.i.f. value of goods. Although import insurance is not 
mandatory, a  surcharge of 2% of the f.o.b. value of goods is added to the dutiable base in absence 
of insurance costs. For conversion purposes, KRA uses the selling exchange rate notified by the 
Central Bank of Kenya at the time it approves the customs declaration.  
3.16.   KRA maintains a database of reference values constituted from previously accepted 
transactions. The database is used only for risk management purposes, according to the authorities.  
3.17.   The valuation of used cars is based on retail selling prices assessed by KRA . They are updated 
twice annually. KRA derives its selling prices from the retail price of vehicles of the same model or 
similar models on the domestic market, adjusted for profit margins and depreciation. The 
depreciation rates range from 5% for vehicles of less than 6 months old to 70% for vehicles aged 
between 7 and 8 years.  
3.1.3   Rules of origin  
3.18.   Kenya does not apply non -preferential rules of origin, according to its notification to the WTO 
Committee on Rules of Origin.3 Kenya applies EAC preferential rules of  origin agreed to under the 
EAC Customs Union Protocol ( Common Report, section 3.1.3 ).  
3.19.   As a member of the Common Market for Eastern and Southern Africa (COMESA), Kenya 
applies preferential rules of origin to goods originating in any other member country. A product 
qualifies for COMESA's preferential treatment if it falls under any of the following five criteria4: (i) 
goods wholly produced in a member country; (ii) goods with foreign materials accounting for less 
than 60% of their import content; (iii) good s with a local value -added of at least 35% of their ex -
factory cost; (iv); goods from processes involving a change of tariff heading; or (v) goods with a 
local value -added of at least 25% (for goods designated as of "particular importance to the economic 
development of a member state"5).  
3.20.   KRA is responsible for issuing preferential certificates of origin (i.e. EU, COMESA, EAC, AGOA, 
GSP certificates of origin). KRA collects a fee of KES  200 per certificate issued. A simplified certificate 
of origin is avail able free of charge for small cross -border trad ers exporting goods worth KES  2,000 
or less.  
3.21.   The Kenya Revenue Authority issues certificates of origin that are used for preferential trad e 
under  agreements, while the Kenya National Chamber of Commerce and Industry issues certificates 
of origin for non-preferential trade.  
3.1.4   Tariffs  
3.22.   Over the review period, the contribution of import duties to total tax revenues in Kenya 
remained stable, at around 7% annu ally. Kenya's tariff is based on the EAC Common External Tariff 
                                                
3 WTO document G/RO/N/9, 19 April 1996.  
4 COMESA Protocol on the Rules of Origin . 
5 The list of goods designated by the COMESA Council of Ministers as of "particular importance to the 
economic development of the Member States" is available in the Appendix VI of COMESA Protocol on the Rules 
of Origin.  WT/TPR/S/384 • Kenya  
 
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  (Common Report, section 3.1.4 ). Under the EAC waiver regime, Kenya was allowed, for the fiscal 
year 2017 -18, to deviate from CET rates on 48 tariff lines ( Common Report, Table 3.5 ). Most of 
these tariff lines consist of iron, steel and related articles (HS chapters 72 and 73);  this reflects the 
country's strategy to spearhead the development of iron and steel industries as part of its Vision 
2030 projects (Section 4.3). For 26 tariff lines,  the deviation consists of a switch from ad valorem  
to mixed duties, further complicating the tariff structure.  
3.23.   Kenya applies duty and tax exemptions and concessions schemes harmonized at the EAC level 
(Common Report, Section 3.1.4.3). Kenya may also take uni lateral decisions to suspend tariffs on 
certain goods for specific purposes. In 2017 for instance, import duties on white maize were 
suspended for four months to address domestic shortages . In general, import duties on dates are 
suspended during the month of Ramadan.  
3.24.   Kenya grants duty -free preferential access to products originating from its EAC partners. As 
a member of the Common Market for Eastern and Southern Africa (COMESA), Kenya grants a 
preferential tariff treatment  to products originating from the other 18 COMESA member countries.6  
3.25.   During the Uruguay round, Kenya bound 16.1% of all its tariff lines (at HS 6 -digit level) at 
rates ranging from 18% on some waste pharmaceutical products to 100% on all agricultural products 
(Common Report, Table 3.4). Kenya bound six tariff headings at th e HS four -digit level for non -
agricultural products (1.6% of all non -agricultural tariff lines) at rates ranging from 18% to 100%. 
The applied CET rate of 25% on some pharmaceutical wastes (i.e. wastes from pharmaceutical goods 
under HS heading 3006) excee ds Kenya's bound rate of 18% on these goods. In addition, 19 
agricultural tariff lines are subject to mixed duties while all the tariff bindings are ad valorem . The 
transposition of Kenya's schedule of tariff concessions into HS2007 has been certified effe ctive as of 
2 December 2014.7  
3.1.5   Other charges affecting imports  
3.1.5.1   Border taxes  
3.26.   Kenya has bound its other duties and charges at zero. However, in practice, it collects, on 
imports, some fees that have been harmonized at the regional level ( Common Report, Secti on 
3.1.4.5 ).  
3.27.   Kenya also collects an import declaration fee (IDF) on all imports destined for consumption in 
Kenya . In 2016, the IDF rate was lowered  from 2.25% to 2% of the c.i.f. value of the goods, with a 
minimum charge  of KES  5,000.8 Goods imported under a duty remission scheme are charged a 
specific fee  at the time they are entered for consumption in Kenya ; the fee was doubled to 
KES 10,000 per declaration in 2016 . Imports from EAC and COMESA  partners are exempted from 
the IDF. Proce eds from the IDF are partly used to meet the country's  financial obligations towards 
international organization s. Kenya is not yet collect ing the A frican Union levy.9 
3.28.   A railway development levy (RDL) was introduced in 2013 to finance the construction of a 
new railway between Mombasa and Nairobi (S ection 4.4. 2.2). The levy applies to goods imported 
for consumption in Kenya  at the rate or 1.5% of their c.i.f. value. Imports from other EAC and 
COMESA  members are exempted from the levy. Raw materials imported f or the development of 
industrial parks outside the municipalities of Nairobi and Mombasa are also exempted from the RDL.  
3.29.   Kenya collects a sugar development levy with the purpose of financing the activities of the 
sugar industry. The levy is charged at the rate of 7% on the ex -factory price (for locally 
manufactured sugar) or the c.i.f. value (for imports).  
                                                
6 These are: Burundi, Comoros, D emocr atic Republic of  Congo, Djibouti, Egypt, Eritrea, Eswatini, 
Ethiopia, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Uganda, Zambia, and Zimbabwe.  
7 WTO Document WT/Let/1021, 2 December 2014.  
8 Miscellaneous Fees and Levies Act, 2016.  
9 In 2016, African Union members decided to introduce a 0.2% levy on non -African imports to finance 
its activities, including its peace and security operations.  WT/TPR/S/384 • Kenya  
 
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  3.30.   Service -based fees are collected at the border by agencies such as the Kenya Plant Health 
Inspectorate Service ( KEPHIS ) and KEBS for inspections.  
3.1.5.2   Inter nal taxes  
3.1.5.2.1   Value added tax  
3.31.   The value -added tax (VAT) is the second largest contributor to tax revenue in Kenya, 
account ing for about 28% of total tax revenue during the fiscal year 2016 -17 (Table 1.1).  The VAT 
applies to goods and services delivered in or imported into Kenya at a standard rate of 16%.10 The 
taxable value of goods and services is generally the price at which they are provided. For imported 
goods , the taxable value  comprises their c.i.f. value, applicable customs and excise duties, and any 
other charges such as packaging, financing, warranty and commissions fees.  
3.32.   In 2013, t he Value Added Tax Act  was amended to streamline the regime through, inter alia , 
a reduction in the number of zero -rated and exempted goods and services; a reduction in the n umber 
of institutions that are allowed to import some specific goods without paying VAT; and the removal 
of provisions related VAT -remission . The new legislation also includes electronic services under the 
scope of the VAT.  
3.33.   Exports are zero -rated and thus eligible for the refund of VAT paid on their inputs.  In 2017, 
the legislation was further amended to revise the list of zero -rated goods and supplies. The revised 
list includes : the supply of maize, flour, cassava flour, wheat or meslin flour, ordinary bre ad; taxable 
goods supplied to marine fisheries and fish processors; milk and cream products; inputs for the 
manufacture of agricultural pest control products; agricultural pest control products; and right -hand 
drive vehicles imported to replace a left -hand drive vehicle. VAT -exempted goods include: seeds of 
various kinds; live animals, fish and birds; unprocessed meat and milk; fertilizers; fruits and 
vegetables; cereals; and plant and machinery. Some products such as petroleum oils and fuels 
remain exempt under a three -year transitional arrangement.  
3.1.5.2.2   Excise  duty 
3.34.   Excise duties account for about 13.6% of total tax revenue in Kenya during the fiscal year 
2016-17 (Table 1.1). During the review period, Kenya reformed its excise duty collection regime by 
shifting  from a system where the duties were charged mostly at ad valorem  and or mixed rates, to 
a system based largely on units of quantities ( Table A3.1 ).11 The scope of the excise tax was also 
reviewed to remove some goods deemed not to have a harmful effect. Th ese include: petroleum 
jelly, deodorants, body lotions, and certain food preparations.  On the other hand, beer and wines 
manufactured from locally grown agricultural products (excluding barley) are included in the excise 
duty base.  Other newly excisable go ods include: plastic sacks and bags (tariff line 3923.21.00 and 
3923.29.00); and illuminating kerosene (tariff line 2710.19.22).  
3.35.   Under the excise duty regime, only licensed operators can import or manufacture excisable 
goods, or supply excisable services. Licences are granted by the KRA Commissioner for a duration 
that depends on the activity and product category. As an enforcement tool, licensed operators are 
required to affix excise stamps on every package of an excisable good. Stamp fees were adopted in 
2017 (Table 3.1).  
Table 3.1 Excise stamps fees  
Category of excisable goods  Fees  (KES/stamp)  
Cigars, cheroots, cigarillos, or cigarettes containing 
tobacco or tobacco substitutes  
Other manufactured tobacco and  manufactured 
tobacco substitutes; "homogenous" and 
"reconstituted tobacco"; tobacco extracts and 
essences  2.8 
Wines including fortified wines, and other alcoholic 
beverages obtained by fermentation of fruits  2.8 
                                                
10 Until 2013, a reduced rate of 12% applies to diesel oils, residual fuels, and electrical energy.  
11 Excise Duty Act, 2015. The act repeals the Customs and Excise Act, Cap 472.  WT/TPR/S/384 • Kenya  
 
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  Category of excisable goods  Fees  (KES/stamp)  
Compounded spirits of alcoholic strength exceeding 
10% 2.8 
Spirituous beverages of alcoholic strength not 
exceeding 10%  1.5 
Beer, cider, Perry, mead, opaque beer and mixtures 
of fermented beverages with non -alcoholic beverages  1.5 
Mineral water and aerated water (tariff line 
n°2201.10.00)  0.5 
Fruit juices (including grape must), and vegetable 
juices, unfermented and not containing added spirit, 
whether or not containing added sugar or other 
sweetening matter  0.6 
Sweetened or flavoured water and non -alcoholic 
beverages not including fruit or vegetable juices of 
tariff heading 2202  0.6 
Cosmetics and beauty products of tariff headings 
n°3303, 3304, 3305 and 3307  0.6 
Source:  Schedule of the Excise Duty (Excisable Goods Management System) Regulations, 2017 . 
3.36.   With effect from January 2018, excise duty rates are, in principle, adjusted for inflation every 
two years.12  
3.1.6   Import prohibitions, restrictions, and licensing  
3.37.   Kenya's import control regime is governed mainly by regional provisions ( Common report, 
section 3.1.6 ). However, the Minister in charge  of trade may amend the list of goods that are subject 
to import prohibitions, restrictions or licensing.  In 2017, the authorities subjected the importation 
of gaming equipment, machines and related devices to an express clearance  from the Ministry of 
Interior and Coordination of National Government.13  
3.38.   A number of goods are subject to an import licensing, permit and/or registration requirements 
(Table 3.2 ). Applications for import and export permits can be lodged electronically through 
TradeNet , the single window system.  
Table 3.2 Products subject to an import permit and/or licence, or registration, 2018  
Product  Type of restriction  Licensing body  
Livestock and livestock products  Permit  Directorate  of Veterinary Services  (DVS)  
Fish and fish products  Permit  Directorate of Veterinary Services  
Sugar and its by -products  Licence and p ermit  Agriculture and Food Authority  
Dairy products  Permit  Agriculture and Food Authority and DVS  
Coffee  Licence  Agriculture and Food Authority  
Tea Registration  Agriculture and Food Authority  
Drugs  Licence  Pharmacy and Poisons Board  
Petroleum Products  Licence  Energy Regulatory Commission  
Ozone depleting substances  Licence and p ermit  National Environment Management 
Authority  
Fireworks  Licence and p ermit  Department of Mines & Geology  
Irradiating devices and 
radioactive materials  Licence  Radiation Protection Board  
CITES products  Permit  Kenya Wildlife Services (KWS)  
Source:  Information provided by the Kenyan authorities.  
3.39.   Kenya maintains some import controls and prohibitions under the Animals Diseases Act 
(Table  3.3). An absolute import prohibition applies to certain meat and meat products: products 
from animals raised with animal growth promoters, beta agonist and chloramphenicol; products from 
animals bred through genetically modified  inputs; and products with levels of lead, mercury, 
cadmium and arsenic exceeding the maximum residue limits, or with residues of mycotoxins 
                                                
12 Finance Act, 2017 . 
13 Kenya Revenue Authority Public Notice. Accessed at: 
http://www.kra.go.ke/notices/pdf2017/Public%20Notice%20 -
%20Restriction%20on%20Importation%20of%20Gaming%20Equipment,%20Machines%20and%20Devices.PD
F, 2.08.2018.  WT/TPR/S/384 • Kenya  
 
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  exceeding the recommended limit s. The importation of fish and fish products derived from toxic 
species is prohibited. Other prohibited fish products include: fish and fishery products that have been 
fed with genetically modified/engineered feedstuff, and prohibited animal proteins such as meat, 
bone meal and greaves.  
Table 3.3 Import prohibitions and restrictions on SPS grounds  
Product  Type of 
restriction/requirements  In force since  
Live sheep and goats from countries infected with scrapie,  
caprine arthritis/encephalitis and bovine spongiform 
encephalopathy.  Prohibition  2011 
Live poultry, birds, captive wild birds, carcasses, meat,  
meat products, bone meal, feathers and other poultry 
products  Prohibition  2017 
Live rabbits  Prohibition  .. 
Birds and eggs  Prohibition  .. 
Swedish landrace pigs  Authorization  .. 
Semen of animals  Authorization  .. 
live organisms capable of setting up infections in animals  Authorization  .. 
vaccines and biological products intended for use in control 
of animal diseases  Authorization  .. 
Birds and eggs for hatching purposes  Further test may be 
required ( Products must be 
tested for bacillary white 
diarrhoea, tuberculosis, 
and certified free from the 
fowl paralysis  .. 
.. Not available.  
Source:  Information provided by the Kenyan authorities.   
3.40.   The importation of excisable goods is subjected to a licensing requirement (Section 3.1.3). A 
list of licensed agents and brands is published by the Kenya Revenue Authority.  
3.41.   Kenya prohibits the importation of left hand  drive vehicles14, and used vehicles of more than 
eight years old. For v ehicles shipped without a certificate of roadworthiness , KEBS carries out a 
destination inspect ion and applies a  penalty of 15% of their c.i.f. value. An import ban on plastic 
carrier b ags has been effective since 28 august 2017. An exemption may be granted for f lat plastic 
bags for industrial packaging.  
3.1.7   Anti-dumping , countervailing, and safeguard measures  
3.42.   The Trade Remedies Act of 2017 provides for the establishment of the Kenya Trade Remedies 
Agency (KETRA) as the national authority responsible for investigating and evaluating allegations of 
dumped or subsidized imports, and requests for the application of safeguard measures. Under the 
legislation, the power to impose anti -dumping and countervailing measures is vested in Cabinet 
Secretary responsible for international trade while safeguard measures are under the authority of 
the Cabinet Secretary responsible for finance. The Ministry of Industry, Trade and Cooperatives is in 
the process  of establishing the agency as provided  for by the Act.  
3.43.   In principle, investigations on dumping and subsidies may be initiated by the KETRA on its 
own initiative, or upon an application by or on behalf of a domestic industry. An investigation is 
triggered only if it is supported by producers accounting for at least 50% of the production of the 
concerned product. When an investigation is launched, the KETRA must notify the government of 
the exporting country, and domestic interested parties through a notice in the Gazette . 
Investigations must be completed within twelve months of the date of initiation. However, 
provisional measures may be applied 60 days after the initiation of the investigation, and for a 
duration not exceeding six months in the case of alle ged dumping, and four months in the case of 
alleged subsidies.  
                                                
14 Kenya Bureau of Standards KS 151 5:2000 . WT/TPR/S/384 • Kenya  
 
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  3.44.   KETRA may launch safeguard investigations on its own initiative or upon a request from a 
domestic industry. It should conclude the investigation within six months from the date of initiation. 
Provisional measures may be imposed between 30 and 45 days after the initiation of the 
investigation. The duration of safeguard measures may not exceed six years.  
3.45.   Kenya has not applied any anti-dumping, countervailing of safeguard measures under the 
WTO.  
3.1.8   Other measures affecting imports  
3.46.   Kenya applies trade sanctions adopted by the United Nations and regional organizations to 
which it belongs. Kenya does not participate in countertrade, and has not signed any agreement 
with a foreign government or firm to in fluence the quantity or value of goods and services exported 
to its market.  
3.47.   Kenya adopted a Buy Kenya Build Kenya Strategy  in 2017 with the overall objective of 
increasing the competitiveness and consumption of locally produced goods and services.15 Key 
interventions include measures aiming at giving preferences for public procurement, providing an 
enabling business environment,  and enhancing market access for locally produced goods and 
services (Table 3.4). For goods to obtain the local status, they  must be wholly produced in Kenya or 
contain at least 35% of local value added. Services provided through any of the four modes of supply 
qualify as locally provided services.  
Table 3.4 Key interventions under the Buy Kenya - Build Kenya  Strategy  
Area  Selected strategies and activities  
Public procurement policy framework  Reservation by ministers, departments and agencies of:  
• 40% of their public procurement budget for local goods and 
services;  
• 30% of their procurement budget to youth, women, and the 
disab led. 
Enabling business environment  • Provision/enhancement of: subsidies and incentives related to 
agricultural inputs, machinery, utilities; duty and tax exemptions, 
and other rebates to manufacturers using locally sources raw 
materials;   
• Enhancement of the quality infrastructure (enforcement of 
standards, certification of products, accreditation of industries and 
plants…);  
• Safeguard of intellectual property rights (development of an IP 
policy, restructuring of the IP Tribunal, institutional capacity 
building);  
• Promotion of industrial research and development, inn ovation and 
technology transfer.  
Market access  • Establishment of trade finance facilities and promotion of credit 
guarantee sys tem; 
• Support to packaging industries;  
• Strengthening the implementation of trade remedies and safeguard 
measures;  
• Other measures (promotion of the Kenya brand, exhibitions and 
trade fairs; provision of working spaces and shelf spaces) . 
Advocacy  • Awareness a nd communications campaigns;  
• Sensitization to voluntary labelling;  
• Advertising, publicity.  
Source:  Government of Kenya (2017), Buy Kenya – Build Kenya Strategy.  Ministry of Industry, Trade and 
Cooperatives, June 2017.  
3.48.   Local content requirements are in place in the construction industry; for public procurement 
under the Buy Kenya  - Build Kenya Strategy ; in the mining and energy sectors (Section 4.2); and 
in the manufacturing sector (Section 2. 4). In the constr uction indu stry, projects worth  
KES 500 million or less are not open to foreign contractors .16 To be eligible for projects above this 
                                                
15 Government of Kenya (2017), Buy Kenya – Build Kenya Strategy.  Ministry of Industry, Trade and 
Cooperatives, June 2017. Accessed at: 
http://www.trad e.go.ke/sites/default/files/BUY_KENYA_BUILD_KENYA_STRATEGY_v2_1.pdf  [05.05.2018].  
16 National Construction Authority Act , 2011. WT/TPR/S/384 • Kenya  
 
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  threshold, they are required to enter into a joint -venture involving at least 30% of Kenyan 
ownership, or subcontract at least 30% of the value of the work to local contractors. They are also 
required to implement a plan to transfer technical skills not available locally to a local firm or person .  
3.49.   The Brand Kenya Board was established in 2008 to build and enhance the country's image 
and national identity. The Board issues a mark of identity to companies which accept to participate 
in the Brand Kenya initiative which is carried out in collaboration with the Kenya Association of 
Manufacturers and the Kenya Bureau of Standards. Companies vo luntarily participate in the scheme.  
3.2  Measures Directly Affecting Exports  
3.2.1   Customs procedures and requirements  
3.50.   Registration formalities for export activities are simil ar to those applying to imports  
(Section 3.1.1). Required documents may include a commerci al invoice, a packing list and a bill of 
lading (or airway bill). Depending on the product and/or destination market, the following may be 
required: a certificate of origin, a phytosanitary certificate, a sanitary certificate, a fumigation 
certificate, and  a quality assurance certificate. Export declarations are submitted to the customs 
administration through the single window ( TradeNet ). For customs purposes, export values are 
assessed on an f.o.b. basis.  
3.2.2   Taxes, charges , and levies  
3.51.   Kenya levies an export tax on raw hides and skins to promote the domestic leather processing 
industry. In 2014, the tax rate was doubled to 80% of the f.o.b. value of exports (or US D 0.52 per 
kg whichever is higher). Raw hides and skins are also subject to a 2% export levy for t he Veterinary 
Service Development Fund.  Export taxes on wet blue and crust are respectively at the rate of 1% 
and 0.5% of their f.o.b. value.  
3.52.   Export taxes are also levied on raw macadamia nuts.  In 2017, the 20% export tax on ferrous 
scrap metals was repla ced by a ban .  
3.2.3   Export  prohibitions, restrictions, and licensing  
3.53.   In addition to measures decided at the EAC level ( main report, section 3.2.3), the authorities 
may take measures to prohibit or restrict the exportation of some goods.  
3.54.   With effect from Januar y 2017, the exportation of scrap metals is prohibited.17 The measure 
aims at ensuring a sufficient supply to the domestic industry. Between 2009 and 2014, an export 
ban applied to used automobile batteries, lead scrap, crude and refined lead. In 2015, the e xport 
ban was replaced by the requirement of an approval  by the Scrap Metal Council.  In 2017, Kenya 
banned the exportation of maize to guarantee its supply to domestic markets.  
3.55.   Kenya prohibits the export ation of counterfeit goods, pirated goods, and good s bearing false 
indication of origin.   
3.56.   Some agricultural, veterinary and mining products are subject to specific export 
documentation requirements (T able 3.5 ). 
Table 3.5 Product -specific export requirements, Oc tober 2018  
Product  Documentation requirement  
Honey  • Analysis certificate for pesticides, heavy metals and 
antibiotics  
• Health  certificate from the Directorate  of Veterinary Services 
(DVS)  
Horticulture products  • Licence and permit from the Horticultural Crops 
Development Authority  
                                                
17 Scrap Metal Act, 2015.  WT/TPR/S/384 • Kenya  
 
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  Product  Documentation requirement  
• Phytosanitary Certificate from the Kenya Plant Health 
Inspectorate Services  
Tea • Registration with the Agriculture and Food Authority (AFA)  
and the East Africa Tea Trade Association  
Coffee  • Licenc e from AFA  
• Membership to the Mil d Coffee Trade Association  
• Performance bond of KES  500,000 in favour of the Board  
Live birds  • Import permit from the country of destination  
• Licence and export permit from the DVS  
Live animals  • Health Certificate from the DVS  
• Certificate of origin  
Processed meat  • Processing licence and Health Certificate from the DVS  
• Certificate of origin from the Kenya Revenue Authority  
Quail • Health certificate and movement  (within Kenya)  permit from 
the DVS  
• Non-CITES export permit   
• Importation and exportation from  Kenya Wildlife Service  
Fish • Permit from the Fisheries Department  
• Health certificate and Field Inspection report (for live fish) 
from the DVS  
Dairy products  • Health certificate from the DVS  
• Permit from the Kenya Dairy Board  
Minerals  • Licence and export permit from the Commissioner of Mines 
and Geology  
Source:  Export Promotion Council, online information. Viewed at: 
http://epckenya.org/index.php?option=com_content&task=blogcategory&id=208&Itemid=295 .  
3.2.4   Export support  and promotion  
3.57.   Kenya does not grant any export subsidy , according to the Kenyan authorities . The country's 
National Trade Policy  aims to unleash the countr y's potential in international trade to turn it into an 
"export -led globally competitive economy".18 However, Kenya's export performance is hindered by 
challenges related to, inter alia , poor infrastructure and high cost s of inputs, high cost s of export 
finance, increased competition in key markets, stringent and changing market entry requirements, 
and some non -tariff barriers.  19 
3.58.   There has not been any major change to the country's export promotion activities since the 
last TPR. The Export Promotion Council (EPC) is responsible for export promotion activities. Other 
agencies in export promotion include the Export Processing Zone Authority, the Kenya National 
Chamber of Commerce and Industry, and some producers' associations.   
3.59.   During the review period, export promotion activities were implemented mainly under the 
EPC's Strategic Plan 2012 -2017, which targets a 20% annual growth in exports of goods and 
services .  
3.60.   A new export development strategy was adopted in 2017 and identified priority subsectors in 
agricult ure, manufacturing, and services.20  
3.61.   Kenya also applies export promotion schemes agreed upon at the community level 
(Section  3.2.3).  
                                                
18 Government of Kenya (2017), National Trade Policy – "Transforming Kenya into a Competitive Export-
led and Efficient Domestic Economy , May 2017.  
19 EPC (2018), Monthly Economic and Export Review. Export Promotion Council, December 2017. 
Accessed at: http://epckenya.org/images//monthly%20economic%20and%20export%20review%20report -
%20dec%202017.pdf , 5.5.2018.  
20 Government of Kenya (2017), The National Export Development and Promotion Strategy for Kenya 
2017-2022.  June 2017.  WT/TPR/S/384 • Kenya  
 
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  3.62.   The e xport processing zones (EPZs)  regime remains an important  component of Kenya's 
strategy to diversify its exports. In 2016, EPZ enterprises accounted for 11% of total exports and 
17.4% of the employment in the manufacturing sector ( Table 3.6 ). There are close to one hundred 
enterprises operating in seven distinct EPZs.  EPZ exports consist mainly of textile and apparels , and 
the U.S. is the main market for their exports.  
Table 3.6 Selected EPZ performance indicators 2012 -16  
Indicator  2012  2013  2014  2015  2016  
Number of gazetted EPZs 47 50 52 56 65 
Number of EPZ enterprises  82 85 86 89 92 
Employment (% of manufacturing  
employment ) 12.8 14.1 16.1 17.0 17.4 
Exports       
Total (K Sh. million)  39,962 44,427 51,377 60,879 63,005 
Total (in % of total exports)  7.7 8.8 9.6 10.5 10.9 
EAC countries (K ES million)  .. .. .. .. .. 
Domestic Sales (K ES million)  3,322 4,601 4,211 1,793 3,687 
Imports by SEZs (K ES million)  24,973 27,413 29,461 31,370 30,160 
Investment (K ES million)  38,535 48,004 44,218 48,128 56,960 
.. Not available.  
Source:  Information provided by the Kenyan authorities.  
3.63.   EPZs are established under the Export Processing Zones Act, 1990, and regulated by the 
Export Processing Zones Authority (EPZA). They may be fully foreign owned. There are four types 
of EPZ licences: the  Developer Operator Licence; the Manufacturing Enterprise Licence, for 
businesses engaged in manufacturing and processing activities; the Commercial Enterprise Licence, 
for businesses engaged in activities such as brokerage, consultancy and repair services ; and the 
Business Service Permit, for firms providing business services to EPZ enterprises.  
3.64.   Production from EPZs is destined primarily for exports. Companies engaged in commercial 
activities are required to generate the totality of their turnover from ex ports, while those engaged 
in manufacturing activities and export -oriented services may sell up to 20% of their output on the 
regional customs territory . They are required to seek the approval of the Ministry in charge of trade, 
to follow normal import pro cedures and pay applicable import duties.  
3.65.   EPZ Enterprises enjoy many tax incentives such as : a 10 -year corporate income tax holiday 
and a 25% tax rate for the following ten years ; a 10-year withholding tax holiday on dividends and 
other remittances to non -residents; a perpetual exemption from the payment of VAT and customs 
duties on inputs, and stamp duty on legal instruments; and a 100% investment deduction on new 
investment in buildings and machinery.  EPZ companies also benefit from a variety of non -tax 
incentives. They enjoy faster administrative procedures as the EPZ Authority carries out all licensing 
and regulatory activities on behalf of the government. They are not subject to any exchange controls, 
and have access to facilities that are built to int ernational standards. Since 1 January 2018, EPZ 
enterprises have been exempted from the payment of any applicable export dut y and lev y, and the 
payment of import declaration fees.21 There are no plans to phase out the EPZs.  
3.2.5   Export finance, insurance, and gu arantees  
3.66.   The authorities indicated that the government does not operate any export finance, insurance 
or guarantee schemes . These are provided by commercial entities at market prices.  The Africa Trade 
Insurance Agency is the main provider of export credit in Kenya.22  
                                                
21 Finance Act 20 17 Section 59.  
22 Kenya is a founding member of the African Trade Insurance Agency. The other members of the ATI 
are: Burundi, Eritrea, Malawi, Madagascar, Rwanda, Tanzania, Uganda and Zambia.  WT/TPR/S/384 • Kenya  
 
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  3.3  Measures Affecting Production and Trade  
3.3.1   Incentives  
3.67.   Besides the various duty rebate and suspension  schemes  available at the EAC level (Common 
Report, Section 2.4.2), Kenya offers fiscal incentives in the form of tax holidays, reduced tax rates, 
and investment deduction allowances. Incentives are available under the Export Processing Zones 
regime  (Section 3.2.4) and the newly adopted  Special Economic Zone regime (S ection 3.2.4). 
Sector -specific incentives are available for mining activities (S ection 4.2.1); the manufacturing 
sector (S ection 4.3); and the capital markets industry (S ection 4.4.2.3).  
3.3.2   Standards and other technical requirements  
3.68.   There has been no major change to the legal and institutional framework governing standards 
and technical  regulations in Kenya. The Standards Act, Cap 496, is the main legislation governing 
standardization activities in Kenya. The institutional framework comprises the Kenya Bureau of 
Standards (KEBS) as the agency responsible for standardization and certifica tion activities; the 
National Standards Council as the oversight body; and, the Standards Tribunal to hear appeals to 
decisions by the other institutions. KEBS is the national enquiry point under the TBT Agreement . The 
MITC is the national notification Aut hority .23  
3.69.   Kenya is a member of the International Organization for Standardization (ISO), the 
International Electrotechnical Commission (IEC), and the African Regional Organization for 
Standardization (ARSO).   
3.70.   In Kenya, any interested party can launch the initiative for setting a standard, and revising 
or amending an existing one. The relevant t echnical committee evaluates the request in consultation 
with stakeholders and may decide to launch the standardization process. When the process is 
launched, KEBS i s required to publish a notice in the Gazette informing the public of the standard 
development  process.  The draft standard prepared by the technical committee is then published in 
the KEBS Standards Work Programme Bulletin . Interested parties, including fr om any WTO Member , 
have 60 days to make written comments.24 The draft standard becomes a national standard once 
declared as such through a legal notice by the MITC.  
3.71.   A standard becomes a technical regulation upon declaration through a legal notice by the 
Cabinet Secretary responsible for Standards and Technical Regulations.  The authorities may exempt 
some importers and manufacturers  from compl ying with a technical regulation ; the decision is taken  
on a case -by-case basis.25 Standards are in principle reviewed after three years for the first time, 
and every five years thereafter.  As at October 2018, Kenya has 9  150 standards, of which 65.2% 
derive from international standards. These are: ISO standards (45.3% of national standards), IEC 
(7.7%), East African Standards (6.5%), and Codex (4.6%).  
3.72.   Kenya operates a pre -shipment inspection programme on the conformity of imported goods 
with applicable standards, specifications or regulations . For prod ucts not subject to Kenyan 
standards, the verification is carried out against the relevant international standa rds or those 
applicable in the country of origin. Five companies are operating the verification programme on 
behalf of KEBS: Société Générale de Surveillance SA; Intertek International Ltd.; China Certification 
and Inspection (Group) Co. Ltd.; Bureau Veritas; and Cotecna Inspection SA.26 Each company is 
appointed for 36 months and has monopoly over inspection activities in countries assigned to it b y 
the authorities.  
3.73.   The verification may include: physical inspection of goods; sampling, testing and analysis; 
audit of the production process; documentary check; and conformity assessme nt to Kenyan 
standards. The requirement was notified to the WTO in No vember 2015.27 Since December 2015, 
                                                
23 WTO document  G/TBT/2/Add.86, 28 April 2005.  
24 WTO document G/T BT/2/Add.86, 28 April 2005.  
25 Section 9 (iii) of the Standards Act Cap 496, as revised.  
26 KEBS Public Notice – Inspection of imported goods in the country of supply. Accessed at: 
https://www.kebs.org/images/pdf/13331841R_ -_Public_Notice.pdf , 20.08.2018.  
27 WTO document G/TBT/N/KEN/122/Rev.1 , 9 November 2015.  
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  the verification programme has covered virtually all finished  goods  imported into Kenya. The list of 
exempted goods includes: products regulated by other government agencies; raw materials, 
machinery and spare parts impor ted by registered manufacturers; Complete ly-knocked-down (CKD) 
motor vehicles and motor bikes imported for local assembly ; courier parcels; printed and copyrighted 
digital materials; and goods certified by KEBS under the Diamond Mark of Quality s cheme .28 Goods 
manufactured in another EAC country are accepted based on the certification issued by the 
respective national standards bodies. 
3.74.   There are four possible routes for obtaining the certification (T able 3.7 ). Owing to their risks 
of fraud, the following products can only be certified through route A, which requires testing and 
physical inspection: sugar, cereals and pulses, fertilizer, animal and fishery products, fresh dairy 
products, fresh horticultural pr oduce, used and second -hand goods. A registration and/or licensing 
is required for route B, C and D. Registration and licensing fees are calculated on a case -by-case 
basis by each inspection company and apply to its area of operation.  Depending on the outc ome of 
the assessment, the company may issue a Certificate of conformity , a Non- conformity report , or an 
Uncompleted process report . The Certificate of conformity  is required for customs clearance.   
Table 3.7 Routes of certifications and fees, June 2018  
Options  Eligible shipments/traders  Verifications  Fees 
Route A  One-off shipments of goods  • Testing and physical 
inspection  0.60% of the f.o.b.  
USD 265 – USD 2,700 
Route B  Registered frequent shippers of 
homogeneous goods  • Physical inspection  
• Regular testing throughout 
the registration period  0.55% of the f.o.b.  
USD 265 – USD 2,700 
Route C  Licensed manufacturers and 
their authorized representatives  • Annual factory audit  
• Random testing and 
physical inspection  0.35% of the f.o.b.  
USD 265 – USD 2,700 
Route D  Registered importers of 
consolidated cargos  • Physical inspection  0.75% of the f.o.b.  
USD 265 – USD 2,700 
Source:  Kenya Bureau of Standards, online information. Viewed at: 
https://www.kebs.org/index.php?opt=qai&view=new_pvoc_requirments , 10.3.2018.  
3.75.   Goods imported without a certificate of conformity are subject to a destination inspection by 
KEBS at a fee of 15% of their c.i.f. values. The importer is required to post a bond of a similar value 
pending the verification. Depending on the certification route, the inspection fee may range from 
0.35% to 0.75% of the f.o.b. value of the consignment, with a minimum perception of US D 265 and 
a maximum of US D 2,700. Due to their ad val orem nature, the fees charged may not be 
commensurate with the cost of the inspection service. Furthermore, the application of a minimum 
perception may result in higher charges for small traders.29 
3.76.   The Kenya Accreditation Services (KENAS) is the body mandat ed by the government to 
provide accreditation services. KENAS is a member of the International Laboratory Accreditation 
Cooperation, the International Accreditation Forum, and the African Accreditation Cooperation. It 
provides accreditation services to cer tification and inspection bodies; calibration, testing and medical 
laboratories; and proficiency tests providers. Accredited bodies are subject to an initial assessment 
fee of KES 250 ,000, and an annual fee of KES  192,500.  
3.77.   Kenya maintains labelling requir ements for foodstuffs and excisable goods. All foodstuffs must 
be labelled in English and/or Swahili. Packaged goods must be marked with a batch number, the 
dates of expiration and/or production. For products with limited shelf live, 50% (for non -food item s) 
to 75% (for food items) of the shelf live must be valid from the date of expected arrival in Kenya.  
3.78.   Since November 2017, operators have been required to affix an excise stamp on all excisable 
goods manufactured or imported into Kenya (Section 3.1.5). D epending on their end use, excisable 
                                                
28 The Diamond Mark of Quality is a voluntary certification scheme for manufacturers who can 
demonstrate to KEBS a high degree of excellence in their product manufacturing process and quality. The 
certification is valid for three years.  
29 For instance, a one -off importer with a consignment value of USD 4,416 or less must pay the 
minimum perception, and faces an effective rate that is higher than the prescribed 0.60% fee.  
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  goods must be labelled with one of the following mentions: "For use in Kenya", "Duty free", "Kenya 
Defence Forces", or "National Police Service".  
3.79.   Food and feed containing at least 1% (by weight) of genetically modified organisms are 
subject to labelling and traceability requirements.30 Operators are required to ensure that the words 
"genetically modified 'name of ingredient or food ' " appear on the label. They are also required to 
inform any subsequent operator in the production or distribution chain that the product contains or 
consists of genetically modified organisms.  
3.3.3   Sanitary and phytosanitary  requirements  
3.80.   There has been no majo r change to Kenya's sanitary and phytosanitary ( SPS) legal and 
institutional framework since the last Review in 2012 ( Table 3.8 ). National enquiry points under the 
WTO SPS Agreement are: the Kenya Plant Health Inspectorate Service, for plant health issues;  the 
Department of Veterinary Services for animal health; and the Department of Public Health for food 
safety issues. Veterinary medicines and poisons are regulated by the Veterinary Medicine 
Directorate, established in 2016.31  
Table 3.8 Main elements of Kenya's SPS legal framework  
Area  Main agency  Main legislation  
Plant health  Kenya Plan Health Inspectorate 
Service  Plant Protection Act , Cap 324  
Suppression of Noxious Weeds Act , 
Cap 325  
Agricultural Produce (Export) Act , 
Cap 319  
Seeds and Plants Varieties Act , Cap 
326 
Animal health  Directorate of Veterinary Service  Animal Diseases Act , Cap 364  
Meat Control Act , Cap 356  
Veterinary Surgeons and Veterinary 
Para-professionals Act, 2011  
Food safety  Department of  Public Health  Food, Drugs and Chemical 
Substances Act  
Public Health Act  
Meat Control Act  
Dairy Industry Act  
Pharmacy and Poisons Act  
Genetically modified organisms  National Biosafety Authority  Biosafety Act, 2008  
Source:  Information provided by the Keny an authorities.  
3.81.   During the review period, Kenya submitted five notifications to the WTO Committee on SPS 
Measures.32 Kenya did not raise any specific trade concern (STC). However, it supported two 
concerns: European Union revised proposal for categorization  of compounds as endocrine disruptors  
(STC N°382); and India's fumigation requirements for cashew nuts  (STC N°427).  Kenya is a member 
of Codex Alimentarius , the World Organization for Animal Health, and the International Plant 
Protection Convention. Kenya is party to the Cartagena Protocol on Biosafety, and the Convention 
on International Trade in Endangered Species of Wild Fauna and Flora (CITES).   
3.82.   Kenya ratified the EAC Protocol on SPS measures in July 2016.   
3.83.   Plant health is governed mainly by the Plant P rotection Act. The importation of any plant 
product is subject to an import permit from the Kenya Plan t Health Inspectorate Service  (KEPHIS), 
and a phytosanitary certificate from the relevant authority in the exporting country.33 Plants are 
inspected upon a rrival at the port of entry, and laboratory tests may be carried out.  
                                                
30 Biosafety (Labelling) Regulations, 2012.  
31 Veterinary Surgeons and Para -professional Ac t, Cap 366 . 
32 The notifications cover specifications of basic requirements for slaughter houses, as well as testing 
and sampling methods for cream cheese, roasted macadamia, macadamia kernels, and virgin coconut oil 
(G/SPS/N/KEN/31 to 35).  
33 Plant Protecti on (Importation of Plants, Plant Products and Regulated Articles) Regulations, 2009.  
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  3.84.   Live animals and other veterinary goods are subject to an import permit by the Directorate 
of Veterinary Services (DVS).34 The permit is issued electronically through the single window s ystem 
(Section 3.1.1). The Directorate also issues the international veterinary certificate  for exports . In 
some cases, the application must be lodged with the relevant institutions such as: the Kenya Dairy 
Board, for milk and milk products; the Pharmacy a nd Poison Board for veterinary drugs and vaccines; 
the Fisheries Department for fish and other aquatic products; and the Kenya Wildlife Service, for 
game animals and their products. For genetically modified animals and feedstuffs, the importer must 
obtain the approval from the National Biosafety Council before applying for the import permit. 
Consignments are inspected at the port of entry by relevant institutions.  
3.85.   Between 2014 and 2017, KEPHIS received technical assistance under the Standards and 
Market Acc ess Programme (SMAP) to enhance market access and the competitiveness of the 
country's animal and plant -based products.  
3.86.   Drugs and medical supplies are under the purview of the Kenya Medical Supplies Agency. It 
is responsible for procuring, warehousing and  distributing drugs and medical supplies to health 
institutions.35 It is also responsible for maintaining the national strategic reserve stock defined as 
equivalent to six months stocks of a list of prescribed medical supplies.  
3.3.4   Competition policy and price  controls  
3.87.   There is no regularly published data on concentration in industries in Kenya. According to the 
Competition Authority of Kenya (CAK), the cement industry, the fertilizer market and the 
downstream petroleum  industry are among th ose with high levels  of concentration.36  
3.88.   Competition issues are regulated under the Competition Act, 2010. The Competition Authority 
of Kenya is the enforcement agency. The legislation has been amended in 2016 to address issues 
related to, inter alia , the abuse of buyer power37 and the abuse of dominance. Thresholds were 
adjusted with a view to excluding mergers with benign competition effects from the provisions of 
the legislation.  
3.89.   The CAK deals with a nti-competitive  practices through a number of measures, including 
investiga tions, advocacy and awareness campaigns, trainings, and guidelines. Investigations may 
be initiated by the Authority on its own or based on complaints from stakeholders. CAK also publishes 
guidelines to support its advocacy campaigns. In 2017, the Authorit y has issued guidelines on the 
following issues: block exemption, search and seizure, abuse of buyer power, fining and settlements, 
and restrictive trade practices.  
3.90.   Over the past years, the Authority has dealt with cases involving a range of sectors and 
activities, the most frequent being alcoholic beverages, air transportation, and telecommunication 
services.38 It also handled cases of exclusive agreements relating to alcoholic beverages, education 
services and sports goods . CAK has not dealt with any import or export cartel.  
3.91.   Price controls are in principle abolished with the repeal of the Restrictive Trade Practices, 
Monopolies and Price Control Act, Cap. 504. Exceptions may be granted for a specific period. Sector -
specific leg islation (e.g. energy) may also provide for tariff -settings.  
                                                
34 Such goods include: live animals (both domestic and game), eggs, semen, embryos, hides & skins, 
unprocessed leather, animal feedstuffs, ingredients, fertilizers, incubat ors, hives, milk and other milk products, 
meat and meat products, aquatic products, honey, veterinary drugs, vaccines and accessories, genetically 
modified animals and micro -organisms.  
35 The Authority replaced the Kenya Medical Supplies Agency, and it was established under the Kenya 
Medical Supplies Authority Act, 2013.  
36 In the cement industry for instance, there were six players in 2016 with market shares between 
32.5% and 10.5%.  Similarly, t he Kenya Petroleum Refineries Limited and the Kenya Pipeline Com pany detain 
jointly more than half of the storage capacity for petroleum products.  
37 These abuses take the form of non -compliance with credit terms, discrimination in the allocation of 
shelf-space, and margin squeezing. According to the authorities, these have contributed to a low survival rate 
of small and medium enterprises.  
38 CAK (2016), Annual Report 2014/2015 . Competition Authority of Kenya.  
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  3.3.5   State trading, state -owned  enterprises, and privatization  
3.92.   According to its notification to the WTO , Kenya does not have any state -trading enterprise 
within the meaning of Article XVII of GATT 19 94.39 
3.93.   State -owned enterprises remain an important feature of the Kenyan economy. In 2013, there 
were about 262 state corporations operating in various sectors of the economy.40 Receipts from 
State corporations and government -linked enterprises, mostly divide nds and surplus funds , 
amounted to KES  35.9 billion during the 2016 -17 fiscal year. The Kenya National Trading Corporation 
Limited (KNTC) is a state -owned enterprise involved in wholesale and retail trade. In wholesale and 
retail trade, the company operate s a network of depots and its portfolio includes the following 
products: cement, salt, lime, sugar, soda ash, sheets, fertilizer s, nails, and other hardware items.  
3.94.   There is no overarching legal framework for the establishment and regulation of state -owned  
entities in Kenya. They are established either under the State Corporation Act Cap 446, the Public 
Finance Management Act, or their individual enabling legislation. There has been no major change 
to the legislation during the review period. Each state cor poration is under the oversight of a line 
ministry, which is responsible for ensuring its proper management. According to the authorities,  the 
main challenges facing parastatals in Kenya are budgetary constraints and poor governance.  
3.95.   A parastatal reform p rogramme was launched in 2013  to review the governance of SOEs. Key 
elements of the reform include41: the enactment of the Government Owned Entities Bill, 2015 , an 
overarching law guiding the establishment and regulation of state corporations; the adoption of 
Mwongozo, a code of governance for SOEs; and the establishment of the Government Investment 
Corporation, a holding to exercise  ownership and oversight of commercial state corporations. 
Oversight offices were established at the national and county levels  to oversee s tate agencies such 
as regulatory authorities and public universities.  
3.96.   The Government of Kenya is in the process of establishing a Sovereign Wealth Fund through 
the Kenya National Sovereign Wealth Fund Bill (2014). The objective of the propose d Fund is to 
shield the economy from cyclical changes in commodity prices, to save for future generations and 
to support infrastructure investment. The bill is still undergoing internal review and stakeholder 
consultations.  
3.97.   Kenya's privatization programme  covers 31 state -owned companies operating in various 
sectors of the economy, including banking, hotel, and port  services .  
3.98.   Privati zations in Kenya are governed by the Privati zation Act , 2005.42 The Privatization 
Committee is responsible for identifying assets to be included in the privatization programme . The 
privatization programme is reviewed on a needs basis.  Once approved by the Government, the 
privatization programme is gazetted. The Privat ization Commission then undertakes to prepare 
privatization proposal for each of the item included in the Programme. Each detailed privatization 
proposal needs approval from the Cabinet and the Parliament before its implementation. 
Privatisations are to be conducted in an open and competitive way. Privatization methods include: 
public offering of shares; negotiated sales resulting from the exercise of pre -emptive rights; and 
sales of assets. The implementation of any of these methods is to follow public pro curement 
procedures (Section 3.3.6).  
                                                
39 WTO document G/STR/N/11/KEN, 27 March 2006.  
40 Republic of Kenya (2013), Report of the Presidential Taskforce o n Parastatal Reforms – Current 
Inventory of State Corporations.  Executive Office of the President, 9 October 2013. Accessed at: 
http://www.scac.go.ke/2015 -02-16-09-56-36/reports?download=3:current -inventory -of-state-corporations -
9th-oct-2013. 
41 Following recommendations by the Presidential Taskforce on Parastatal Reforms, the authorities 
adopted a policy on the management of Gove rnment -owned entities in October 2013.  
42 The first schedule of the Privatization Act of 2005 went through amendment and became the 
privatization amendment Act, 2015. In order to effectively and efficiently handle matters of privatization, the 
Government is  in the process of further amending the Act through the Privatization Bill of 2016. The object of 
this Bill is to amend the Privatization Act, 2005, to address the reappointment of serving members of the 
Commission upon the expiry of their first ter m of of fice. 
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  3.99.   In principle, privatization proceedings are open to any business registered to operate in 
Kenya.  However, the authorities may restrict some proceedings to nationals, or take measures to 
ensure a minimum level of partici pation by nationals. As of June 2018, the privatization programme 
covers about 30 institutions and public -sector projects.43 Privatization proceeds arising from the sale 
of direct Government equity holdings are generally paid into the Government budget.  
3.100.   The Privatization Act establishes a Privatization Appeals Tribunal to hear and determine 
appeals against privatization -related decisions. The Tribunal is not yet operational. During the review 
period, the legislation was amended twice to, inter alia , strengt hen the governance of the 
Privatization Commission and take into account the newly enacted public -private partnership 
legislation.  
3.101.   Under the Public -Private Partnerships Act of 2013, private sector entities may participate in 
public infrastructure or develo pment projects through concessions and other contractual 
arrangements. The Public -Private Partnership Committee is responsible for the implementation of 
the legislation. The Committee is assisted in its duties by the Public -Private Partnership Unit, within  
the Ministry in charge of finance.  
3.102.   The PPP Act (2013), revised in 2015, establishes the following organs to support 
implementation of PPP projects: the PPP Committee includes PSs for Finance (chair), Planning, 
Lands, County governments, Transport, Infrast ructure, Energy, Agriculture (or his nominee), four 
non-public officers and a director (acting as secretary) appointed for a five year term (renewable 
once); and the PPP Unit headed by the director and acting as the secretariat and providing technical 
support to the committee and contracting agencies.  
3.103.   A government institution or agency may enter into a project agreement or a public -private 
partnership with a private entity, upon approval by the PPP Committee. Procurements are to be 
carried out through competitive bidding process. Public -private partnership arrangements may take 
many forms, including: management contracts and output performance -based contracts, for up to 
ten years; leases, for up to thirty years; and concessions. As of September 2017, th ere were about 
70 projects in the pipeline for PPP arrangements.  
3.3.6   Government procurement  
3.104.   According to the World Bank's Benchmarking Public Procurement scale, Kenya scores 
relatively high in the areas of bid opening, evaluation and award; and content and man agement of 
the procurement contract.44 Areas of low performance include the delay for payments to suppliers 
(between 31 and 90 days) and the level of unsolicited proposals for PPP's (only 5% of PPP 
investments during the last five years).  
3.105.   Under the 2010 Con stitution, public procurement and asset disposal are to rest on the 
principles of fairness, equity, transparency, competitiveness, and cost -effectiveness. They are 
governed by the Public Procurement and Asset Disposal Act, 2015 (PPAD Ac)45 and the Public Pr ivate 
Partnership Act, 2013. The implementing regulations of the PPAD Act are yet to be enacted. In the 
meantime, the Public Procurement and Disposal Regulations (under the PPAD Act of 2005) are still 
in use.46  
3.106.   The PPAD Act applies to purchases by all publ ic entities, including the defence and national 
security organs . Government -to-government procurements, i.e.  projects financed through 
concessional loans and grants from foreign governments are exempted from the procurement law.   
3.107.   The institutional framewor k comprises the National Treasury in charge of policy formulation; 
and the Public Procurement Regulatory Authority (PPRA), in charge of enforcing the legislation and 
                                                
43 Kenya Privatization Commission, online information. Viewed at: 
http://www.pc.go.ke/images/documents/APPROVED%20PRIVATIZATION%20PROGRAMME.pdf  [03.08.2018].  
44 World Bank Group, online information. Viewed at: 
http://bpp.worldbank.org/data/exploreeconomies/kenya/2019  [03.08.2018].  
45 It replaced and repealed the Public Procure ment and Disposal Act, 2005.  
46 WTO (2012).  
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  monitoring the procurement system.47 The Public Procurement Administrative Review Board is the 
internal appellate system. Appeals to the decisions of the Board can be brought before the High 
Court.  
3.108.   Open tendering is the preferred procurement procedure for awarding contracts. Other 
methods include: two -stage tendering, design competition, restric ted tendering, direct 
procurements, requests for quotations, electronic reverse auction, low value procurement, force 
account, competitive negotiations, request for proposals, and framework agreements (Table 3.9). 
Procurement materials are to be made publi cly available online.  
Table 3.9 Procurement methods used, Fiscal year 2017 -18 
Procurement method  Characteristics and selected requirements  
Main procedure   
Open tendering  One phase procedure, advertisement on government portals, websites and 
in at least two national dailies . May be open internationally  
Alternative procedures   
Two-stage tendering  Tenders submit their proposals without a tender price; successful tenders 
are then invited to provide detailed b ids. 
Restricted tendering  May be used if there is only a few know suppliers, or if the specialized 
nature of the procurement requires so. The approval of the Tender 
Committee is required.  
Direct procurement  Can be used if there is only one able supplier or in case of an urgent need. 
The approval of the Tender Committee is required.  
Request for proposals  Can be used for procurements including services which are advisory or 
predominately of intellectual natu re. May be open internationally  
Request for quotations  Can be used for the procurement of goods for which there is an established 
market, subject to maximum thresholds.  
Low value procurement  Can be used if the estimated value of the procurement is below some 
prescribed thresholds.  
Specially permi tted methods   
Design competition  Used for services which are creative in nature (e.g. architectural, engineering, 
fine arts).  
Electronic reverse auction  Sellers compete to obtain the procurement by undercutting each other (the 
procuring entity must have a procurement portal with electronic procurement 
capabilities and functionalities).  
Force account  A procuring entity may directly make recourse to public officers and use public 
assets, equipment and labour if the quantities of work involved are small and 
scattered, and construction firms are unlikely to tender at a reasonable price.  
Framework agreem ent  Can be used if the required quantity of goods, works or services cannot be 
determined at the time of entering into the agreement. The term of the 
agreement cannot exceed 3 years.  
Source:  Information provided by the Kenyan authorities.  
3.109.   In general, bid ders offering locally produced goods can benefit from a 15% price preference 
margin in the evaluation of tenders. Some specific groups (small and micro enterprises, 
disadvantaged groups, citizen contractors, and local contractors) are eligible for a 10% pr eference 
margin.48 A foreign contractor can benefit from the preference if it enters into a joint venture or 
subcontracting arrangement with an eligible local contractor. For joint ventures, the preference 
margin is 10% if the national shareholding is above  51%; 8% if the national shareholding is between 
20% and 51%; and 6% if the national shareholding is below 20%.  The legislation also provides for 
reservation schemes in favour of the above -mentioned specific groups. Local citizens have 
exclusivity for procurements with a value of up to KES 50 million (KES  500 million for road works, 
and KES  200 million for other works). Local contractors have exclusive preference in the constituency 
or county where they are based when participating in procurements that use funds from the 
Constituency Development Fund, or the Local Authority Transfer Fund. Public entities are required 
to grant exclusive preference to local contractors offering locally made goods and locally assembled 
equipment.   
3.110.   Under the Buy Kenya Build Kenya Strategy (Section 3.1.9), ministries, departments and 
agencies are required to reserve 40% of their public procurement budget for local goods and 
services, and 30% for youth, women and the disabled.  
                                                
47 Under the 2005 legislation, these functions are carried out by the Public Procurement Oversight 
Authority.  
48 Public Procurement and Disposal (Preference and Reservations) Regulations, 2011.  WT/TPR/S/384 • Kenya  
 
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  3.3.7   Intellectual property rights  
3.111.   Except for patents, a pplications for industrial property rights are generally on an increasing 
trend over the review period ( Table 3. 10). As at end 2017, there were 410 registered patents, 115 
industrial designs, and 29 utility models. Trademark registrations by residents grew  during the 
review period, driving the total number of registered trademarks to 5,917 in 2017.  
Table 3.10 Registration of intellectual property rights in Kenya, 2012 -17 
IPRs  2012  2013  2014  2015  2016  2017  
Patents (total)  255 301 263 382 406 410 
- by residents  4 2 4 1 4 11 
- by non -residents (via PCT)  72 69 49 23 20 31 
- via ARIPO  179 230 210 358 382 368 
Industrial designs (total)  83 145 247 140 163 115 
- by residents  38 30 31 52 37 60 
- by non-residents  12 8 3 5 15 12 
-via ARIPO  33 107 213 83 111 43 
Utility models (total)  1 4 31 25 22 29 
- by residents  1 4 31 22 22 79 
- by non -residents  0 0 0 0 0 0 
-via ARIPO  0 0 0 3 0 6 
Trademarks (total)  4,771  4,821  5,037  5,268  5,919  5,917  
- by residents  1,924  1,883  2,123  2,350  2,781  2,783  
- by non -residents  1,031  1,175  1,036  1,142  1,047  1,144  
Trade marks (Madrid designations)  1,816  1,763  1,878  1,776  2,091  1,990  
Source:  Information provided by Kenya Industrial Property Institute.  
3.112.   There has been no major change to Kenya's intellectual property rights (IPR) regime since 
its last TPR in 2012. The institutional framework comprises the Kenya Industrial Property Institute 
(KIPI), responsible for industrial property matters; the Kenya Copyrights Bo ard (KEKOBO), in charge 
of copyrights issues; and the Kenya Plant Health Inspection Service (KEPHIS), in charge of plant 
breeders ' rights. The Anti -counterfeit Agency (ACA) handles matters relating to enforcement of 
intellectual property rights . 
3.113.    Kenya is party to the main treaties on IPRs, including those administered by the World 
Intellectual Property Organization (WIPO), the African Regional Intellectual Property Organization 
(ARIPO), and the International Union for the Protection of New Varieti es of Plants (UPOV).  
3.114.   Patents, industrial designs and utility models are protected under the Industrial Property 
Act, 2001. The duration of protection is twenty years for patents, ten years for utility models, and 
five years (renewable twice) for industrial  designs. An annual fee is payable for the duration of the 
protection. The Industrial Property Tribunal has jurisdiction to hear contentious matters under the 
Industrial Property Act. Its decisions may be appealed to the High Court.  
3.115.    The legislation allows  for compulsory licensing and parallel import s. Kenya did not grant any 
compulsory licence during the review period. Parallel imports concern essentially pharmaceutical 
products, and are restricted to operators registered as "parallel importers" with the P harmacy and 
Poisons Board. A n impor t permit is required.  The duration of a parallel importer's licence  is one year.   
3.116.   Trademarks are protected under the Trade Mark Act Cap 506 . The legislation incorporates 
well known trademarks as well as marks that are pro tected under the Paris Convention, the Madrid 
Agreement and the Madrid Protocol. Trademarks are protected for renewable ten year period. 
Grievances about decisions by KIPI can be brought before the Registrar of Trademarks whose 
decisions are appealable to the High Court. The total fee for applic ation, publication and grant is  
KES 9,000 (approximately US D 90) and renewal fee is 4,000 (approximately US D 40) for national 
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  3.117.   Plant breeder's rights are  regulated under the Seeds and Plants Varieties Act (Cap 326). 
Rights are granted by KEPHIS for 20 to 25 years. The prescribed minimal duration of protection is 
18 years for varieties such as fruit trees and their root -stocks, forest and ornamental trees, and 
grape vines. The Seeds and Plants Tribunal has jurisdiction over appeals from KEPHIS decisions and 
matters relating to the infringement of plant breeder's rights. The  Tribunal  is operational.  
3.118.   Trade in counterfeit goods is prohibited and can be prosecut ed under the Anti -Counterfeit 
Act, 2008. Established in 2010, the Anti -Counterfeit Agency was tasked with the mandate of 
combatting counterfeiting, trade in counterfeit goods and other related dealings. Under the 
legislation, any holder of an intellectual property right with valid grounds may lodge a complaint 
with the Agency to seize and detain the suspected goods. According to the authorities, since its 
inception, the Agency has seized suspected counterfeit goods worth about KES  1.6 billion  are filed 
and prosecuted over one thousand cases. Most frequently counterfeit goods include: electrical and 
electronic goods, plumbing items, cigarettes and alcoholic drinks, and motor vehicle spare parts. 
The legislation is being amended to increase the penalties and b roaden its scope to include 
unbranded goods and labels.  
3.119.   Amendments to the Anti -Counterfeit Act are proposed in the Statute Law (Miscellaneous 
Amendments), Bill 2018 and is in Parliament pending approval. The bill introduces a number of 
changes such as : the possibility for a  consumer to be a complainant on issues relating to  intellectual 
property infringements, expan sion of  the meaning of counterfeiting to include counterfeit marks 
(such as labels), expan sion of  the powers of inspectors to investigate related offences,  and 
introduc tion of  new offences in relation to counterfeit marks .  
 
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  4  TRADE POLICIES  BY SECTOR  
4.1  Agriculture , Forestry, and Fisheries  
4.1.1   Overview  
4.1.  The sector of agriculture, forestry and fisheries remains the backbone of the Kenyan economy, 
contributing to about one -third of the country's output, two -thirds of its exports earnings, and a 
substantial part of inputs to the manufacturing sector. In 2017, the agricultural sector accounted for 
31.5% of GDP.  
4.2.  Food crops account f or about a third of the agricultural GDP but only a marginal share of 
Kenya's exports, as they are mainly for domestic consumption. Maize is the main staple food, and 
many farmers depend on it as their main source of income. In 2017, about 2.3 million hect ares of 
land was under maize cultivation for a total production of 3.3 million tonnes (Table 4.1). Maize is 
used mainly for human consumption and for manufacturing animal feeds. Domestic production does 
not meet domestic demand and the deficit is offset by  imports, mainly from neighbouring countries. 
The other major food crops are wheat, rice and Irish potatoes. Production fluctuates according to 
the weather conditions since production relies on rain -fed agriculture. Kenya is a net food importer.   
4.3.  Tea, hort iculture and coffee are Kenya's major industrial crops which are also exported. 
(Section 4.1.3.2). Other industrial crops include sugar cane, cotton, sunflower, pyrethrum, and 
barley. None of these crops are exported.  
Table 4.1 Kenya's main agricultural crops: area, production and exports, 2012 -16 
  2012  2013  2014  2015  2016  
Area under cultivation (000' ha)       
 - Maize  2,159.3  2,123.1  2,16.1 2,267.2  2,337.6  
- wheat  148.8  149.5  147.3  145 153.1  
- Rice 29.6 31.3 28.3 29.4 29.5 
- Coffee 109.8  110 113 114 114.7  
- Tea 0 198.6  203.1  209.4  218.5  
- Horticulture  .. .. .. .. .. 
- Irish potatoes  99.5 104.6  115.6  176.6  171.2  
Production (thousands of tonnes)       
- Maize  3,749.9  3,592.7  3,513.2  3,972.6  3,339.2  
- Wheat 444.6  390.7  328.7  439.9  395.1  
- Rice 138.1  125.2  86.2 110 99.5 
- Coffee 39.8 49.5 42 46.1 40.8 
- Horticulture  .. .. .. .. .. 
- Tea 369.6  432.5  445.1  399.2  473 
- Irish potatoes  1,436.7  1,667.7  1,626 1,172.3  1,150.1  
Exports (thousands of tonnes)       
- Coffee  .. .. .. .. .. 
- Tea 430.2  499.4  443 480.3  285.4  
- Horticulture  0.205  0.214  0.220  0.238  0.261  
Memorandum items:       
- Agriculturala GDP (% of GDP)  .. 26.4 27.5 30.2 32.1 
- Agricultural exports (% of total)  .. .. .. .. .. 
.. Not available.  
a This includes agriculture, forestry and fisheries.   
Source:  State Department of Crop Development/Ministry of Agriculture, Livestock, Fisheries and Irrigation.   
4.4.  The sector remains dominated by small -scale farmers, operating on about 2 hect ares of land 
on average and producing 75% of the total agricultural output. Large -scale farmers (with farm sizes 
of 20 hectares or more) account for 20% of the cultivated area. Kenya's agricultural productivity 
remains constrained by many factors, includin g low -level technology, insufficient investment, and 
changing weather patterns. A significant portion of the production is wasted/spoiled due to poor 
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  4.5.  Under the Constitution of 2010, lands in Kenya are cla ssified as follows: public land, vested in 
the national or county governments; private lands, held by individuals under leasehold tenure or  
registered and held under any freehold tenure; and community lands. Public lands are managed by 
the National Land Co mmission, on behalf of national and county governments. The decision to 
allocate any part or parcel of public land is to be made by the relevant government. The communal 
land ownership system is based on traditional customary rights, and all individuals bo rn in the 
community have a right to use but not sell it. Privately owned lands are registered; the owner holds 
the title under a freehold or leasehold system, and can use it as collateral to access credit. Non -
citizens may hold land on the basis of leaseho ld tenure not exceeding ninety -nine years.  
4.6.  During the review period, Kenya pursued its land reform1 through the revision and consolidation 
of related laws into three pieces of legislation: The Land Act, 2012; the Land Registration Act, 2012; 
and the Nation al Land Commission Act, 2012.  
4.1.2   Agricultural policy  
4.7.  The Ministry of Agriculture, Livestock, Fisheries and Irrigation is responsible for the formulation, 
implementation and monitoring of agricultural policy. Other departments of key importance to the 
sector i nclude the Ministry of Water and Sanitation; the Ministry of Industry, Trade and Cooperatives; 
and the Ministry of Environment and Forestry. In line with the 2010 Constitution, county authorities 
have power in matters related to crops and animal husbandry,  livestock sale yards, county abattoirs, 
plant and animal disease control, and fisheries.2  
4.8.  The main objectives of Kenya's agricultural policy are to enhance food security, increase 
agricultural productivity and output, and improve market access and trade.  During the review period, 
the implementation of the Agriculture Sector Development Strategy 2010 -2020 aims at achieving a 
shift of the sector from smallholder subsistence farming to a commercially -oriented one.3  
4.9.  Food security is enshrined in the Constitu tion4, and a food and nutrition security policy was 
adopted in 2011 with the following key objectives5: improving food availability and access through 
increased production, better storage and processing, and improving the efficiency of markets; 
ensuring fo od safety, standards and quality control; and supporting improved nutrition.  Thus, as of 
2014, the government introduced subsidies to increase the use of fertilizer and increase the yields 
of food crops. The fertilizer was specific for promoting food produ ction. The government also 
continues with the National Accelerated Agricultural Inputs Programme (NAAIP) to provide inputs 
for promoting food security to the resource poor farmers.   
4.10.    Strategic reserves stockholding is part of Kenya's strategy for food secu rity. Since 2015, the 
National Cereals and Produce Board (NCPB) has been responsible for maintaining a strategic reserve. 
The prescribed quantities are eight million bags of 90 kilograms of maize equivalent to be held in 
reserve at any given time. This can  be in the form of grains, pulses, rice, powdered milk or cash 
equivalent. Replenishment is through buying from farmers during harvest time. The stocks are 
offloaded during drought or when there is a shortage in the market. The Stock can also be offloaded 
after two years to ensure fresh supplies and avoid wastage due to pest infestation or expiry. NCPB 
currently provides storage and grain maintenance services, and distributes farm inputs, including 
the fertilizers procured by the Government under its agricu ltural development support programme.   
4.11.   The agricultural sector enjoys a higher protection under the EAC  common external tariff. The 
average applied tariff on agricultural products (WTO definition) is 20.7%, while the overall average 
tariff rate is 12.9% (Common Report, Table 3.2). Although constrained by the CET, Kenya's 100% 
bound rate on agricultural prod ucts leaves ample room for an increase in applied tariff rates. Many  
                                                
1 The land reform was derived from the National Land Policy of 2009 and the Constitution of 2010.  
2 Constitution of the Republic of Kenya, Fourth Schedule.  
3 Kenya Vision 2030 . 
4 The Government shall ensure that every Kenyan has a right to be free from hung er, to have adequate 
food of acceptable quality, uninterrupted supply of clean and safe water in adequate quantities ( Article 43 (1) 
(c) of the Constitution of Kenya ). 
5 Government of Kenya (2011), National Food and Nutrition Security Policy . 
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  agricultural inputs can be imported free of duty, under the EAC duty exemption regime. Some 
agriculture -related products and services are exempted from the VAT.6 
4.12.   During the review period,  Kenya undertook a significant consolidation of the sector's legal and 
institutional frameworks through the enactment of three pieces of legislation: the Agriculture and 
Food Authority (AFA) Act, 2013; the Crops Act, 2013; and the Agricultural Research Act  2013.  
4.13.   The AFA Act consolidates the main laws on the regulation and promotion of agriculture 
(excluding livestock).7 The legislation clarifies the respective roles of the central government and 
county governments in the sector, and establishes the Agricul ture and Food Authority as the main 
agency in charge of regulating agricultural products.8 Its responsibilities cover the production, 
processing, marketing, grading, stocking, collection, transportation, and warehousing of the 
agricultural products identif ied under the Crops Act.  
4.14.   The Crops Act of 2013 replaces many other laws governing the agricultural sector.9 It applies 
to a list of crops identified as "scheduled crops" that are to be promoted. There are two categories 
of "scheduled crops", depending on whether they are or not under a breeding programme. Crops 
under breeding programmes are subject to either a compulsory certification (it is the case for crops 
such as tea, coffee, maize, and wheat), or a voluntary certification (bananas and pyrethrum) for 
instance.  
4.15.   Every dealer in a scheduled crop is required to register with the Agriculture and Food 
Authority. Only operators licensed by AFA are allowed to process any scheduled crop. Licences are 
issued in consultation with county authorities. In general, county governments may impose fees for 
the development of agricultural crops or the regulation of scheduled crops markets. County 
governments are also responsible for the issuance of licences to individuals and cooperatives trading 
in or dealing with sched ules crops.  
4.16.   Under the Crops Act of 2013, a Commodities Fund is to be established to provide credit and 
advances at subsidized rates in areas and activities such as: farm improvement, farm inputs, farming 
operations, and price stabilization. According to t he authorities, the Fund is yet to be established.  
4.17.    The incentives and facilities specifically available to growers and dealers of scheduled crops 
include: establishment of institutional linkages to coordinate provision of credit, farm inputs and 
marketing; credit assistance; credit guarantee; affordable fa rm inputs; technical support; 
infrastructural support; fertilizer cost reduction investment projects; pest and disease control; and 
post-harvest facilities and tax exemptions.  
4.18.    Kenya's budget allocation to the agriculture sector reached 10% in the 2011 -12 Budget, 
meeting for the first time the target of the Maputo Declaration. About 35% of the budget is spent 
on development expenditures.  
4.19.   The Biosafety Act, 2008 and its implementing regulations make up the main legal framework 
for activities related to gen etically modified organisms (GMO). Established in 2009, the National 
Biosafety Authority (NBA) is responsible for regulating research and commercial activities involving 
GMOs. It carries out its mandate in collaboration with the other regulatory agencies i nvolved in GMO 
                                                
6 First Sched ule of the Value Added Tax Act, 2013.  
7 The following Acts are repealed: the Agriculture Act (Cap 318); the Suppression of Noxious Weeds Act 
(Cap 325); and the Grass Fires Act (Cap 327).  
8 The Agriculture and Food Authority replaces the following instituti ons: the Coconut Development 
Authority; the Kenya Sugar Board; the Tea Board of Kenya; the Coffee Board of Kenya; the Horticultural Crops 
Development Authority; the Pyrethrum Regulatory Authority; the Cotton Development Authority; and the Sisal 
Board of Ke nya. 
9 The Crops Act of 2013 repealed the following: Agricultural Produce (Export) Act (Cap 319); 
Agricultural (Produce) Marketing Act (Cap 320); Crop Production and Livestock Act (Cap. 321); Canning Crops 
Act (Cap. 328); Cereals and Sugar Finance Corporat ion (Cap. 329); Coconut Industry Act (Cap. 331); Coconut 
Preservation Act (Cap. 332); Cotton Act (Cap. 335); Pyrethrum Act (Cap. 340); Sisal Industry Act (Cap. 341); 
Tea Act (Cap. 343); Coffee Act (No. 9 of 2001); and Sugar Act (No. 10 of 2001).  
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  products.10 Under the Biosafety Act, NBA's approval is required for any activity involving a genetically 
modified organism. This includes their importation, exportation or transit. The approval process may 
involve a risk assessment to identif y and evaluate the potential adverse effects of the GMO on human 
health and the environment. Appeals to the Authority's decisions can be brought before the Appeals 
Board, established under the High Court of Kenya. All decisions by the NBA are to be registe red in 
the National Biosafety Clearing House.  
4.20.   Kenya does not yet produce genetically modified crops or seeds at commercial scale. Kenya 
introduced a ban on the importation of genetically modified foods in 2012, but repealed the measure 
in 2015. Research i n GMO products is allowed. A number of GM crops have been approved by the 
National Biosafety Authority11: corn, cotton, cassava, sorghum, and sweet potatoes. A few operators 
have applied for the open field cultivation of genetically engineered corn and cott on.  
4.21.   Imports of GMO products ar e subject to approval from the Kenya Plant Health Inspectorate 
Service (KEPHIS), a phytosanitary certificate, and a declaration from the country of origin stating 
the GMO status of the product. In line with the Cartagena Prot ocol on Biosafety, Kenya established 
a Biosafety Clearing House in 2010 to facilitate information exchange on GMO products and assist 
in complying with its related obligations.  
4.22.   Kenya's agricultural sector is impacted by climate change but is also the large st contributor 
to the country's greenhouse gas emissions. Therefore, the agricultural policy is impacted by the 
country's measures to adapt to climate change and reduce greenhouse gas emissions. Under the 
Climate Change Act of 2016, national and county aut horities are required to mainstream climate 
change into their policies and development strategies. A Kenya Climate Smart Agriculture 
Framework Programme (KCSAFP) was adopted in 2017 with the objective of promoting "climate 
resilient and low carbon growth s ustainable agriculture".  
4.23.   As part of the overhaul of the sector, the four main research institutions dealing with 
agricultural matters were merged in 2013 to form the Kenya Agricultural and Livestock Research 
Organization (KALRO).12 Sixteen semi -autonomous institutes were created under KALRO to carry 
out focused research in their fields.13 Other agricultural research institutions include: the Kenya 
forestry Research Institute; the Kenya Marine and Fisheries Research Institute; and the Kenya 
Industrial Researc h and Development Institute. There are also some regional and international 
institutions undertaking agricultural research in Kenya. The main regional and international 
agricultural research institutions operating in Kenya are the International Lifestock R esearch 
Institute (ILLRI) and International Centre for Research on Agro Forestry (ICRAF).  
4.24.   Access to agricultural credit remains a major challenge despite the country's relatively well -
developed banking system (Section 4.4.2.1). Agricultural credit are prov ided mainly by cooperatives, 
NGOs and community -based lending institutions. In addition to risk associated with agricultural 
business, the cost of bank credit and the limited number of banks in rural areas contribute to 
restricting farmers' access to credi t. The Agricultural Finance Corporation (AFC) is a government -
owned financial institution that seeks to fill this gap. The land reform has enabled farmers to get 
title deeds to their farms which they can use as collateral to secure credit for agricultural 
development.  AFC provides agricultural loans on commercial terms.  
4.25.   Kenya's seed industry is relatively well developed, with close to one hundred of registered 
seed companies operating in the country. However, the Kenya Seed Company, a government owned 
entity, holds about 70% of the seed production market share. The main players in the seed industry 
include Monsanto, Western Seed Company and Seedco Limited. The Kenya Plant Health Inspectorate 
                                                
10 These ar e: the Kenya Plant Health Inspectorate Service; the Department of Public Health; the Kenya 
Bureau of Standards; the National Environment Management Authority; the Pest Control Products Board; the 
Kenya Wildlife Service; the Kenya Industrial Property Instit ute; and the Department of Veterinary Services.  
11 Viewed at: http://ke.biosafetyclearinghouse.net/approvedgmo.shtml . 
12 These were: the Kenya Agricultural Research Institute ; the Tea Res earch Foundation ; the Coffee 
Research Foundation ; and the Kenya Sugar Research Foundation.  
13 These are: Agricultural Mechanization Research Institute ; Food Crops Research Institute; Dairy 
Research Institute; Arid and Range Land Research Institute; Horticul tural Research Institute; Genetic Resource 
Research institute; Biotechnology Research institute; Beef Research Institute; Apiculture Research Institute; 
Non –Ruminant research Institute; Sheep and Goat Research Institute; Veterinary Science Research Instit ute; 
Industrial Crop Research Institute; Tea Research Institute; Coffee Research Institute; and Sugar Research 
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  Service is the regulatory authority for seeds. It issues licences to seed importers and exporters, 
provides seeds certification services, and administers related phytosanitary matters.  
4.26.    Seed production and certification is regulated through th e Seeds and Plant Varieties Act  
(Cap 326). For a new variety to be released and  registered, it must successfully undergo national 
performance trials for at least two seasons according to UPOV protocols; be proven to be distinct,  
uniform and stable in its essential characteristics; and have a valid descriptor. Once officially 
released , the variety is gazetted and entered into the national variety list. It takes between three 
and four years for a variety to be released, from the time it is registered for certification. The vetting 
process is under the oversight of the National Variety R elease Committee .  
4.27.   Kenya has a relatively well -developed feed industry. However, feed producers and raw 
material suppliers are concentrated in and around urban areas. Several regulations by the Kenya 
Feed Manufacturers are using the standards already in pl ace. Fertilizer and Animal Foodstuffs Act 
2015 regulates feed industry. According to producers, the industry is adversely affected by some 
regulations and access to raw materials.  
4.1.3   Policy by subsector  
4.1.3.1   Food crops  
4.28.   Food crops in Kenya consist mainly of cereals  (maize, wheat, sorghum, millet, and rice); 
legumes (beans, pigeon peas, cowpea, chickpea, green grams, turtle beans, dolichos); and roots 
and tubers (potatoes, sweet potatoes, cassava, yams and arrow roots). The subsector accounts for 
about one third of a gricultural GDP but contributes marginally to exports. It is essentially rain -fed 
and its performance is highly vulnerable to weather shocks. Kenya is a net importer of food. Major 
imported food products include wheat, rice, edible oil, and sugar. Imports of maize, wheat, sorghum, 
and millet are subject to the import duty at 25%; rice imports attract an import duty of 75%.  
4.29.   A Food Crops Research Institute was created in 2013, under the umbrella of the Kenya 
Agricultural and Livestock Research Organization. The Institute conducts research aiming at 
developing technologies and innovations for food crops. The National Rice Development Strategy 
aims at improving food security and farmers income through sustainable rice production, marketing 
and utilization of ri ce, both rain -fed and irrigated.  
4.30.   According to the authorities, under normal circumstances food crops can be imported at any 
time on payment of applicable customs duties and taxes and compliance with relevant standards 
and sanitary and phyto sanitary regul ations. However, during times of scarcity and drought, customs 
duties and taxes may be waived for a specific period and quantities until the situation stabilizes. This 
is provided for through a legal gazette notice.  
4.1.3.2   Industrial crops  
4.1.3.2.1   Tea 
4.31.   Kenya is the fourth  largest tea exporter in the world, behind India, China and Sri Lanka. Kenya 
cultivates mainly the black tea which is the country's main export crop, and the second largest 
source of foreign exchange earnings, after remittances.  Tea production was 473 thou sand tonnes in 
2016, an 18% increase compared to 2015 (Table 4.1). Exports, which include re -exports from 
neighbouring countries, dropped by 40% to only 285 thousand tonnes. Pakistan, Egypt, and some 
EU countries (Great Britain, France and Germany) are the  major destinations of Kenya's tea. Kenya 
has been experimenting the purple tea, a new variety in the foothills of Mount Kenya. The authorities 
expect this new variety to account for up to 5% of the country's tea exports within the next three 
to five years .14  
4.32.   The tea industry is divided in two segments: the small -scale segment comprising about 
260 000 farmers, and a few large estates. Small -scale farmers account for about 60% of the 
                                                
14 World Bank online information. Viewed at: 
http://www.worldbank.org/en/news/feature/2017/08/29/creating -kenyas -purple -tea-market ---markets -and-
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  production, and are managed by the Kenya Tea Development Agency (KTDA). Tea  processing 
factories are owned by farmers and managed by the KTDA. According to the authorities, the factories 
comply with international standards such as the ISO 22000, HACCP Food Safety Standard, Rain 
Forest Alliance, and Fair Trade and Good Manufacturi ng Practices (GMP).  
4.33.   Local consumption and processing account only for a marginal share of Kenya's tea production 
(about 5%). The bulk of the tea is either directly exported (about 14%) or traded through the 
Mombasa Tea Auction.15 At the Mombasa marketplace , auctions are held twice a week, and attract 
sellers from the region, including other EAC members, Malawi, the Democratic Republic of the Congo, 
Mozambique, and Madagascar. The Tea Research Institute (TRI) was created under the KALRO Act 
of 2013, to contr ibute to the overall production, processing and marketing of tea.16 The TRI is 
operational and funded through the normal government budgetary process under KALRO as well as 
development partners.  
4.34.   The CET rate on tea imports is 25%. In 2012, the authorities introduced a 1% levy on Kenyan 
tea exported through the Mombasa Tea Auction. The purpose of the levy is to fund the regulators 
and some investment in the infrastructure. According to the authorities, the levy was removed into 
2016 after complaints from the  tea farmers. There are no crop specific incentives except the general 
agricultural extension service that is provided by the government.  
4.1.3.2.2   Horticulture  
4.35.   The horticulture subsector continues its export -driven expansion and contributed 33% to the 
agricultural GDP in 2017. The vegetable sub -segment (Irish potatoes, tomatoes and cabbages) is 
the major contributor to the production, and an important source of livelihood in rural areas. Only 
about 5% of the total horticultural production is exported but it is still  among the major foreign 
exchange earners. Kenya's horticultural exports consist mainly of vegetables and cut flowers; the 
EU (Netherlands, United Kingdom, Belgium, and France) is the main destination.  
4.36.   The objective of the Government's policy is to accele rate and sustain growth and development 
of the horticultural industry. During the review period, developments in the industry were guided 
mainly by the National Horticulture Policy, adopted in 2012.  An electronic traceability system for 
horticulture produc e was launched in March 2015 on a pilot basis, to monitor the supply chain 
processes from farm to distribution.  
4.37.   The industry players can benefit from various incentives available under the Special Economic 
Zones regime (Section 2.4. ), and the e xport processing zones  regime (Section 3.2.4). Charges and 
fees on horticultural exports include a levy of KES 0.2 per kilogram of produce; a phytosanitary 
service fee of KES 0.2 per kilogram; and a fee of KES 400 for the issuance of the phytosanitary 
certificate.   
4.1.3.2.3   Coffee  
4.38.   Coffee is Kenya's third largest agricultural export (after tea and horticultural produce). In 
2017, coffee exports earned about US D 235 million in foreign exchange. Kenya produces mainly the 
Arabica variety. The subsector is dominated by smallholder farming (65% of the production). There 
are about 700  000 growers involved in coffee production. Coffee covers a land area of about 160  000 
hectares, a third of which is under plantation and the rest managed by smallholders. Virtually all 
coffee produced in  Kenya is exported, mainly to the EU (Germany, Belgium and Sweden) an d 
the United States.  
4.39.   The coffee sub -sector faces many challenges, including erratic weather conditions and a high 
incidence of pest and diseases. Government's intervention in the sub -sector includes: conducting 
research on new species, and controlling pests and diseases; constructing feeder roads; and 
providing loans to farmers.  
                                                
15 Mombasa Tea Auction is the second largest tea auction marketplace, after Dubai.  
16 The Tea Research Institute replaces the Tea Research Foundation of Kenya.  
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  4.40.   New regulations were adopted in 2017 to implement the AFA Act and the Crops Act.17 The 
Coffee Directorate (forme rly the Coffee Board of Kenya) is responsible for regulating the sales and 
marketing of coffee. The Nairobi Coffee Exchange (NCE) is the central coffee auction marketplace. 
It operates under the oversight of AFA through its Coffee Directorate, but is funde d by market 
participants. The new regulations clarify the various licences to be issued by AFA and county 
governments. There are seven licensed commercial coffee mills. Under the legislation, millers are  
required to enter into contractual arrangements with  farmers and cooperatives. Milling contracts 
typically last one year.  
4.41.   Coffee beans are wet -processed and graded by the size of the beans (AA for the largest beans, 
A, and B for smaller beans). After milling, coffee beans are further graded mechanically int o various 
categories depending on their size, shape and weight. Coffee beans are then packaged in 50kg jute 
bags and mostly exported in their raw form (about 98% of the production).  
4.42.   Coffee farmers can either sell their coffee directly to international buy ers, or on the coffee 
exchange marketplace managed by the Kenya Coffee Producers and Traders Association. Coffee 
auctions are conducted every Tuesday, and are open to dealers licensed by the Coffee Directorate. 
The coffee exchange marketplace is also open to sellers and dealers from neighbouring countries. A 
direct sale typically involves a marketing agent negotiating directly with a foreign buyer. The sales 
contract must be registered with the Coffee Directorate.  
4.43.   The Coffee Development Fund has been the m ain source of funding for the subsector. It 
provides affordable credit for farm inputs, farming operations, and income stabilization. In 2015, the 
Fund was replaced by the Commodities Fund.  
4.44.   According to the authorities, the government does not operate any  specific price support or 
subsidy programme for the coffee sector. Coffee imports are subject to the CET at the rate of 25%. 
However, coffee imported to be sold at the NCE is exempted. The industry is burdened by several 
levies and high intermediary costs . Numerous levies by the authorities used to account for up to 4% 
of the coffee value.18 In 2016, the authorities abolished these levies and capped the cost of services 
at 15% of the coffee sales.  
4.45.   In 2010, the former Coffee Board of Kenya launched an initi ative to promote the 
distinctiveness of Kenyan coffee. It developed a national logo that applies to Kenyan coffee meeting 
minimum standards of quality defined by the Kenya Bureau of Standards.  
4.46.   The subsector receives no specific incentives.  
4.1.3.2.4   Sugar  
4.47.   Kenya's s ugar industry supports about 16% of the population, and contributes on average to 
15% of the agricultural GDP. Sugar cultivation is dominated by small -scale farmers, and covers a 
land area of over 191,215  hectares in 2017. The country produces annually abo ut 600 000 tonnes 
of sugar against a domestic demand estimated at 800  000 tonnes. The resulting deficit is filled 
through imports, mainly from the COMESA region (Egypt and Swaziland among others).  
4.48.   The industry comprises twelve operational sugar mills, of w hich five have a substantial 
government shareholding: South Nyanza Sugar company (98.8%), Nzoia Sugar Company (97.93%), 
Chemelil Sugar (96.21%), Miwani Sugar (49%), and Muhoroni Sugar (16.9%). Sugar mills have a 
combined processing capacity of 24  000 tonne s of cane per day. However, many of them are 
operating at 55% to 60% of their capacity due to technical difficulties and the availability of raw 
materials. In 2015, the Government announced plans to sell its stakes in the sugar companies. The 
privatization  process has not yet started.  
4.49.   The sugar production value chain is one in which millers, through contractual arrangements, 
support farmers in the cane development process in exchange of the harvest. The support typically 
includes land preparation, supply of  seed cane and fertilizer, and the provision of extension services. 
                                                
17 Coffee (general) Regulations Act, 2016.  
18 There used to be a 2% levy for Coffee  Research Fund, 1% for the Coffee Directorate, a 0.8% by the 
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  Sugar distribution is performed by wholesalers, retailers and importers. The by -products of the 
processed sugarcane are either reused for planting, for energy generation, or sold for anima l feed 
production. During the review period, Kenya's sugar industry continues to struggle with high  
production cost, poor transport infrastructure , and weak  corporate governance .19 According to the 
authorities, Kenya has the highest  production costs compared to EAC and COMESA countries.  
4.50.   The sugar industry is regulated by the Sugar Directorate under the Agriculture Fisheries and 
Food Authority. The Sugar Directorate is responsible for issuing licences to importers and exporters 
of sugar and its b y-products, and managing related imports and exports restrictions. Sugar import 
and export licences are valid for one fiscal year, and issued for a fee of KES  100,000. Prior to the 
importation, any registered importer is required to apply for a pre -approva l permit for the quantity 
it intends to import over the following one to three months.  
4.51.   Under the Crops Act of 2013, sugarcane is classified as a "scheduled crop" under a breeding 
program, and is subject to a compulsory certification. Sugarcane growers and millers are required 
to register with the Sugar Directorate. Sugarcane prices are to be based on their sucrose content 
rather than their weight. Prices are set each season by a committee comprising representatives from 
the government, cane growers and mill ers.  
4.52.   Sugar is heavily protected in the EAC: the CET rate on raw sugar is either 100% of the c.i.f. 
value or US D 200 per tonne, whichever is higher. As a member of COMESA, Kenya's sugar imports 
from COMESA partners attract a duty -free treatment. However, K enya has been applying a 
safeguard measure under which any importation above the allowable quota of 350  000 tonnes is 
subject to a 5% import duty. The safeguard measure has been introduced in 2002, and is set to 
expire in February 2019.  
4.53.   In 2016, the autho rities scrapped the sugar development levy which used to be collected at 
the rate of 4% on the value of locally produced sugar and imports.  
4.1.3.3   Livestock   
4.54.   Kenya's livestock population is diverse and includes cattle, goats, sheep and poultry. The 
subsector cont ributes to about 40% of the agricultural GDP and employs half of the agricultural 
labour force. Milk and beef are the two major livestock products with total production worth about 
KES 404 billion in 2017. The production of the livestock subsector is desti ned mainly to the domestic 
market. Products such as wool and ostriches are geared towards specific niche markets. The sector 
relies largely on natural vegetation and water for pasture, and is vulnerable to weather conditions. 
Disease outbreaks with related  export restrictions are among the major constraints the subsector is 
facing.  
Table 4.2 Livestock Production , 2013 -17 
(Metric tonnes)  
 2013  2014  2015  2016  2017  
Milk (Cattle)  3,174,175  3,306,432  3,444,200  4,115,473  3,560,702  
Beef 296,765  442,571  489,065  528,990  481,799  
Goat/Chevon  45,312  68,191  68,016  50,468  33,678  
Mutton  18,852  19,410  18,286  27,901  17,767  
Pork 18,160  22,804  26,002  20,768  12,989  
Poultry Meat  28,692  60,504  62,754  64,309  106,978  
Camel Meat 8,856  11,221  18,361  18,715  29,086  
Source:  Data provided by the authorities.   
4.55.   Pending the adoption of new legislation, the subsector is regulated by the Crop Production 
and Livestock Act, Cap 321, the Dairy Industry Act, the Meat Commission Act, the Animal Diseases 
Act, and the Public Health Act. The Kenya Agricultural and Livestock Research Organization is 
responsible for the promotion, coordination and regulation of research in livestock.  The Ke nya 
                                                
19 Monroy L., Mulinge W., Witwer M.  (2012), Analysis of incentives and disincentives for sugar in Kenya.  
Technical notes series, MAFAP, FAO, Rome.  WT/TPR/S/384 • Kenya  
 
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  Veterinary Vaccines Production Institution (KEVEVAPI) is a state -owned institution tasked with the 
production and supply of veterinary vaccines and services .  
4.56.   The National Livestock Policy is the main framework governing livestock production in Kenya. 
It aims at increasing the productivity of livestock farming by interventions in the following key areas: 
breeding, nutrition and feeding, animal health, processing and marketing. Some of the key 
achievements in implementing  the livestock policy are increas ing production and earnings in meat, 
milk and eggs; establishing of livestock institutions to support livestock breeding and tsetse and 
trypanosomiasis control; expanding capacity of livestock training institutions; and increasing 
investment in the milk va lue chain.   
4.57.   In 2017, the authorities launched an electronic single window system for the processing of 
permits related to exports and imports of animals and animal products. Other achievements include 
the development of: guidelines on the inspection of hat chery facilities; standards for imports and 
exports of animal genetics; and codes  of inspection for rabbits and donkeys. Kenya also took steps 
to expand its markets by inviting risk assessment missions from the United Arab Emirates, Saudi 
Arabia, and the S eychelles.  
4.58.   Raw hides and skins  are subject to an export tax of 80%, and a 2% export levy for the 
provision of veterinary services . Wet blue and crusts attract lower rates of 1% and 0.5% 
respectively. The purpose of the export tax is to encourage further do mestic processing. According 
to the authorities, the export duty has increased the number of tanneries in the country from nine 
in 2005 to 15 in 2017; 7000 new jobs have been created in the industry (1000 direct, 6000 indirect). 
As a result, incomes for 40 ,000 people have increased as well as earnings in th e sector  
by US D 9.28 Million.  
4.1.3.3.1   Dairy  
4.59.   The dairy industry supports approximately 1.8 million rural households and 700,000 jobs 
along the dairy value chain. Dairying is predominantly practiced by smallholder s who produce over 
80% of the milk. Annual milk production in 2017 is estimated at 3.6 billion litres. Cattle produce 
about 88% of this milk, while camels and goats contribute to the rest. It is projected that milk 
production will continually grow by betwe en 4.5 and 5 % annually in the next ten years and by the 
year 2030. It is envisaged that the annual milk production in Kenya will increase to about 12 billion 
litres. About 648 million litres of milk is processed through the formal channels representing 
approximately 16% of the total milk produced. The rest is marketed through milk bars and directly 
to consumers.  
4.60.   The major constraints facing dairy production are poor breeds; high cost of feed, inputs and 
services; limited value addition; poor marketing infr astructure; and high post -harvest losses 
especially during the rainy season . 
4.1.3.3.2   Beef  
4.61.   Beef production is largely concentrated in the Arid and Semi -Arid land (ASAL) areas which 
accounts for 70% of total production. Approximately  13 million Kenyans living in th e ASALs derive 
their livelihood largely from livestock. The population of beef cattle is approximated at 14 million. Of 
the entire beef produced from the ASAL areas, 50% comes from the extensive pastoral production 
systems, 25% from the commercial ranches and the remainder is produced from agro -pastoral beef 
production systems. About 70% of beef produced in the country is mainly from the Zebu cattle 
population, while the rest is from dairy herd culls.  
4.62.   While pastoralists account for the majority of  Kenya’s meat supply (approximately 70%), a 
significant portion comes from livestock raised in neighbouring countries (Ethiopia, Somalia, 
Tanzania and Uganda ); Kenya is a meat deficit country. Beef production output was approximately 
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  4.1.3.4   Fisheries  
4.63.   The fisheries sub -sector had an annual production estimated at 147,916 tonnes in 2016, and 
contributed to about 0.5% of GDP.20 Fish exports were valued at US D 45 million in 2016. Inland 
fisheries, primarily from Lake Victoria, are the largest s ource of catches; marine catches account for 
a mere 5% of the overall production. Marine f ish stocks are exploited essentially by distant water 
fishing vessels . There is one processing company that transforms tuna supplied by purse seiners 
into cooked and frozen tuna loins. The production is sent to the EU for further processing.   
4.64.   The fisheries sub-sector is hampered by an unsustainable utilization of its resources in some 
water bodies  such as Lake Victoria due to limited surveillance capacity. In the Marine Sector , Kenya 
has a domestic fleet composed of industrial and semi -industrial fishing vessels in its Exclusive 
Economic Zones (EEZ).  
4.65.   Kenya faces threat from Illegal, Unregulated an d Unreported (IUU) fishing. However, the 
incidences have declined following the installation of a vessel monitoring system (VMS) to monitor 
vessels fishing in its EEZ. According to the authorities, t he VMS is functioning and is able to monitor 
both local a s well as foreign vessels operating in Kenyan waters. This is complemented by the vessel 
Automatic Identification System ( AIS) and Long -Range Identification and Tracking System (LRIT) 
operated by the Kenya Maritime Authority (KMA) in the Regional Maritime Rescue Coordination 
Centre (RMRCC). The country also recently acquired a patrol vesse l with the capability to patrol  
its EEZ.  
4.66.   The objective of the fisheries policy is to contribute to the wellbeing of the people and national 
economic growth through sustain able management and development of fisheries and aquaculture . 
The Ministry of Agriculture , Livestock, Fisheries and Irrigation, through its State Department for 
Fisheries , Aquaculture  and the Blue Economy , is responsible for policymaking in the subsector. Other 
institutions include : the Kenya Fisheries Advisory Council, to advise the national government on 
fishery issues; the Kenya Fisheries Services, responsible for the conservation, management and 
development of fishery resources; and the Kenya Fish Marke ting Authority responsible for marketing 
fish and fisheries products from Kenya.  
4.67.   The Fisheries Management and Development Act No.35 of 2016 provides for the conservation, 
management and development of aquatic resources in Kenya. A licence is required in t he following 
cases: using an industrial or semi -industrial fishing vessel in Kenya fishery waters; artisanal fishing 
vessel for commercial purposes; and commercial aquaculture. County governments are responsible 
for issuing licences with respect to recreat ional fishing and the operation of a fish processing facility 
within their jurisdiction. Licenses are valid for up to one year, and subject to the payment of an 
annual fee.   
4.68.   Operators of licensed vessels are required to ensure that at least 45% of the crew members 
are citizens of Kenya. Operators  of industrial fishing vessels are required to land a portion of their 
catches and bycatches at designated domestic fish landing stat ions. They cannot retain more than 
30% of their bycatches. The minimum quantities of catches to be landed for sale in the local market 
is 30% for purse seiners, 30% for long liners, and 5% for shrimp trawlers. For semi -industrial fishing 
vessels, the requi rement applies to 100% of the catch for undecked vessels and 50% for decked 
vessels.  Transhipment activities at sea are prohibited.  
4.69.   During the review period, Kenya has also been implementing the Kenya Tuna Fisheries 
Development and Management Strategy, which focuses on the Development of the tuna industry to 
ensure optimal economic benefits from the country’s tuna fisheries by facilitating their sustainable 
development and management, value addition, and equitable access to them.  Kenya is currently 
negotiat ing a fisheries agreement with the EU.  Kenya is a member of the Indian Ocean Tuna 
Commission (IOTC) and the South West Indian Ocean Fisheries Commission (SWIOFC).  
                                                
20 Viewed at: http://www.industrialization.go.ke/index.php/media -center/blog/346 -kenya -outlines -
measures -to-lift-fisheries -sector. 
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  4.1.3.5   Forestry  
4.70.   Forest covers 3.5 million of hectares in Kenya, which is about 6% of the land area.21 The 
country is endowed with a range of forest ecosystems including rainforests, savannah woodlands, 
dry forests, and mangroves. The 2010 Constitution mandates the authorities to maintain a forest 
cover of at least 10% of the country's land area. A forest  policy was adopted in 2014 to implement 
this constitutional requirement and promote investments in commercial tree growing, forest industry 
and trade.  
4.71.   The main policy measures for the forestry sub -sector include s supporting forestry research in 
critical areas to ensure generation of appropriate technologies for forestry development ; increasing 
forest cover through sustainable utilization and conversion of other land to forest land uses ; and 
harmonization of the forest law and other sectorial legislations in order to achieve national 
development objectives.  
4.72.    Under the Constitution, forests may be classified into three categories: public forests, 
community forests, and private forests. Forest resources are regulated by the Forest Conservation 
and Management Act, 2016 .22 The Kenya Forest Service (KFS) was established in 2016 to manage 
all public forests and regulate the allocation of licences and permits for exploitation of forest 
resources.  
4.73.   Imports and exports of forest products are subject to a permit issued  by the KFS.  The import 
and Export of forest products are governed by the Forest Act (Cap 385 , laws of Kenya ) which grants 
the Minister powers to issue licenses for the use of forest produce. Trade in forest products is subject 
to “Forest Produce Movement Permit ” (FPMP) issued by authorized  officials as established by law. A 
certificate of origin issued by the  local forest office helps to identify the source of the material and 
to confirm that it is not contraband in accordance with the law. Imports of timber may enter into 
Kenya on production of necessary import permits indicating that the produce is allowed for export 
to Kenya and certificates of origin. They must also be accompanied by appropri ate Certificates 
indicating they are disease and or pests free.  
4.74.   Restrictions on Exports and Imports are provided by the Forest Act which states that no person 
shall export or enter for export of any timber (a) of Kenya origin, except under and in accordanc e 
with the terms of an export permit issued by the Conservator or by a person authorized by him in 
writing in that behalf; (b) of Tanzania or Uganda origin, unless it is accompanied by a document 
issued in the country concerned allowing such exports; (c) i n respect of which an export permit has 
been issued, until a certificate of grading has been obtained or in a state other than that in which 
such timber was when such a certificate was issued; (d) through any place or port in Kenya which 
has not been decla red by the Conservator of Forest through a Legal Gazette, as a place or port of 
export of timber.  
4.75.    Local communities are also involved in forest management through the formation of 
Community Forest Associations.  The Kenya Forest Research Institute is respo nsible for forestry 
research and development. Investors willing to invest in the Forestry sector in Kenya benefit from 
general investment incentives such as  customs and excise waiver in respect of imported capital 
goods , or tax rebates to forest industries  and other establishments investing in plants ; exemptions 
from payment of part of the land t axes; income and other tax deductions to land owners in exchange 
for establishment of forest conservation.  
4.2  Mining and Energy  
4.2.1   Mining products  
4.76.   Kenya's mining industry  remains small (about 1% of GDP) but is poised to expand further 
with recent discoveries and current exploration activities. Kenya's main mineral resources include 
soda ash, fluorspar, titanium minerals, rare earth elements, gold, and gemstones.  Between 20 12 
and 2017, the country's mineral exports nearly doubled to 11.7% of its total exports . In 2014, Kenya 
                                                
21 FAO (2010): Forest Resources Assessment Report . 
22 The Act repeals the Forests Act, 2005 and the Timber Act.  WT/TPR/S/384 • Kenya  
 
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  started exporting additional ores and other minerals such as: o res and concentrates of molybdenum, 
niobium, tantalum, titanium, vanadium and zirconium .  
4.77.   The Mining Act, 2016 regulates mining activities in Kenya.  According to the authorities, t he 
legislation is well aligned with the aspirations of the African Mining Vision  and other international 
extractive industry transparency initiatives ; it is poised t o invigorate the mining sector as it has 
provided transparency in concession management  and regulation. The sector's institutional 
framework includes: the State Department for Mining through the Directorate of Mines as the 
regulator; the Online Transaction al Mining cadastral portal that aims to facilitate transparent 
licencing and concessions management, the Mineral Rights Board as an advisory institution; the 
Directorate of Geological Survey; the National Mining Corporation as the investment arm of the 
Government; and the Mineral and Metal Commodity Exchange, as the marketplace for minerals.  
4.78.   Mineral rights are granted either  through a license (for large scale operations) or a permit 
(Table 4. 3). Licenses and permits are granted by the Cabinet Secretary, upon recommendation by 
the Mineral Rights Board. Artisanal mining operations are reserved for citizens and local 
cooperatives, associations or groups. County authorities are responsible for issuing artisanal mining 
permits .  
Table 4.3 Mining licences  
Licence type  Eligibility/Rights conferred  Terms  
Large scale operations  
Reconnaissance licence  Non-exclusive rights to carry out 
reconnaissance operations  2 years non -renewable term  
Up to 5  000 contiguous blocks  
Area-based annual fees  
Not transferrable  
Prospecting licence  Exclusive rights to carry out prospecting 
operations   3 years term, renewable twice 
for up to 3 years  
Up to 1  500 contiguous blocks  
Not transferable  
Retention licence  Exclusive right to conduct prospecting 
operations and apply for a mining licence  2 years renewable term 
Mining licence  Exclusive right to carry out  mining 
operations   Up to 25 years, renewable for 
up to 15 years  
Small -scale operations  
Prospecting permit  Citizen or body corporate with at least 
60% shareholding by citizens  5 years term, renewable once 
for up to five years  
Up to 25 contiguous blocks  
Mining permit  Rights: exclusive  5 years term, renewable once 
for up to five years  
Up to two contiguous blocks  
Artisanal mining  Kenyan citizens  3 years term 
Up to one block  
Source:  Mining Act, 2016.  
4.79.   With a view to strengthening the governance of the s ector, mineral agreements above  
USD 500 million are subject to ratification by Parliament.23 For large scale mining operations, the 
Government is entitled to a 10% interest in the share capital of the right. The Government may also 
choose to enter into a mineral agreement with a holder of a mining licence, if the proposed 
investment is above US D 500 million. Mining companies are required to have local equity 
participation of at least 35% of the mining rights.  Investors with capital expenditures over a certain 
threshold are required to offer a minimum of 20% of their shares to the public on a local  stock 
exchange.  This provision may be exempted upon application to the Cabinet Secretary.   
4.80.    Some mineral resources and  deposit s may be declared as "strategic " and subjected to more 
stringent regulations. The Government has pre-emptive rights over them. Cu rrently, all radioactive 
minerals are strategic minerals. Currently , only radioactive  minerals have been declared  strategic  
minerals.  
                                                
23 Natural Resources (Classes of Transactions Subject to Ratification) Act, 2016 . 
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  4.81.   Royalties on mineral resources are assessed on their gross sales value at the rate of 5% for 
gold and silver; 8% for manganese and iron ore; 8% for coal; 10% for titanium ores and rare earths; 
and 12% for diamonds.24 Additional royalties apply on gold and gemstone exports. An export royalty 
is levied on gold at the rate of 2% of the gross  value . The dealership royalty is assessed on the f.o.b. 
value of the exportation of gemstones at the rate  of 5% for raw gemstones and 1% for semi -
processed gemstones. Royalties are to be divided between the national government (70%), the host 
county government (20%), and the local communi ty (10%).  
4.82.   Holders of mineral rights are required to implement an environmental management plan , and 
contribute to the development of local communities by entering into Community Development 
Agreements with them. These agreements typically cover development  projects, including special 
programmes for youth, women and marginalized groups; they may not result in the imposition of 
any additional rent or fee on the mining company. The licence holder is required to spend at least 
1% of its gross revenue from the s ale of minerals on projects under the agreement.  
4.83.   Local content requirements have been in force in the mining sector since 2017.25 Under the 
Mining (Use of Local Goods and Services) Regulations of 2017, licence holders and their sub -
contractors are required  to use to the extent possible locally produced goods and services. As part 
of the licence or permit application process, operators are required to submit a procurement plan 
for the purchase of local goods and services. In practice, licence holders are req uired to give priority 
to companies with a majority ownership by Kenyans when calling for tenders. For international 
procurement, companies are required to give preference to locally registered suppliers.  
4.84.   In addition to general incentives (Section 3.3.1), specific incentives are available to 
businesses operating in the mining industry. G oods imported for the construction of LPG storage 
facilities  are exempted from the payment of import declaration fees and the railway development 
levy.26 Additionally, import s of machinery and equipment meant for mining and prospecting activities 
are exempt from import duties upon confirmation by the State Department to the revenue authority.  
4.85.   Operators in the mining industry are required to insure risks related to their local  business or 
operations with companies licensed by the Insurance Regulatory Authority of Kenya. Kenya does not 
participate  in the Extractive Industries Transparency Initiative (EITI).  
4.2.2   Petroleum products  
4.86.   The Ministry of Petroleum and Mining through the Sta te Department for Petroleum is 
responsible for the formulation of petroleum policy; strategic petroleum stock management; 
management of upstream petroleum products marketing; oil and gas exploration policy 
development; oil and gas sector capacity developme nt; trade policy in petroleum products ; licensing 
of petroleum marketing and handling; and quality control of petroleum products.  The upstream 
petroleum subsector is regulated mainly by the Petroleum ( Exploration and Production) Act  
(CAP, 308).  Downstream Regulatory functions are carried out by the Energy Regulatory Commission 
(ERC). The Energy Tribunal has jurisdiction to hear and determine matters referred to it.  
4.2.2.1   Upstream  activities  
4.87.   As at September 2018, there were 14 International Oil Companies (IOCs) and the National 
Oil Corporation of Kenya undertaking  exploration and appraisal activities in the 27 petroleum 
exploration blocks with valid Petroleum Sharing Contracts (PSCs).  The rema ining 36 blocks were 
available .  
4.88.    Proven oil reserves currently stand at approximately 760MM Barrels with a potential  of 1.6 
Billion  barrels . The reserves have been confirmed as commercially viable. The number is expected 
to rise with more appraisal drilli ng. Production of the first oil is expected in the year 2022. However, 
the Government, Tullow Oil and Joint Venture partners are undertaking an Early Oil Pilot Scheme 
(EOPS). The project will allow comparatively small quantities of crude oil to be delivere d to Mombasa. 
EOPS will help by establishing logistical infrastructure (road upgrades), and provide for important 
technical well data . It will enable national and county governments to gain more techni cal experience  
                                                
24 Mining (Prescription of Royalties on Minerals) Regulations  of 2013 . 
25 The Mining (Use of Local Goods and Services) Regulations, 2017.  
26 Finance Act 2017 Section 59 . WT/TPR/S/384 • Kenya  
 
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  and also to test the international marke t for Kenyan Crude Oil as the Kenya Joint Venture transitions 
from exploration and appraisal, to development and production. Kenya  is yet to export crude. There 
are plans to build an 820 km-long pipeline to transport crude from production fields in the Lok ichar 
Basin to the Lamu port for storage and onward export to international markets.  
4.89.   Upstream petroleum activities are regulated mainly through the Petroleum (Exploration and 
Production) Act (CAP, 308) and related regulations. The legislation was last rev ised in 2007, and 
does not comprehensively cover exploration and production activities. It covers petroleum 
operations which consist of activities such as exploration and production. The legislation also covers 
natural gas processing operations but not pet roleum refining. Under the legislation, petroleum 
operations are subject to licensing by the related ministry. Once a license is granted, the operator 
must enter into a petroleum agreement with the Government. The Government also engages directly 
in petrol eum upstream and downstream operations through its own entity, the National Oil 
Corporation of Kenya Ltd (NOCK).  
4.90.   Recent oil discoveries increased the urgency of an updated legal framework, prompting the 
launch of a revision process in 2012. The Petroleum (Exploration, Development and Production) Bill 
was introduced into Parliament in January 2018. If passed, the Bill would, inter alia , transfer 
regulatory activities to the proposed Petroleum Regulatory Authority and retain NOCK as the 
government's investme nt arm in upstream activities. The bill, like the Petroleum Act (CAP, 308), 
includes a production sharing contract model to be used in all negotiations related to petroleum 
rights. A minimum of 5% local equity participation is required for production shari ng contracts. The 
proposed bill introduces specific licences and permits relating to activities such as drilling, 
underground injection , control well plugging and abandonment. In general, once the petroleum bill 
is enacted, any licensing of petroleum explo ration activities will be subject to ratification by 
Parliament.  The bill is with the Senate awaiting third reading.  
4.91.   Incentives in the upstream sub -sector include negotiable terms of the production sharing 
contracts and possible exemptions from VAT on good s for oil and gas operations.  
4.2.2.2   Downstream activities  
4.92.   Kenya's downstream oil and gas sub -sector comprises: the Kenya Petroleum Refineries 
Limited, fully owned by the Government27; the Kenya Pipeline Company Limited, dealing mainly with 
storage and pipeline transportation of petroleum products; Oil Marketing Companies; and the 
National Oil Corporation of Kenya Limited which has an active downstream business segment with a 
growing retail network of over 99 service stations spread throughout the country. The Co rporation 
also serves a cross -section of resellers, industrial and government businesses from its modern 
Nairobi National Terminal. The Kenya Petroleum Refineries Limited (KPRL) no longer processes crude 
oil and is used as a storage facility for refined pe troleum products imported into the country. Some 
of the tanks at KPRL are used to store crude for the Early Oil Pilot Scheme (EOPS) Project. The 
refined petroleum products are meant for both the local and transit markets. Products are 
transported mainly th rough the pipeline system managed by the state -owned Kenya Pipeline 
Company Limited. The pipeline network is about 1,342  km long and runs from Mombasa to Eldoret 
and Kisumu, through Nairobi.  
4.93.   Downstream petroleum activities are regulated by the Energy Regu latory Commission (ERC). 
Only licensed oil marketing companies can import petroleum products. As of 2018, there were 102 
oil marketing companies operating in the country. Kenya no longer imports crude oil as all imports 
are in the form of refined petroleum  products. The importation of petroleum products is through a 
monthly open tender system centrally coordinated by the State Department of Petroleum. There is 
an agreed Price Build Up for the Refined Products. The Price is based on the FOB cost, Freight and  
Premium plus Local Currency components. The tendering process is based on the freight and  
premium quoted by sellers for refined petroleum products. Currently , Kenya has about 75 licensed 
importers of petroleum products.  
4.94.    In addition to excise duty and im port declaration fee ( Section 3.1.5 .2), petroleum products 
are subject to a merchant shipping levy at the rate of KES 0.02 per litre for super petrol, diesel and 
                                                
27 In 2016, the Kenya n Government purchased the 50% stake owned by Essar Energy in Kenya 
Petroleum Refineries Limited , taking full ownership of  the company . 
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  kerosene; road maintenance levy at the rate of KES  18 per litre for super petrol and diesel28; anti-
adulteration levy at the rate of KES  18 per litre for kerosene;  petroleum development levy at the 
rate of KES  0.40 per litre  for super petrol, diesel and kerosene; petroleum regulatory levy at the 
rate of KES 0.25 per litre for super petrol, diesel an d kerosene; and the railway development levy 
(1.5% of the landed cost).  
4.95.   Petroleum products are subject to price controls. Maximum wholesale and retail pump prices 
are determined by the ERC and are published on 15th of every month.29 The price structure comp rises 
the following: landed  cost, distribution and storage costs, margins  set by the regulator , and various 
taxes and levies.30 
4.96.   The legislation provides for the establishment of petroleum strategic stocks to protect the 
country from any disruption in the su pply chain.31 Equivalent to ninety days of consumption, the 
strategic reserves are to be procured by the National Oil Corporation of Kenya, and stored by the 
Kenya Pipeline Company Limited.   
4.97.   With the devolved  structure of governance, county governments are responsible for regulating 
and licensing retail petroleum service stations and gas reticulation systems.  
4.2.3   Electricity  
4.98.   The energy mix in Kenya is mainly from geothermal and hydropower sources. They account 
on average respectively for 28.8% and 35.5% of elect ricity generation in the country.  The high 
reliance on hydro resources is a source of concern as power availability is dependent on the level of 
rainfalls. As of August 2018 , Kenya's installed capacity was 2  341 MW against a demand of 
1 832 MW. However, not all  the installed capacity is available all  the time due to scheduled 
maintenance. Kenya does not export any  its surplus  of electricity.  
4.99.   The East African Rift is the main source of geothermal energy in Kenya. The Kenyan 
authorities intend to harness th is potential to achieve their objective of eliminating fossil fuel -
powered electricity generation by 2025. The Geothermal Development Corporation (GDC) has the 
mandate to fast track development of geothermal resources in the country. Since the last review,  
GDC added six power plants with a total capacity of 410.6 MW.   
4.100.   Wind power and nuclear energy are also part of the energy mix required to achieve the 
country's Vision  2030. In 2018, Kenya completed the Lake Turkana Wind Power projects which 
added 310  MW to  the country's installed capacity. Ngong wind operated by KenGen has an installed 
capacity of 25.5MW bringing total installed capacity for wind to 335.5MW . Kenya established the 
Nuclear Electricity Board in 2012, to fast track the development of nuclear en ergy.32 The construction 
of a 1  000 MW nuclear power plant is planned to start in 2022 . A draft nuclear bill and policy have 
been developed. Identification of an appropriate site for the nuclear power plant is ongoing.  
Furthermore, t he government mobilizes resources in funding drilling and steam development of 
geothermal resources.   
4.101.   Electricity generation is carried out mainly by the Kenya Electricity Generating Company 
Limited (KenGen). KenGen  has a government shareholding of 70% and contributes to about 70%  of 
the installed capacity . The Kenya Electricity Transmission Company Limited (KETRACO) is 
responsible for the development of the infrastructure. It is fully owned by the Government and has  
monopoly over electricity transmission.  The distribution segment is under monopoly by the  Kenya 
Power and Lighting Company Limited (KPLC) and Rural Electrification Authority (REA). Independent 
power producers (IPPs) play an increasing role in the sector, accounting for about 30% of the 
                                                
28 Road Maintenance Levy Fund (Imposition of Levy) (Amendment) Order,  2016.  
29 The Energy (Petroleum Pricing) Regulations, 2010.  
30 For instance, the maximum retail price  for super petrol in Nairobi is set at KES 113.73 per litre from 
15th August to 14th September 2018 . Its structure is  as follows: 52% of landed cost; 3.9% of distribution and 
storage costs; 9.6% of margins  for importers, dealers and marketing companies ; and 34.6% of taxes and 
levies. Source: ERC online information, viewed at : https://www.erc.go.ke/addendum -to-the-maximum -retail-
petroleum -pump -prices -released -on-14th-august -2018-2/, 20.08.2018.  
31 Energy (Petroleum Strategic Stock) Regulations, 2008 (Legal Notice No. 43 of 2008).  
32 It replaces the Nuclear Electricity Project Committee  which was establ ished in 2010.  WT/TPR/S/384 • Kenya  
 
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  installed capacity in 2018. KenGen and IPPs are required to enter into power purchase agreements 
with KPLC.  
4.102.   The electricity sub -sector is regulated by the Energy Regulatory Commission (ERC). ERC 
licenses IPPs and sets the t ariffs, including feed -in tariffs. The Rural Electrification Authority (REA) 
is responsible for electricity access in rural areas. The Government's strategy consists in connecting 
to the grid public institutions such as trading centers, secondary schools a nd health centers. For 
areas that are difficult to reach through the conventional grid, the Authority supplies solar kits to 
public institutions. As at August 2018, the REA had connected 60,617 public facilities representing 
68.4% of the total and 23,886 p rimary schools (100%).  
4.103.   The consumer electricity tariff structure is composed of an energy charge and other 
applicable charges that include: 16% VAT; 5 cents per kWh levy for the Water Resource Management 
Authority; 30 cents per kWh levy to cover the operat ional costs of the Energy Regulatory Authority; 
and a 5% Rural Electrification Programme levy. The authorities indicated that there was no direct 
subsidy from the Government to the sub -sector. There is however some cross -subsidization, as low 
consumers (up  to 50 kWh monthly) are charged at rates below the production cost. In July 2018, 
the electricity tariffs were reviewed (for the first time since 2013) to account for the growing 
importance of renewable energy and accommodate a KES 11 billion increase in r evenue requirement 
by KPLC.  The revised tariffs resulted in a 7% average drop, due mainly to the removal of a KES 150 
fixed charge on low consumers.  After this review, the lifeline tariff was adjusted downwards from 
KES 50 per KWh monthly to KES 10 per KWh  monthly. Electricity prices are adjusted for inflation 
every six months. ERC reviewed its feed -in tariffs policy in 2012 to include energy from renewable 
sources (geothermal, solar, and bio gas generated electricity). ERC guarantees power purchase 
agreeme nt with the KPLC and tariffs are valid for 20 years. A Renewable Energy Auctions Policy was 
developed and would be used to procure solar and wind projects above 10MW; it is yet to be 
approved.  
4.104.   Electricity is subject to the VAT at the standard rate of 16%. However, power generation 
equipment and solar panels can be imported free of VAT and import duties.   
4.2.4   Water  
4.105.   About a half of the Kenyan population lacks access to safe and reliable water and basic 
sanitation. The Government's objective under the Vision  2030 is to provide a universal access to 
water and sanitation by 2030. Water related functions are a shared responsibility between the 
national and county governments. The national government has responsibility over policy 
formulation and the regulation of wate r services and resources, as well as the management of 
national public water works. County governments are responsible for the provision of water and 
sanitation services, and the development of water works at county levels. At the national level, the 
Ministry of Water and Irrigation is responsible for policy formulation.  
4.106.   The sector is regulated mainly through the Water Act and the Water Services Act, both 
enacted in 2016. In the regulatory framework, water resources management functions are separated 
from the provision of water services. The Irrigation Bill is currently at the National Assembly for 
review. The Water Act, 2016 provides for the regulation, management and development of water 
resources, water and sewerage services.  
4.107.   The Water Resources Authori ty is responsible for the regulation, the management, and use 
of water resources. Under the law, a permit is required for any of the following activities: any use of 
water from a water resource except for domestic use; the drainage of any swamp or land; an d the 
discharge of a pollutant into any water resource. There are four classes of permits and they depend 
on the volume of water allocated annually: 122.5 million m3 for class A permit; 203.3 million m3 
for class B permit; 1.2 billion m3 for class C permit ; and 29.4 billion m3 for class D permit. Permits 
are issued for five years and are subject to an application fee ranging from KES  1,000 (class A) to 
KES 400,000 (class D). Class A permits are issued and renewed free of charge. The issuance and 
renewal fee s are as follows: KES  7,000 for class B; KES  25,000 for class C; and KES  45,000 for class  
D. Water use charges apply to categories B, C and D permit holders at a rate that depends on the 
use of water and the volume used. For hydropower generation plants, t he charge is 5 cents per KWh WT/TPR/S/384 • Kenya  
 
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  of electricity generated in excess of 1 MW.33 Domestic water use and water use for smallholder 
irrigation schemes  are subject to authorizations. From 2013 to June 2018,  the number of permits 
granted was 5,982.   
4.108.   Providers of wate r services are regulated through the Water Services Act, 2016. The Water 
Services Regulatory Board (WASREB) has the mandate to approve water tariffs, enforce water 
services standards, and issue licences to water services providers. The transition of Nation al Water 
Conservation and Pipeline Corporation (NWCPC) to National Water Harvesting and Storage Authority 
(NWHSA) as per Water Act 2016 is ongoing.  
4.109.   A fund (Water Service Trust Fund) has been established to finance the provision of water 
and sanitation serv ices to underserved communities in rural and urban areas. The fund is financed 
mainly by the Government and development partners. Up to June 2015, the Fund has disbursed 
over KES 7 billion for projects benefiting about five million people.34  
4.110.   The Water Sect or Trust Fund disbursed a total KES 9.34 Billion in the period 2013 -2017. 
Apart from funding community water and sanitation projects and activities in the sub -catchment 
areas (under Water Resource Users Associations), the fund also gives grants to register ed water 
service providers country -wide.  
4.3  Manufacturing  
4.111.   During the period under review, the manufacturing sector's contribution to GDP declined 
from 10.7% in 2013 to 9.2% in 2016. The drop is partly attributed to, among others, high costs of 
doing business and competition from imports. Manufacturing output increased from KES 1,619,622 
million in 2013 to KES 2,132,259 million in 2016. The sector's performance was mainly driven by 
the textiles and apparels industry, which grew by 15%; pharmaceutical products b y 17%; beverages 
by 13%; wood and wood products by 10%; and basic metals by 11%. Over the same period, the 
assembly of motor vehicles declined by 5%, rubber products by 41%, tobacco products by 5%, fish 
processing by 38%, and fabricated metals by 5%.  
4.112.   The Ministry of Industry, Trade and Cooperatives (MITC) is the main policymaking institution 
for industrial development in Kenya. Other institutions include: the Micro and Small Enterprise 
Authority; the Kenya Investment Authority; and the Industrial Developme nt Bank . The Kenya 
Association of Manufacturers (KAM) is the representative body for manufacturers in Kenya.  
4.113.   Under Kenya's Vision 2030, the manufacturing sector is projected to be a major source of 
employment and wealth creation, contributing about 15% to GDP by 2020. In 2012, Kenya adopted 
an industrialization policy that aims at turning the country into a leading industrialized nation with a 
"robust, diversified and globally competitive manufacturing sector".35 The policy framework outlines 
strategies to b e implemented to achieve the following objectives: strengthening the domestic 
production capacity and the local content of the manufactured goods; increasing the generation and 
use of Research and Development; raising the country's regional market share fr om 7% to 15%; 
and developing niche products.  
4.114.   The Special Economic Zones Act was enacted in 2015 and its regulations developed in 2016. 
The land for the establishment of SMEs industrial parks was identified in Eldoret and Taita Taveta: 
in each, 135 and 20 acres of land were identified respectively. The master plans and structural 
designs for the SME industrial parks were finalized; construction of basic infrastructure facilities for 
the Leather Park and industrial warehouses for textiles and apparels manufa cturing were initiated in 
Athi River. Value chain studies on leather, textiles, wood, furniture and agro -processing were also 
completed; the Scrap Metal Act 2015 was enacted and a feasibility study on the establishment of  
the integrated steel mill was comp leted. The C onstruction of Kisumu Industrial Research, Technology 
                                                
33 Shurie, Mohamed M ; Boniface Mwaniki ; and  Patricia Kameri -Mbote  (2017), Water Permit Systems, 
Policy Reforms and Implications for Equity in Kenya.  Pegasys Institute, IWMI and Reach Project Country 
Report , March 2017.  
34 Water Sector Trust Fu nd online information. Viewed at: http://www.waterfund.go.ke/brief , 
23.07.2018.  
35 Government of Kenya (2012), National Industrialization Policy Framework for Kenya 2012 -2030.  
Sessional Paper N°9 of 2012.  WT/TPR/S/384 • Kenya  
 
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  and Innovation Laboratory was completed and leather laboratory equipped. The construction of 
KIRDI Research, Technology and Innovation Laboratory in South B (Nairobi ) is ongoing.   
4.115.   The author ities identify the iron and steel as one of the industries that would drive industrial 
growth. The government's strategy is to build on the country's existing iron ore and coal deposits to 
establish an integrated iron and steel industry. The Integrated Ste el Mill project has not been started; 
it will be undertaken during the next medium -term plan (2018 – 2022). In this context, the 
government strengthens the regulation of the scrap metal industry to guarantee a sufficient supply 
to the domestic industry. Th e Scrap Metal Act was adopted in 2015 to regulated activities related to 
scrap metals. The legislation prohibits the exportation of scrap metals. Furthermore, Kenya uses the 
EAC waiver regime to afford more protection to the industry. Indeed, Kenya is allo wed to deviate 
from CET with higher rates on 48 tariff lines, mostly iron, steel and related articles (HS chapters 72 
and 73).  
4.116.   Some incentives are specific to vehicle assemblers. Since January 2018, the corporate tax 
on motor vehicle assemblers has been ha lved to 15% for a period of five years.36 The reduced rate 
would be extended for another five years if the assembler achieves a local content of at least 50% 
of the ex -factory value of the vehicle.  
4.117.   In 2015, the authorities launched the Kenya Industrial Transformation Programme ( KITP). 
The Programme seeks to develop the country into an industrial hub through specific projects in areas 
where it is deemed to have a comparative advantage. These include: growing traditional exports; 
building a food processing  hub; promoting non -industrial sectors such as IT, tourism, wholesale and 
retail trade; and supporting SMEs.  
4.118.   Micro, small and medium enterprises (MSMEs) are an important component of Kenya's 
manufacturing sector, particularly in terms of job creation. Acco rding to estimates, they account for 
about 80% of jobs and 45% of GDP; they fall mostly under the informal sector. The Micro and Small 
Enterprises Act, 2012 regulates micro and small enterprises and provides for their promotion. MSEs 
are regulated by the M icro and Small Enterprises Authority. The legislation provides for the 
establishment of the Micro and Small Enterprises Development Fund to provide credit and finance 
capacity building of M SEs.  
4.119.   The assistance available to Micro, Small and Medium Enterpris e (MSMEs) includes: 
development of Micro and Small Enterprises Centres of Excellence (MSE COE); provision of 
worksites; incubation, innovation and technology transfer; provision of financing; productivity and 
promotion of quality improvement of MSMEs produ cts; intellectual property right registration; and 
branding and market access to MSMEs products. The One -Village -One-Product initiative as one of 
the strategies for promotion of value addition to local resources will be implemented in partnership 
with the county governments.  
4.120.   Manufacturers can benefit from preferential treatment under the Special Economic Zones 
regime ( Section 2.4),  and the Export Processing Zones regime ( Section 3.2.4 ). Under the SEZ 
regime, manufacturers can benefit from additional incenti ves (e.g. tax incentives, discounted utility 
rates, lower licensing fees) by establishing their production units closer to their sources of raw 
materials.  
4.4  Services  
4.121.   The services sector is the largest contributor to Kenya's GDP, accounting for about half of  
the GDP in 2017 (Table 1.1). Transport and storage, wholesale and retail trade, real estate, financial 
and insurance are among the largest components, accounting for over 8% of the GDP each.  
4.122.   Under the General Agreement on Trade in Services, Kenya maintai ns specific commitments 
in five subsectors:  communication, financial services, tourism and travel -related services, transport 
services, and other services (meteorological data information). Kenya has horizontal commitments 
in commercial presence and moveme nt of natural persons, with limitations covering market access 
for commercial presence: foreign providers are required to incorporate or establish their business  
                                                
36 Finance Act, 2017 .  
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  locally.  Horizontal limitations also cover the entry and temporary stay of natural persons emp loyed 
in management and expert jobs. The employment of foreign natural persons must be agreed upon 
by the contracting parties and approved by the Government.37 
4.4.1   Financial services  
4.123.   Kenya's financial services sector is relatively diverse and encompasses the following sub -
sectors: banking, insurance, credit unions (Saccos), Capital markets and retirement 
benefits/pensions. The National Treasury is responsible for the overall oversight of the financial 
system. Each segment is however under the purview of an ind ependent regulator.  
4.124.   One of the objectives of Kenya's  Vision  2030 is the development of "an efficient and globally 
competitive financial services sub -sector". To achieve this, the country enacted a number of laws, 
including: the Movable Property Security Ri ghts Act of 2017, which contributed to facilitating the use 
of movable assets as collateral for credit facilities; the Nairobi International Financial Centre Act of 
2017 and the Financial Services Bill of 2016, which provides for the merging of the main fi nancial 
services regulators.38  
4.125.   The Financial Services Bill 2016 provides for establishment of uniform norms and standards 
in relation to the conduct of providers of financial products and services, the establishment of 
Financial Services Authority (FSA); t he financial Sector Ombudsman and Tribunal; and the promotion 
and maintenance of a fair and efficient financial sector. The aim of establishing FSA is to enhance 
the effectiveness of prudential oversight of the non -bank financial sub -sectors and improve th e 
overall efficiency of the regulation structure. The key initiatives under the proposed Bill include 
enactment of the new legislative framework, operationalization of the new FSA, merger of regulatory 
agencies and establishment of an integrated market con duct framework. The Bill is still under 
consideration in Parliament.  
4.126.   Fees charged by banks, money transfer agencies and other financial service providers are 
subject to the excise duty at the rate of 20% of their value. However, excise duty on fees charge d 
on money transfer s by cellular phone service providers is 12% of the ir value.  
4.4.1.1   Banking and other credit institutions  
4.127.   As at end 2017, Kenya's banking sector comprises: 42 commercial banks  of which 15 are 
fully foreign -owned ; 1 mortgage finance company; 8 representative offices of foreign banks ; 13 
microfinance institution s; 3 credit reference bureaus; 17 money remittance providers; and 77 foreign 
exchange bureaus.  Three banks are fully owned by the Government: the Consolidated Bank of Kenya 
Ltd.; the Devel opment Bank of Kenya Ltd.; and the National Bank of Kenya Ltd. T o increase 
efficiency, resolve overlaps and make better use of resources to achieve economies of scale , the 
Government is in the process of consolidating six financial institutions namely : Kenya Industrial 
Estates, Development Bank of Kenya, Industrial Development of Kenya, Uwezo Fund, Youth Fund 
and the Women Enterprise Development Fund into Kenya Biashara Bank.  
4.128.   During the review period, Kenya's banks and financial institutions pursued their e xpansion 
in the region, with nine banks having subsidiaries operating in other EAC countries. From 211 in 
2011, the number of branches of Kenyan banks abroad increased to a peak of 333 in 2015, and 
declined to 297 in 2016.  The decline is mainly attributed to the exit of Bank of Africa (BOA) Kenya, 
with its 59 branches (36 in Uganda and 23 in Tanzania), following the change of ownership of the 
Uganda and Tanzania branches. As of 31st December 2016 , Equity Group had the largest number 
of branches in the region (89). It was followed by Diamond Trust Bank with 68 and KCB Group with 
63. A total of 306 branches were in operation as at December 31, 2017 compared to 297 branches 
in December 2016. The increase is mainly attributed to the increase in Equity Group branches in 
DRC. Uganda had the highest number of branches in the region at 102 , compared to 99 the previous 
year, followed by Tanzania at 81 , and Rwanda at 55 branches. As of 31st December 2017 , Equity 
Group had the highest nu mber of branches in the region at 104. It was followed by Diamond Trust 
                                                
37 GATS/SC/47 , 15 April 1994.  
38 These are: the Retirement Benefits Authority (RBA), the Insurance Regulatory Authority (IRA), the 
Capital Markets Authority (CMA) and the Sacco Societies Regulatory Authority (SASRA).  WT/TPR/S/384 • Kenya  
 
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  Bank with 70 and KCB Group with 60. The increasing number of branches demonstrates potential 
for banking services within the region.  
4.129.   The banking industry's total assets were valued at KES 3.7 trillion as at end December 2017. 
Foreign commercial banks account for 30.1% of the total assets while the three public commercial 
banks account for 3.9%. High interest rate spreads and the prevalence of non -performing loans are 
among the main chal lenges to the banking sector. The ratio of gross non -performing loans to gross 
loans was 9.2% in December 2016.  
4.130.   The banking industry is regulated by the Central Bank of Kenya (CBK) under the provisions 
of the Banking Act Cap 488. Banking business is subje ct to licensing by the CBK. Licences must be 
renewed annually. Financial institutions are subject to a minimum capital requirement set at KES 1 
billion for commercial banks and mortgage companies, and KES  200 million for other financial 
institutions. In 20 13, the CBK issued revised guidelines on prudential capital adequacy ratios. 
According to the revised guidelines, banks are required to maintain a minimum capital requirement 
(Tier II) of 14.5% instead of 12%; a capital conservation buffer of 2.5% over the  prevailing minimum 
ratios; a minimum core capital to risk weighted assets of 10.5%; and the total capital to risk 
weighted assets levels at 14.5%. In practice, Kenya n banks are relatively well capitalized with core 
and total capital to risk weighted asset s averaging 15.8% and 18.4%, against regulatory minimum 
requirements  of 10.5% and 14.5% respectively . 
4.131.   In November 2015, CBK imposed a moratorium on new licences for commercial banks. The 
restriction on licences was intended to give the regulator time to en hance its supervisory capacity 
after two banks ; Imperial Bank and Dubai Bank were placed under receivership. The two banks were 
experiencing weak internal governance controls leading to fraud. The moratorium was lifted in April 
2017 and a new commercial ba nk, the Dubai Islamic Bank , has since been licenced bringing the 
number of commercial banks to 43.   
4.132.   High interest rates were perceived as one of the main factors limiting access to credit. In 
2016, the Banking Act was amended to cap interest rates applied by commercial banks on credits 
and deposits. With the amendments, the maximum interest chargeable for credit facilities by 
commercial banks is capped at 4 percentage points above CBK's policy rate, which stood at 9% as 
of July 2018. Similarly, interests on  interest -earning deposits are to be at least 70% of the policy 
rate. The authorities expect the measure to lower the cost of credit and increase access to credit. In 
practice, the measure caused commercial banks to prioritize large corporate borrowers and  
government bonds at the expense of smaller and riskier customers. Furthermore, monetary policy's 
transmission channel was weakened as the caps move with any change in the policy rate.39  
4.133.   Kenya reformed its deposit insurance system and established a Deposit  Insurance Fund (to 
replace the Deposit Protection Fund).40 The Fund is managed by the Kenya Deposit Insurance 
Corporation. All deposit -taking licensed institutions are required to contribute an annual premium of 
0.15% of their total deposit to the fund, wi th a minimum contribution of KES  300,000. The Fund 
provides protection to each depositor for an amount of up to KES  100,000 per financial institution.  
4.134.   Credit unions (known in Kenya as Savings and Credit Cooperative Societies (SACCO) are an 
important featur e of Kenya's financial ecosystem. As at end 2017, there were a total of 177 licensed 
deposit taking over 4,000 non -deposit taking SACCOs in Kenya. The total assets of deposit taking 
institutions amounted to US D 3.4 billion in 2017. They are regulated under  the SACCO  Societies Act , 
2008. SACCOs are required to maintain a core capital of at least KES 10 million, representing at 
least 10% of their total assets and 8% of their total deposits. The SACCO  Societies Regulatory 
Authority  (SASRA)  is responsible for g ranting licences, regulating and supervising the Saccos.  
4.135.   Kenya's mobile banking transfer segment continues its expansion. M -PESA, a subsidiary of 
Safaricom, remains the leading player, servicing about 19 million users with about US D 150 million 
transacted daily. Services offered have been expanded to include loans and saving products. Mobile 
                                                
39 Central Bank of Kenya (2018), The Impact of Interest Rate Capping on the Kenyan Economy . Nairobi, 
March 2018. Accessed at: https://www.centralbank.go.ke/wp -content/uploads/2018/03/Interest -Rate-Caps_ -
March -2018fi nal.pdf , 2.08.2018.  
40 Kenya Deposit Insurance Act, 2012 . WT/TPR/S/384 • Kenya  
 
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  money services providers are under a special licensing system managed by the Central Bank of 
Kenya. Under the system, funds are held by a trust a nd deposited in several commercial banks.  
4.4.1.2   Insurance  
4.136.   As at end 2016, there were 52 insurance companies and 3 reinsurance companies in Kenya.41 
The non -life insurance business accounted for 63 % of total  insurance premiums, with motor  and 
medical insurance co mprising of over two thirds of the non -life premiums. The industry premiums 
grew by 13.5 %, the life business growing faster by 20 % compared to the non -life segment growth 
rate of 9.9 % between  2015 and 2016 . The industry also comprises 204 insurance brokers ; 10 
reinsurance brokers; 32 medical insurance providers, and 7  720 insurance agents. During the review 
period, the total assets of the industry increased steadily to 5 84.84 billion in 2017 (Table 4.4 ). 
Similarly, gross premiums rose to about KES 207.6 bil lion in 2017. The insurance penetration, which 
is the ratio of gross premiums to GDP, remained stable at around 2.8, indicating that premium 
collected are increasing at the same rate as the economic growth.  According to IRA annual insurance 
report of 2016,  there were 26 general insurers, 15 long -term insurance companies, 11 composite 
insurers and 3 reinsurers operating in Kenya . 
Table 4.4 Evolution of some insurance indicators, 2012 -17 
Indicator  2012  2013  2014  2015  2016  2017  
Assets (KES billion)  311.2  366.2  430.5  478.8  528.7  584.84  
Gross premium (KES billion)  111.9  129.2  155.8  172.5  195.2  207.6  
Net premiums written (KES billion)  87.5 105.0  126.3  140.0  158.4  154.45  
Direct expenses (KES billion)  20.2 24.8 30.5 36.3 40.0 54.86  
Penetration ratio ( premium/GDP ) 2.6 2.7 2.9 2.8 2.7 2.8 
Density (KES per capita)  2,749 3,090 3,623 3,903 4,300 .. 
Number of policies/population (%)  .. .. 9.1 6.1 7.5 .. 
.. Not available.  
Source:  IRA (2017), Annual Insurance Industry Report for the Year Ended 31st December 2016. Insurance 
Regulatory Authority, July 2017.   
4.137.   The Insurance Regulatory Authority (IRA) has the mandate to regulate, supervise and 
develop the insurance industry in Kenya. The Insurance Act is the main legal frame work for insurance 
business. Minimum capital requirements are set at KES 150 million for long term insurance 
businesses, KES 300 million for general insurers, and KES 800 million for reinsurers. The legislation 
requires that at least one -third of ownership  of any insurance company be held by EAC citizens.  
4.138.   In line with the 2010 amendment, composite insurance companies are required to have 
separate entities dealing with life insurance and non -life insurance. The demerging has been 
completed in 2015. The Insu rance Act was further amended (in 2014 and 2016) to, inter alia , 
increase capital requirements, regulate bancassurance activities, and provide for insurance based 
on Islamic sharia law ( Takaful  insurance business). Banks offering insurance services are con sidered 
as insurance intermediaries, and their intermediation activities are under the supervision of IRA.  
4.139.   There are four reinsurance companies: Kenya Reinsurance Company (Kenya Re) which is 
60% owned by the Government; Zep Re (PTA Insurance Company), whi ch is owned by the 19 
COMESA member countries; Africa Reinsurance Company (Africa Re), which is owned jointly by 
African countries; and Africa Trade Insurance Agency (ATI). Kenya Re, Zep Re, and Africa Re receive 
mandatory cessions of respectively 20%, 10% , and 5%of all reinsurance business in Kenya. Africa 
Re, Zep Re and ATI are regional insurance organizations, and are not subject to domestic 
regulations.  
                                                
41 IRA (2017), Annual Industry Report, 2016 . Accessed at: https://www.ira.go.ke/images/docs/Annual -
_Industry_Report_2 016.pdf , 2.08.2018 . 
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  4.140.   Fraud seems to be prevalent in the insurance industry: about 40% of insurance claims are 
fraudulent.42 In 2011, IRA established a fraud unit to investigate and prosecute fraudulent activities. 
In Kenya, third -party liability insurance for automobile , vessels and aircrafts are mandatory.   
4.4.1.3   Capital markets  
4.141.   Kenya's capital markets rank among the top five in A frica, according to Barclays Africa 
Group's Financial Markets Index.43 Kenya is particularly praised for its contract enforcement policies, 
the market depth, and the capacity of local investors. Capital Markets (Nairobi Securities Exchange 
(NSE)  and All Sha re Index (ASI) ) have shown strong asset growth ; the m arket capitalization gr ew 
by 11.91% and 15.65% between 2016 and 2017 respectively. However, the level of new investment 
raised through public offerings remains limited with only 67 companies listed on th e NSE in 2017. 
Indeed, a s of October  2015, the NSE had already 65 listed companies with a total market 
capitali zation of about USD 21.5 billion.44 However, the market is highly concentrated as six of the 
largest firms account for about 75% of the total capitali zation.   
4.142.   Under the 2030 Vision, the Government aims at establishing Nairobi as a leading 
international financial centre in Sub -Saharan Africa. The Nairobi International Financial Centre was 
established in 2014 through an executive order. The Nairob i Financial Act, 2017 provides for a legal 
framework to facilitate and support the development of an efficient and globally competitive financial 
services sector that generates high levels of national savings and investments through the 
establishment of th e Nairobi International Financial Services Authority (NIF SA). NIFSA is in the 
process of being operationalized. The next steps involve development of a strategy, creation of a 
one–stop shop for incorporation, and developing the strategic incentives aimed a t attracting 
investors and marketing of NIFC . 
4.143.   Capital markets are regulated under the Capital markets Act Cap 485A, last reviewed in 
2016. The Capital Market Authority (CMA) is responsible for licensing and supervising capital markets 
intermediaries. These  are: securities exchange; investment banks; stockbrokers; fund managers; 
dealers; investment advisers; and credit rating agencies. Licensing and renewal fees range from 
KES 50,000 for fund managers registered with Retirement Benefits Authority (RBA) to K ES 250 000 
for investment banks. However,  the application fee for licence approvals or renewal s is 
KES 2,500. The fees were set  in the Capital Markets (Licencing Requirements) General Regulations 
of 2002.  
4.144.   The development of capital markets in Kenya is guid ed mainly by the Capital Markets 
Plan 2014 – 202345, which is part of the country's Vision 2030 . Reforms implemented under the Plan 
include: the removal of the 75% cap on foreign ownership of companies listed on NSE; the repeal 
of the 30% local shareholding  requirement for foreign companies46, and of the requirement to have 
local boards of directors for locally registered branches of foreign entities. In 2012, legislation was 
taken to separate the Nairobi Stock Exchange's commercial functions from its regulat ory functions.47 
The demutualization became effective in 2017, and was associated with a tenfold reduction in 
admission fees to KES  25 million.  
4.145.   The CMA manages an Investor Compensation Fund that provides compensation to investors 
who suffer pecuniary loss resulting from failure of a licensed stockbroker or dealers to meet their 
contractual obligations. Every buying or selling stock broker or dealer that is a trading participant of 
a securities exchange contributes to the compensation fund an amount prescrib ed by the CMA. The 
compensation is capped at KES 50,000.  
4.146.   Tax incentives are provided under the Stamp Duty Act, various editions of the Income Tax 
Act and the Finance Act, and capital markets regulations. Issuers are eligible for, inter alia , a three 
to five percentage point discount on the corporate tax rate; a reduced listing fee for offers of equity; 
                                                
42 Presentation by the Insurance Regulatory Authority. Viewed online at: 
https://www.ira.go.ke/images/docs/THE_ROLE_OF_IRA1.pdf , 2.7.2018.  
43 OMFIF (2018), Barclays Af rica Group Financial Markets Index 2017.  Official Monetary and Financial 
Institutions Forum . 
44 Oxford Business Group (2017), The Report, Kenya 2016.  
45 CMA (2014), Capital market Master Plan 2014 – 2023.  Capital Markets Authority, Nairobi.  
46 Section 85 of t he Finance Act, 2016.  
47 Capital Markets (Demutualization of the Nairobi Securities Exchange Limited) Regulations of 2012.  WT/TPR/S/384 • Kenya  
 
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  VAT exemption on transactions related to the transfer of assets into Real Estate Investment Trusts 
and Asset Backed Securities.  Investors are no longer subj ect to the 5% capital gains tax, but rather 
a 0.3% levy on their sale transactions. Furthermore, they enjoy a host of incentives, including a 
reduced rate for withholding tax on dividend and interest incomes; tax exemption on income from 
asset backed secur ities, infrastructure bonds, and collective investment schemes such as retirement 
schemes; and stamp duty and VAT exemption on share capital.   
4.4.2   Transport  
4.4.2.1   Road transport  
4.147.   Road transport accounts for about 93% of Kenya's freight and passenger traffic.48 The 
country has a road network of about 177  800 km, of which 63  575 km is categorized as the classified 
road network.49 There are six categories of classified roads: international trunk roads ( class A ); 
national trunk roads ( class B) ; primary roads ( class C); secondary roads ( class D) ; minor roads 
(class E) ; and, s pecial purpose roads ( class F) . About 70% of the classified road network is 
considered as in good condition; paved roads account for 15.6% of the classified network.  
4.148.   Road transport activities are regulated mainly under the Roads Act, 2007; and the National 
Transport and Safety Authority Act , 2012.50 The National Transport and Safety Authority (NTSA) is 
responsible for regulating the road transport system and implementing related policies. In Kenya, 
all goods and passenger vehicles with a tare weight of 3.4 tonnes or higher are to be licensed by the 
NTSA. There are three main categories of licences: a road service licence, for the carriage of 
passengers and goods; a "B" carrier's licence for the trans portation of commercial goods; and a 
tourist service licence. The legislation also provides for the issuance of short term licences, for a 
duration of up to three months. The Authority may also grant exclusive licences for specific areas or 
routes. Licence s are issued for one year.  Axle load limits are set under the Traffic Act.  
4.149.   Road infrastructure is managed by three separate entities: the Kenya National Highway 
Authority, the Kenya Urban Roads Authority, and the Kenya Rural Roads Authorities. The Roads A ct 
allows for private -sector participation in financing and managing road infrastructures through 
concessions. The private  sector may build, manage, and transfer designated roads during an agreed 
period.  
4.150.   During the review period, the government's interven tions in road transport were guided by 
the Road Sector Investment Plan  2010-2024. The Lamu Port -Southern Sudan -Ethiopia Transport 
(LAPSET) Corridor project  is one of the key components of this Plan. Launched in 2012, LAPSSET is 
a USD 29.2 billion infrastru cture project that involves the construction of ports, airports, a dam of a 
32-berth port at Lamu (in Kenya); a railway, a highway, a pipeline and a fibre -optic cable connecting 
the three countries.  
4.151.   Road maintenance is financed mainly through the road mai ntenance levy, collected on 
imports of petroleum products at the rate of KES18 per litre of petrol or gas oil .51  
4.4.2.2   Railway transport  
4.152.   Railway transport is increasingly playing a role in goods transportation in Kenya. The country 
has a network of about 2,778 k m of lines connecting the Port of Mombasa to Nairobi, and to Malaba 
on the border with Uganda. Until 2016, it was operated by the Rift Valley Railways based on a 
concession .52  
                                                
48 World Bank (2011), Kenya Transport Sector Support Project . Viewed at: 
http://documents.worldbank.org/curated/en/656501468048281802/pdf/600050PAD0P1241OFFICIAL0USE0ON
LY191.pdf . 
49 Kenya Highway Authority onlin e information. Viewed at: http://www.kenha.co.ke/index.php/road -
network . 
50 The National Transport and Safety Authority Act repeals the Transport Licensing Act Cap 404.  
51 Road Maintenance Levy Fu nd (Imposition of Levy) (Amendment) Order,  2016.  
52 The concession was granted by Uganda and Kenya to the Rift Valley Railways for a period of 25 years. 
The Kenyan part of the concession was terminated in July 2017 due to the company's failure to meet some 
terms of the concession.  WT/TPR/S/384 • Kenya  
 
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  4.153.   In 2014, Kenya launched a major railway project that aims at providing a high -performance 
railway infrastructure from the port city of Mombasa to Nairobi and the Ugandan border. To fund the 
project, the authorities introduced a railway development levy on imports for home use at the rate 
of 1.25% of their c.i.f. value . The first phase of the standard gauge railway project between Mombasa 
and Nairobi was completed in June 2017. Freight operations were launched in January 2018, but 
were suspended temporarily because of low cargo volumes.  
4.154.   An airport commuter rail pr oject linking Nairobi to Jomo Kenyatta International Airport is  
also under way.   
4.155.   Since April 2017, the transportation of cargos to destination outside Kenya has been 
exempted from VAT.  
4.4.2.3   Air transport  
4.156.   Air transport services contributed directly and indirect ly (via tourism) to the generation of 
about 5.1% of Kenya's GDP in 2015.53 Kenya  Airways (KQ) is the designated national carrier. The 
government remains its largest shareholder with 48.9% of the shares.  
4.157.   The aviation infrastructure comprises four internatio nal airports54 and six regional airports 
owned by the government, and over 400 airstrips privately owned. Located in Nairobi, Jomo 
Kenyatta International Airport is the busiest airport in Kenya. In 2017, the subsector carried about 
10.3 million passengers a nd 291 million tonnes of cargo ( Table 4. 5). The Kenya Airport Authority 
(KAA) is responsible for the provision and management of the aviation infrastructure. Handling 
services at international airports are provided by  Kenya Airways Ground Handling . 
Table 4.5 Evolution of air traffic in Kenya, 2012 -17 
  2012  2013  2014  2015  2016  2017  
Number of aircraft movements  264,664  259,404  270,185  266,233  297,832  301,512  
Of which (%)  Domestic  66.5 65.9 65.4 67.4 68.8 69  
International  33.5 34.1 34.6 32.6 31.2 31 
Number of passengers (million)  8.6 8.2 8.9 9.0 10.0 10.3 
Of which (%)  Domestic  31.9 31.6 35.3 38 40 38.6  
International  51.2 51.7 50 46.4 45.3 47.1  
Transit  17 16.6 14.7 15.5 14.6 14.3 
Freight (million tonnes)  296.4  262.5  279.9  263.6  250.0  291.4  
Of which (%)  Domestic  0.6 0.8 1.3 1.8 0.7 0.5  
International  99.4 99.2 98.7 98.2 99.3 99.5 
Source:  Information p rovided by the Kenya Airport Authority.  
4.158.   Kenya is a signatory to the Yamoussoukro Decision which forms the basis for air -traffic rights 
allocation for signatories (African countries). Signatories to the Decision can mutually grant up to 
the fifth freedom air traffic right using a simple notificat ion procedure. Kenya is among the 23 African 
countries that launched the Single African Air Transport Market in 2018. Traffic rights for carriers 
from other countries are based on bilateral agreements. Cabotage is permitted only for freight 
companies.  
4.159.   Kenya is party to the Chicago Convention of 1944.  
4.160.   During the review period, Kenya reformed the regulatory regime for civil aviation through 
the adoption of the Civil Aviation Act of 2013, and some implementing regulations.55 The Civil 
Aviation Act re-establis hed the Kenya Civil Aviation Authority (KCAA) as responsible for the 
                                                
53 IATA (2017), The Importance of Air Transport to Kenya.  Viewed at: 
http://www.iata.org/policy/Documents/benefits -of-aviation -kenya -2017.pdf , 5.06.2018 . 
54 The four international airports are: Jomo Kenyatta International Airport located in Nairobi, Moi 
International in Mombasa, the Kisumu International (in Kisumu), and Eldoret International (in Eldoret).  
55 Key civil aviation regulations adopted d uring the review period cover the following areas: security; 
instruments and equipment; operation of aircraft; approved training organizations; air navigation services; 
aircraft nationality and registration marks; airworthiness; and personnel licensing.  WT/TPR/S/384 • Kenya  
 
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  regulation of civil aviation. This includes: licensing air services; providing air navigation services; 
certifying aircraft operators; and administering international agreements to which Kenya is party. 
The provision of internal air services is restricted to Kenya citizens and companies with at least 51% 
of local shareholding. Appeals to KCAA decisions can be brought before the Civil Aviation 
Administrative Review Tribunal.   
4.161.   Airfares  are not regulated, and licensed providers determine their tariffs freely. Competition 
issues are dealt with jointly by the KCAA and the Competition Authority of Kenya.  
4.162.   All aircrafts must be insured against third -party liability risks. For aircraft regist ered in 
Kenya, the risk must be insured with a locally registered insurer .  
4.163.   An air passenger service fee is collected o n air tickets at the rate of USD 50 for international 
flights and KES  600 for domestic flights.56 The charge is used to fund the KCAA, the  KAA, and the 
Civil Aviation Authority Fund.  
4.4.2.4   Maritime transport  
4.164.   Kenya has seven main port facilities, located in Mombasa, Lamu, Malindin, Kilifi, Shimoni, 
Mtwapa, and Kiunga.  The Port of Mombasa , the second largest port in Sub -Saharan Africa (a fter 
Durban ), is the only international seaport in Kenya. It is the main entry and exit point for domestic 
cargo an d goods in transit to the other hinterland countries  (Uganda, Rwanda, Burundi, Democratic 
Republic of the Congo, and South Sudan). During the review per iod, the total cargo throughput, 
mainly imports, increased steadily to exceed 30 ,345 tonnes in 2017 ( Table 4. 6). Container traffic 
increased by about 32% 1.18 million of TEUs. The Kenya Port Authority is responsible for the 
management of all ports in Kenya . It has monopoly over cargo handling at the Port of Mombasa.   
4.165.   In 2017, Kenya has a national fleet of 21 ships with a combined carrying capacity of 8  600 
dead weight ton nes.57  
Table 4.6 Traffic handled at Momb asa Port, 2012 -17 
  2012  2013  2014  2015  2016  2017  
Container traffic (TEUs)  903,463  894,000  1,012,002  1,076,118  1,091,371  1,189,957  
Ships docking (number)  1,763  1,768  1,832  1,694  1,607  .. 
Port throughput (tonnes)  21,920  22,307  24,875  26,732  27,364  30,345  
Of which (in %):        
Total imports  85.5 85.8 83.5 84.8 84.5 84.4 
Total exports  13.9 13.4 13.5 13.2 13.4 12.5 
Transhipment  0.7 0.8 2.9 1.9 2.2 2.7 
Others (re -stowings) 0.0 0.0 0.0 0.0 0.0 0.2 
.. Not available.  
Note:  TEU: Twenty -foot equivalent unit. 
Source:  Information provided by the Kenyan authorities.  
4.166.   Maritime activities are regulated by the Kenya Maritime Authority (KMA) in accordance with 
the provisions of the Merchant Shipping Act, 2009 . KMA's responsibilities include:  co-ordinating the 
implementation of maritime policies, regulating inland waterways shipping, and discharging  Kenya's  
flag and port State controls .58  
4.167.   The provision of maritime services in Kenya is reserved to Kenyan citizens and companies 
with at least 51%  of ownership  by Kenyans. Licences are issued by KMA for up to one y ear. The 
registration fee is USD  300 for shipping lines (with a renewal  fee of USD 1,000 annually), and  
USD 250 for the other marine services providers. Maritime service providers are free  to establish 
                                                
56 Air Passenger Service Charge Act (Cap 475).  
57 Maritime Profile: Kenya. UNCTAD, viewed online at: 
http://unctadstat.unctad.org/CountryProfile/MaritimeProfile/en -GB/404/index.html , 22.8.2016.  
58 Kenya is party to the Indian Ocean Memorandum of Understanding on Port State Control.  WT/TPR/S/384 • Kenya  
 
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  their tariffs, and may be required to file them with the KMA.  Port charges are set by the Kenya Ports 
Authority and submitted to the approval of the line ministry. They were last reviewed in 2005.   
4.168.   Third-party liability insurance is mandatory  for any vessel registered in Kenya or operating 
in Kenyan waters.  
4.4.3   Telecommunications and postal services  
4.169.   Telecommunications and postal services are regulated under the Kenya Information and 
Communications Act, 1998 . The legislation was amended in 2013 to, among others, align it with the 
provisions of the 2010 Constitution  related to the freedom of expression and freedom of media. The 
Ministry of information, Communications and Technology is responsible for policymak ing in the 
telecommunications and ICT sub -sector.  The Communications Authority (CA) is the regulatory body 
for the information and communications industry, including: broadcasting, multimedia, 
telecommunications, electronic commerce, courier and postal ser vices. The Communications 
Authority is also responsible for approving telecommunications and radio communication equipment: 
only registered vendors are allowed to market any equipment.  
4.170.   Its resources are mainly from spectrum fees (81.3% of its budget  in 2017).59 
4.4.3.1   Telecommunications  
4.171.   As at December 2017, there were four mobile network operators in Kenya: Safaricom, Airtel 
Kenya (which acquired the operator Yu in 2015), Telkom Kenya (formerly Orange), and the newly 
launched Faiba4G. Despite the presence of these  four operators, the market remains dominated by 
Safaricom with a market share of 75% in 2017.  Telkom Kenya is the sole fixed -line provider. It was 
managed by Orange Group until 2015, and then sold to Helios.  Over the review period, the number 
of mobile te lephony subscribers increased by about 30% to cross the bar of 40 million as at June 
2017 (Table  4.7).  
Table 4.7 Evolution of key ICT indicators in Kenya, 2012 -17 
Indicators  2012  2013  2014  2015  2016  2017  
Number of subscribers (million)        
Mobile telephony  30.4 31.8 33.6 37.7 39.8 40.3 
Mobile money transfer services  19.3 24.8 27.1 27.7 26.3 28.1 
Internet  8.5 12.4 14.0 19.9 26.9 29.6 
Note:  Indicators are as at end June of each year.  
Source:  Information provided by Communications Authority.  
4.172.   The mobile money services segment pursued its rapid expansion during the review period, 
with about 27.5 million subscriptions in 2017 and a total volume of transactions reaching  
KES 1.2 trillion during the first quarter of 2018. The mobil e money segment is dominated by  
M-PESA, a subsidiary launched  by Safaricom in 2007. Mobile commerce -related operations 
accounted for about 54% of the total value of the transactions.  
4.173.   During the review period, Kenya switched  to unified technology -neutral licensing framework 
comprising three main licences: network  facilities providers, dealing with communications 
infrastructures; application service providers, providing any form of services using communications 
infrastructures ; and content service providers, focused on services such as broadcast material and 
other information services ( Table 4. 8). Applicants for commercial licences are required to issue at 
least 20% of the shares to Kenyans within three years from the date the licence is granted. At least 
30% of equity stakes in telecommunications investments must be Kenyan -owned.  
Table 4.8 The telecommunications' unified licensing framework  
Licence  Licence duration and fees  Number  of licences  
Network Facilities providers (NFP)  
Tier 1 (frequency spectrum for national 
utilisation)  Licence period: 15 years  
Application fee: KES  5,000 
Initial operating fee: KES 15 million  4 
                                                
59 Viewed at: https://www.itu.int/net4/itu -d/icteye/CountryProfileReport.aspx?countryID=125 .  WT/TPR/S/384 • Kenya  
 
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  Licence  Licence duration and fees  Number  of licences  
Annual operating fee: 0.4% of AGT or 
KES 4 million  
Spectrum fees  
Tier 2 (frequency spectrum for regional 
utilisation)  Licence period: 15 years  
Application fee: KES  5,000 
Initial operating fee: KES 15 million  
Annual operating fee: 0.4% of AGT or 
KES 0.8 million  
Spectrum utilization fees  23 
Tier 3 (freq uency spectrum for exclusive 
utilisation within a county)  Licence period: 15 years  
Application fee: KES  5,000 
Initial operating fee: KES 200 ,000 
Annual operat ing fee: 0.4% of AGT or 
KES 160, 000 
Spectrum fees  25 
Submarine cable landing licence  Licence period: 15 years  
Application fee: KES  5,000 
Initial operating fee: KES  200,000 
Annual operating fee: 0.4% of AGT or 
KES 4 million  3 
International gateway licence  Licence period: 15 years  
Application fee: KES  5,000 
Initial operating fee: KES 800 ,000 
Operating fee: max of 0.4% of AGT and 
KES 4 million  
Spectrum fees  12 
Applications service providers  
Applications service providers  Licence period: 15 years  
Application fee: KES 5,000 
Initial operating fee: KES 100, 000 207 
Content services providers  
Electronic certification service providers  Licence period: 15 years  
Application fee: KES  5 000  
Initial operating fee: KES 100 ,000 
Annual operating fee: 0.4% of AG T or 
KES 80, 000 323 
Terminal equipment contractors  Licence period: 10 years  
Application fee: KES 1,000 
Initial operating fe e: KES 7, 500 
Annual fee: KES 3, 000 517 
Technical personnel  Licence period: 10 years  
Application fee: KES  500 
Initial operating fee: KES 1 ,000 
Annual fee: KES 500  502 
VSAT operated through foreign hubs  Licence period: 10 years  
Application fee: KES  1,000 
Annual fee: KES 100 ,000 per VSAT 
terminal  0 
GMPCS landing rights authorization  Licence period: 15 years  
Application fee: KES  5,000 
Initial operating fee: US D 12,500 3 
Business Processes Outsourcing  Licence period: open  
One-time registration fee: KES 10,000 26 
DOT ke subdomain registrars  Licence period: open  
One-time registration fee: KES 10,000 61 
Note:  
AGT Annual Gross Turnover  
VSAT  Very Small Aperture Terminals  
GMPCS  Global Mobile Personal  Communications via Satellite  
Source:  Communications Authority of Kenya.  
4.174.   Operators are free to negotiate their interconnection agreements, including the rates, 
subject to the caps set by the regulators. The caps were reviewed  last in 2010.60 The Universal 
Service Fund was established in 2009.61 It is financed primarily by a mandatory contribution of 0.5% 
of the annual gross revenues of all licensed operators, including postal and courier services 
providers.   
                                                
60 Determination No.2 of 2010 on pure Long Run Incremental Cost (LRIC) based Interconnection Rate 
regime.  
61 Kenya Information and Communications Regulations 2010.  WT/TPR/S/384 • Kenya  
 
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  4.175.   Mobile cellular phone services and other  wireless t elephone services, including fees charged 
for mobile money transfers, are subject to the excise duty at the rate of 10%.  
4.176.   Broadcasting services are regulated by the Communications Authority of Kenya. There are 
three categories of licences: public broadcasti ng licence, with the Kenya Broadcasting Company as 
the only designated public broadcaster; commercial/private broadcasting licence; and community 
broadcasting licence. Licences are granted through open calls, depending on the availability of 
broadcasting r esources. Broadcasters are required to achieve a quota of 40% of local content in 
their programming in the first year of licensing , and to maintain 60% of local content within four 
years. Kenya migrated from analogue to digital t elevision broadcasting in 2 015. 
4.4.3.2   Postal services  
4.177.   Postal and courier services are regulated under the Information and Communications Act. 
There are three categories of licences : the public postal operator licence, valid for 25 years; the 
national operator licence, valid for 15 years; and the international operator licence, valid for 15 
years. The Postal Corporation of Kenya (PCK) is the sole holder of a public postal operator licence. 
It is responsible for universal postal services obligations. PCK has also exclusivity in the provision  of 
certain services such as: postal articles weighing up to 350 grams62; provision of private letter -boxes 
and bags; printing and issuance of postage stamps. As at end 2017, there were 144 operators with 
national licences and 41 international licensees.63  
4.4.4   Tourism  
4.178.   Tourism is important for Kenya's economy. The main touristic attractions are business, 
holiday , wildlife, beach , adventure and transit travel.  The tourism industry remains one of the major 
sources of foreign exchange earnings in Kenya. The sub -sector is recovering from the 2013 slump 
caused, among other things, by terrorist attacks at a shopping mall in Nairobi. International arrivals 
increased gradually to 1.4 million in 2017  despite uncertaint ies surrounding the 2017 general 
elections.  The United States and the United Kingdom are the top sources of Kenya's visitors, 
accounting respectively for 17% and 11% of all the arrivals.  
4.179.   The tourism sector recorded improvements during the period under review despite a 
prolonged period with negative travel adv isories issued by some countries. Improved performance 
of the sector was supported by enhanced security, and aggressive promotion in both the domestic 
and the international markets. International  visitor arrivals and tourism earnings continued the 
recovery  path witnessed since 2016.  
4.180.   The recovery was associated with measures put in place by the Government in the sector 
that resulted in tourist arrivals going up by 8.1 % to 1,448.8 thousand in 2017. Consequently, 
earnings rose by 20.3 % from K ES 99.7 billion in 2016 to K ES 119.9 billion in 2017.  Hotel bed -nights 
occupancy increased by 11.3% from 6,448.5 thousand in 2016 to 7,174.2 thousand in 2017. The 
number of international conferences held contracted by 15.9% from 227 in 2016 to 191 in 2017. 
Local conferences held increased by 2.4% from 3,755 in 2016 to 3,844 in 2017. The number of 
visitors to national parks and game reserves rose by 2.6% to 2,345.2 thousand in 2017. However, 
visitors to museums, snake parks and historical sites decreased by 15 .3% to 782.0 thousand in 
2017 from 923.1 thousand in 2016.  
4.181.   The institutional framework comprises the Directory of Tourism (from the Ministry of 
Tourism) as the policy making institution; the Tourism Regulatory Authority; and the Kenya Tourism 
Board, as th e marketing and promotion agency. A Tourism Tribunal has jurisdiction over complaints, 
appeals and conflicts arising from the implementation of the legislation. A tourism strategy was 
launched in June 2018 as part of efforts towards the attainment of Kenya  Vision 2030 .64 It provides 
                                                
62 Other operators interested in providing postal services for letters weighting up to 350  g are required 
to charge at least five times the r ates applied by the Postal Corporation of Kenya.  
63 Communications Authority of Kenya (2017), 2016-2017 Annual Report . 
64 Ministry of Tourism ( 2018), The Big 4 Tourism Strategy 2017 -2030.  Viewed at: 
http://www.tourism.go.ke/wp -content/uploads/2018/05/The -Big4-Tourism -PLAN-Print-APPROVED -VERSION -4-
launch.pdf , 23.07.2018.  WT/TPR/S/384 • Kenya  
 
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  for interventions in the areas of product development , marketing, supporting infrastructure, and 
investment attraction . 
4.182.   Established in 1965, the Tourism Finance Corporation (TFC) has the mandate of identifying 
investment opportun ities in the sub -sector, providing business advisory services, and providing loans 
and credit facilities to investors and entrepreneurs. The resources of the Corporation are essentially 
from the budget. TFC offers loans with favourable  terms and conditions .  
4.183.   Tourism and tourism -related activities and services are regulated under the Tourism Act, 
2011; and its implementing  regulations.65 Tourism activities are subject to licensing by the Tourism 
Regulatory Authority . Licences are issued for up to one year. Licensing fees  are KES 1,000 for a first 
application , and range from KES  7,000  to KES 52,000 for setting up a hotel.  Tourism operators are 
classified into eight classes, labelled from class A to class H (corresponding to eight types of 
licences): accommodati on facilities (A); restaurants, other food and beverage services  (B); tour 
operators, travel agents, and tourism service s (C); curio vendors, professional photographers, tour 
guides , beach operators  and other similar operators (D);  nature reserves, parks, game ranches  (E); 
entertainment facilities  (F); conference and event services  (G); and, tourism and hospitality training 
institutions  (H). The main restriction for foreigners is a requirement for a valid work permit.  
4.184.   Hotels and accommodation  facilities (class A and class B enterprises) can be further classified 
from one star to five stars according to the 2011 EAC Standards Criteria for Classification of Hotels 
and Restaurants  (Common Report, section 4.4.2 ). Classification activiti es are carried out by the 
Standardization and Classification Committee, or an external body on its behalf. The Tourism 
Regulatory Authority  carried out the latest classification exercise . Classified o perators are required 
to exhibit the classification plaq ue at the main entrance of the facility. Any operator may request to 
be re-evaluated upon payment of a KES  50,000 fee. The classification is reviewed every five years.   
4.185.   Employment in the tourism sector is restricted to Kenyan citizens. An expatriate (inclu ding 
a citizen from another EAC country) may be hired for up to 24 months if the operator demonstrates 
that there is no citizen qualified to fill the post. The operator is required to identify a suitable Kenyan 
citizen to undergo the necessary training to be able to take over the position at the end of the 
authorized period.  
4.186.   A tourism fund was established in 2015 to finance the development  of tourism products and 
services.66 The main source of funding is a 2% levy on the gross sales of accommodation, food, 
drinks and all other services (A and B operators).  The levy applies to hotels charging a minimum of 
KES 250 per room and per night, and restaurants with gross annual sales above KES 3 million.  
4.187.   In addition to general incentives ( Section  3.3.1 ), additional incentives may be provide d in 
the form of customs and excise  duties waivers and tax rebates . These include: a waiver of import 
duties and VAT for investment in hotels; a 100% investment allowance for new investments in 
hotels; and a 25% corporate tax rate (instead of 30%) for companies issuing initial public offers in 
the Nairobi Stock Exchange. Tourist operators can also obtain a VAT -exemption for specially 
designed motor vehicles for transportation of tourists .  
4.188.   The authorities may also institute some disincentives and fees to deter some undesirable 
tourism activities and services .  
                                                
65 The Tourism Regulatory Authority Regulations, 2014.  
66 It replace s the Catering and Tourism Development Levy Trustee, in existence since 1972.  WT/TPR/S/384 • Kenya  
 
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  5  APPENDIX TABLES  
Table A1. 1 Merchandise exports by group of products, including re -exports 2011 -17 
 
2011  2012  2013  2014  2015  2016  2017  
Total exports (USD million)  5,772  6,126  5,832  6,114  5,918  5,695  5,747   
% of total  
Total primary products  61.9 60.7 60.6 65.7 68.3 68.3 71.3 
Agriculture  55.3 54.0 54.8 51.6 53.8 56.6 60.4 
Food 44.3 43.6 43.9 40.0 43.5 44.9 48.1 
0741 - Tea, whether or not flavoured  20.0 19.7 20.9 17.5 21.2 21.6 24.8 
0711 - Coffee, not roasted  4.1 4.3 3.3 3.7 3.5 3.7 3.9 
0545 - Other fresh or chilled  vegetables  3.7 3.4 3.2 3.0 3.0 2.5 2.3 
0579 - Fruit, fresh or dried, n.e.s.  0.7 0.7 0.8 0.9 1.3 1.5 1.7 
0577 - Edible nuts, fresh or dried  0.5 0.5 0.6 0.8 0.8 1.1 1.4 
0989 - Food preparations, n.e.s.  0.3 0.3 0.5 0.4 0.8 1.0 1.3 
1222 - Cigarettes containing tobacco  1.8 1.8 1.5 1.2 1.1 1.2 1.2 
0589 - Fruit, nuts and other edible parts 
of plants otherwise prepared or preserved  0.9 0.8 1.2 1.0 1.3 1.1 0.9 
4222 - Palm oil and its fractions  1.9 1.8 1.2 0.9 0.6 1.1 0.9 
0622 - Sugar confectionery, not 
containing cocoa  1.0 1.1 1.1 1.0 0.9 0.8 0.9 
Agricultural raw material  11.0 10.4 10.9 11.6 10.4 11.7 12.3 
2927 - Cut flowers and foliage  7.7 7.4 8.2 9.1 8.1 8.9 9.4 
2926 - Bulbs, tubers and rhizomes of 
flowering or of foliage plants  1.0 0.9 1.0 1.1 0.8 0.8 0.9 
2929 - Materials of vegetable origin, 
n.e.s.  1.4 1.1 0.7 0.4 0.3 0.8 0.8 
Mining  6.7 6.7 5.8 14.1 14.5 11.7 11.0 
Ores and other minerals  1.8 2.0 1.6 3.5 3.8 4.1 4.6 
2878 - Ores and concentrates of 
molybdenum, niobium, tantalum, 
titanium, vanadium and zirconium  0.0 0.0 0.0 1.6 2.1 2.5 3.0 
Non-ferrous metals  0.5 0.5 0.4 0.4 0.3 0.2 0.2 
Fuels 4.3 4.2 3.8 10.1 10.4 7.5 6.2 
Manufactures  36.9 36.6 37.8 34.2 31.5 31.4 28.4 
Iron and steel  3.6 2.9 3.2 2.5 2.1 2.3 2.1 
Chemicals  10.4 10.7 9.8 9.0 8.1 8.2 8.0 
5429 - Medicaments, n.e.s.  1.1 1.9 1.6 1.8 1.8 2.2 1.8 
5237 - Carbonates; peroxocarbonates; 
commercial ammonium carbonate 
containing ammonium carbamate  2.5 1.9 1.9 1.5 1.1 1.0 1.2 
Other semi -manufactures  7.8 7.2 7.9 6.5 5.7 4.6 4.3 
Machinery and transport equipment  4.8 5.3 5.5 4.1 4.0 5.1 3.2 
Power generating machines  0.2 0.3 0.4 0.1 0.1 0.2 0.2 
Other non -electrical machinery  1.4 1.4 1.4 1.5 1.4 1.4 1.1 
Agricultural machinery and tractors  0.3 0.1 0.2 0.1 0.1 0.1 0.1 
Office machines & telecommunication 
equipment  1.0 1.3 1.1 0.4 0.5 1.6 0.4 
Other electrical machines  0.8 0.9 0.9 0.7 0.8 0.7 0.5 
Automotive products  0.9 0.8 0.9 0.7 0.8 0.9 0.7 
Other transport equipment  0.6 0.6 0.7 0.5 0.4 0.3 0.3 
Textiles  1.1 1.2 1.1 1.0 1.1 0.9 0.7 
Clothing  4.3 4.0 4.9 5.4 4.9 5.3 5.5 
8414 - Men's or boys' trousers, bib and 
brace overalls,  breeches and shorts  0.3 0.6 0.7 0.9 1.0 1.4 1.3 
8426 - Women's or girls' trousers, bib and 
brace overalls, breeches and shorts  0.8 0.9 1.3 1.6 1.4 1.5 1.1 
Other consumer goods  4.9 5.3 5.5 5.6 5.5 4.9 4.6 
8931 - Articles for the conveyance or 
packing of  goods, of plastics  1.4 1.5 1.6 1.5 1.5 1.4 1.2 
Other  1.2 2.7 1.5 0.1 0.2 0.3 0.2 
Note:  SITC Rev. 3  for product groups.  
Source:  WTO Secretariat's calculations, based on data provided by the authorities; and UNSD, Comtrade 
database.   
 WT/TPR/S/384 • Kenya  
 
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  Table A1. 2 Merchandise imports by product groups, 2011 -17 
  2011  2012  2013  2014  2015  2016  2017  
Total imports (USD millions)  14,646  16,262  16,410  18,406  16,068  14,105  16,690   
% of total  
Total primary products  43.2 40.1 37.6 34.9 29.5 30.2 37.8 
Agriculture  14.5 13.7 12.7 11.7 12.7 14.0 20.2 
Food 13.1 12.3 11.3 10.5 11.3 12.4 18.9 
4222 - Palm oil and its fractions  3.8 3.6 3.2 2.8 2.7 3.4 3.5 
0412 - Other wheat (including spelt) and 
meslin, unmilled  2.4 2.2 2.1 2.1 2.3 2.0 2.5 
0611 - Sugars, beet or cane, raw, in solid 
form 0.1 0.4 0.3 0.2 0.3 0.8 2.2 
0449 - Maize, other  0.7 0.3 0.1 0.4 0.2 0.1 2.1 
0423 - Rice, semi -milled or wholly milled  0.9 1.1 1.0 0.9 0.8 1.0 1.6 
0612 - Other beet or cane sugar and 
chemically pure sucrose, in solid form  0.6 0.7 0.8 0.4 0.5 0.6 0.7 
Agricultural raw material  1.4 1.5 1.3 1.2 1.4 1.6 1.3 
2690 - Worn clothing and other worn 
textile articles; rags  0.5 0.6 0.6 0.5 0.6 0.9 0.8 
Mining  28.7 26.4 24.9 23.2 16.9 16.2 17.6 
Ores and other minerals  0.3 0.4 0.3 0.4 0.5 0.4 0.3 
Non-ferrous metals  1.1 0.9 1.0 0.9 0.9 1.0 1.0 
Fuels 27.3 25.1 23.6 21.9 15.4 14.8 16.3 
334 - Petroleum oils and oils obtained 
from bituminous minerals (other than 
crude)  16.6 18.8 19.7 20.6 14.3 13.7 15.1 
3425 - Butanes, liquefied  0.4 0.6 0.4 0.7 0.5 0.6 0.7 
Manufactures  56.4 59.7 61.9 64.8 69.7 69.4 61.8 
Iron and steel  4.8 4.1 5.7 4.7 5.6 5.3 4.8 
6726 - Semi-finished products of iron or 
non-alloy steel  0.5 0.4 0.8 0.6 0.9 0.9 1.1 
Chemicals  13.2 12.8 13.9 13.0 14.7 15.8 13.8 
5429 - Medicaments, n.e.s.  2.0 2.0 1.9 2.2 2.7 3.0 2.3 
5629 - Fertilizers, n.e.s.  1.0 1.0 1.4 0.9 1.1 1.1 1.2 
5711 - Polyethylene  1.2 1.2 1.2 1.2 1.3 1.4 1.0 
Other semi -manufactures  6.9 7.2 7.3 7.1 8.0 9.5 7.3 
6911 - Structures and parts of structures  0.4 0.7 0.7 0.6 0.9 1.1 0.7 
Machinery and transport equipment  25.2 29.3 28.2 33.5 34.0 31.1 28.2 
Power generating machines  0.8 1.1 1.6 1.8 1.2 2.3 0.9 
Other non -electrical machinery  7.5 8.2 8.1 9.2 9.4 8.4 8.5 
7284 - Machinery and mechanical 
appliances specialized for particular 
industries, n.e.s.  0.4 0.5 0.6 0.5 0.5 0.5 0.7 
Agricultural machinery and tractors  0.4 0.5 0.6 0.5 0.5 0.6 0.5 
Office machines & telecommunication 
equipment  5.2 5.4 5.1 3.6 4.1 5.5 4.8 
7522 - Digital automatic data -processing 
machines  0.0 0.0 0.0 0.3 0.0 0.9 1.1 
Other electrical machines  2.5 3.0 2.9 2.5 3.3 4.9 3.2 
Automotive products  5.5 6.0 6.6 6.9 8.2 6.8 5.6 
7812 - Motor vehicles for the transport of 
persons, n.e.s.  2.1 2.5 3.0 3.0 3.4 3.4 3.0 
7821 - Motor vehicles for the transport of 
goods  1.3 1.2 1.3 2.0 2.3 1.4 1.0 
Other transport equipment  3.7 5.6 3.8 9.4 7.8 3.1 5.2 
7918 - Railway or tramway freight and 
maintenance cars  0.0 0.0 0.0 0.0 0.3 0.0 1.2 
7912 - Other rail locomotives; locomotive 
tenders  0.0 0.0 0.0 0.1 0.3 0.0 1.2 
Textiles  2.5 2.1 2.3 2.2 2.6 2.5 2.4 
Clothing  0.4 0.4 0.4 0.4 0.3 0.5 0.8 
Other consumer goods  3.4 3.7 4.0 4.0 4.5 4.8 4.5 
Other  0.5 0.2 0.5 0.3 0.8 0.4 0.4 
Note:  SITC Rev. 3 for product groups.  
Source:  WTO Secretariat's calculations, based on data provided by the authorities; and UNSD, Comtrade  
database.  WT/TPR/S/384 • Kenya  
 
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  Table A1. 3 Merchandise exports by destination, including re -exports 2011 -17 
  2011  2012  2013  2014  2015  2016  2017  
Total exports (USD million)  5,772  6,126  5,832  6,114  5,918  5,695  5,747   
% of total  
Americas  5.4 5.5 6.7 8.5 8.7 9.1 9.2 
United States  5.0 5.1 6.0 7.1 7.0 7.5 8.0 
Other America  0.4 0.5 0.8 1.4 1.7 1.6 1.3 
Europe  24.7 25.6 22.2 23.8 23.2 22.6 22.7 
EU(28)  22.6 21.0 20.8 22.3 21.7 21.0 21.2 
Netherlands  6.4 6.0 6.5 7.6 7.2 7.5 7.4 
United Kingdom  9.2 7.8 7.5 6.7 7.0 6.5 6.5 
Germany  1.5 1.9 1.6 2.0 2.2 2.1 2.0 
France  1.1 0.9 1.1 1.1 1.0 1.1 1.4 
EFTA 1.9 0.9 1.2 1.2 1.3 1.3 1.1 
Other Europe  0.2 3.6 0.2 0.3 0.2 0.4 0.4 
Commonwealth of independent states 
(CIS)  1.9 2.1 2.4 2.1 2.0 1.9 2.1 
Russian Federation  1.1 1.3 1.4 1.3 1.4 1.2 1.3 
Africa  48.3 44.9 46.1 45.0 41.7 40.6 37.7 
Uganda  14.8 13.0 13.0 11.3 11.8 10.8 10.4 
Tanzania  8.1 8.9 8.1 7.9 5.8 6.0 4.8 
Somalia  3.2 3.7 3.4 2.5 2.6 3.1 3.3 
Egypt  4.6 4.1 3.4 3.3 3.5 3.6 3.2 
Democratic Republic of the Congo  3.4 3.6 3.7 3.9 3.6 3.5 3.2 
Rwanda  2.6 3.1 2.7 2.7 3.1 3.0 2.9 
South Sudan  0.0 0.0 3.3 3.7 2.9 2.8 2.8 
Burundi  1.2 1.0 1.1 1.5 1.1 1.3 1.2 
Ethiopia  0.9 0.9 1.0 1.3 1.2 1.4 1.2 
Sudan  4.3 1.3 1.3 1.2 1.0 0.9 1.2 
Middle East  6.4 8.1 7.9 6.7 7.8 8.7 8.6 
United Arab Emirates  3.9 5.5 5.0 3.8 5.0 5.4 4.4 
Saudi Arabia, Kingdom of  0.5 0.6 0.6 0.9 1.0 1.2 1.3 
Yemen  0.9 0.9 1.0 0.8 0.7 0.8 1.1 
Asia 12.4 12.6 14.1 12.6 15.3 16.6 19.2 
China  0.7 1.0 0.8 1.2 1.5 1.7 1.7 
Japan  0.5 0.5 0.5 0.7 0.7 0.7 0.8 
Other Asia  11.2 11.1 12.7 10.7 13.1 14.2 16.8 
Pakistan  4.1 4.6 4.8 4.1 6.1 7.0 10.8 
Hong Kong, China  0.6 0.5 0.7 0.5 0.3 0.2 1.1 
Other  0.9 1.2 0.7 1.5 1.4 0.4 0.4 
Memo:         
EACa 26.8 26.1 24.9 23.5 21.8 21.1 19.3 
a Including all EAC WTO members.  
Source:  WTO Secretariat's calculations, based on data provided by the authorities; and UNSD, Comtrade 
database.   
 WT/TPR/S/384 • Kenya  
 
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  Table A1. 4 Merchandise imports by origin, 2011 -17 
  2011  2012  2013  2014  2015  2016  2017  
Total imports (USD million)  14,646  16,262  16,410  18,406  16,068  14,105  16,690   
% of total  
Americas  6.1 8.7 6.0 11.6 9.3 4.6 7.4 
United States  3.4 4.8 4.1 10.4 8.0 3.4 3.3 
Other America  2.7 3.9 1.9 1.2 1.3 1.2 4.1 
Brazil  1.6 1.8 1.1 0.4 0.4 0.3 1.6 
Mexico  0.0 0.1 0.1 0.1 0.2 0.2 1.2 
Europe  17.5 16.4 16.4 15.3 16.5 16.6 13.7 
EU(28)  14.9 14.9 14.7 13.9 14.8 14.9 12.0 
Germany  2.5 3.0 2.7 2.9 3.0 3.0 2.5 
United Kingdom  3.3 3.2 3.5 2.9 2.7 2.3 1.7 
France  1.5 2.0 1.5 1.4 1.3 1.5 1.6 
Italy 1.1 1.5 1.4 1.2 1.4 1.7 1.3 
Netherlands  1.7 1.3 1.8 1.2 1.3 1.2 1.1 
EFTA 1.3 0.7 0.7 0.6 0.8 0.7 0.8 
Other Europe  1.3 0.9 1.0 0.8 0.9 1.0 1.0 
Commonwealth of independent 
states (CIS)  2.1 1.7 2.8 2.4 2.2 2.0 2.7 
Russian Federation  1.8 1.1 1.6 1.4 1.8 1.7 2.1 
Africa  11.6 10.2 10.5 9.0 9.5 9.8 11.6 
South Africa  5.4 4.5 5.0 3.9 3.9 3.5 3.6 
Uganda  0.8 1.1 1.1 1.1 1.4 1.3 2.4 
Egypt  1.4 2.2 1.8 1.6 1.6 2.1 2.1 
Tanzania  1.2 1.0 0.8 1.1 1.1 0.9 1.0 
Middle East  23.0 20.7 15.6 14.1 11.3 13.6 17.0 
United Arab Emirates  15.3 10.9 8.3 6.4 5.7 6.4 8.0 
Saudi Arabia, Kingdom of  4.1 4.9 2.9 3.5 3.5 4.8 6.6 
Asia 39.4 42.2 48.8 47.6 51.2 53.5 47.5 
China  11.1 12.2 12.9 15.4 20.3 23.6 22.6 
Japan  4.4 4.6 5.9 5.3 5.6 5.8 4.7 
Other Asia  24.0 25.5 30.0 26.8 25.3 24.2 20.2 
India 11.4 14.2 18.3 16.3 16.0 14.4 9.9 
Indonesia  3.3 4.0 3.2 3.0 2.9 3.2 3.3 
Pakistan  1.3 0.9 1.1 1.1 1.2 1.3 1.5 
Thailand  0.9 0.8 0.9 0.8 0.8 0.8 1.2 
Malaysia  0.8 0.5 0.7 0.7 0.7 0.9 1.0 
Korea, Republic of  2.0 1.6 1.7 1.8 1.2 1.0 1.0 
Other  0.2 0.0 0.0 0.1 0.0 0.0 0.0 
Memo:         
EACa 2.1 2.2 2.0 2.3 2.5 2.3 3.5 
a Including all EAC WTO members.  
Source:  WTO Secretariat's calculations, based on data provided by the authorities; and UNSD, Comtrade 
database.  
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  Table A3. 1 Products subject to excise duties, 2018  
Tariff line  Product description  Old rate  New rate  
Petroleum products (KES per thousand litre at 20°C)    
2710.12.30  Aviation spirit  19,895  unchanged  
2710.12.20  Motor Spirit (gasoline), premium  19,895  unchanged  
2710.12.10  Motor spirit (gasoline), regular  19,505  unchanged  
2710.12.40  Spirit type jet fuel  19,895  unchanged  
2710.12.50  Special boiling point spirit and white spirit  8,500  unchanged  
2710.12.90  Other light oils and preparations  8,500  unchanged  
2710.19.10  Partly refined (including topped crude)  1,450  unchanged  
2710.19.21  Kerosene type jet fuel  5,755  unchanged  
2710.19.22  Illuminating kerosene  7,205  unchanged  
2710.19.29  Other medium petroleum oils and preparations  5,300  unchanged  
2710.19.31  Gas oil (automotive, light, amber, for high speed engines)  10,305  unchanged  
2710.19.32  Diesel oil (industrial heavy, black, for low speed marine and stationary 
engines)  3,700  unchanged  
2710.19.39  Other gas oils  6,300  unchanged  
2710.19.41  Residual fuel oils (marine, furnace and similar fuel oils) of a kinematics 
viscosity of 125  centistokes  600 Unchanged  
2710.19.42  Residual fuel oils (marine, furnace and similar fuel oils) of a kinematics 
viscosity of 180  centistokes  600 unchanged  
2710.19.43  Residual fuel oils (marine, furnace and similar fuel oils) of a kinematics 
viscosity of 250  centistokes  600 unchanged  
2710.19.49  Other residual fuel oils  600 unchanged  
Beverages     
 Fruit juices (including grape must), and vegetable juices, unfermented 
and not containing added spirit, whether or not containing added sugar 
or other sweetening matter  KES 10 10.5/litre  
 Waters (excluding water of tariff No. 2201.90.00) and other non-
alcoholic beverages not including fruit or vegetable juices  10% 5.20/litre  
 Beer, cider, perry, mead, opaque beer and mixtures of fermented 
beverages with non -alcoholic beverages and spirituous beverages of 
alcoholic strength not exceeding 10%  10% 105.20/litre  
 Powdered beer  10% 100.20/kg  
 Wines including fortified wines, and other alcoholic beverages obtained 
by fermentation of fruits  10% 157.8/litre  
 Spirits of undenatured ethyl alcohol; spirits liqueurs and other 
spirituous beverages of alcoholic strength exceeding 10%  10% 210.40/litre  
Tobacco     
 Cigars, cheroots, cigarillos, containing tobacco or tobacco substitutes  10,000/kg  10,520/kg  
 Electronic cigarettes  3,000/unit  3,156/unit  
 Cartridge for use in electronic cigarettes  2,000/unit  2,104.00/unit  
 Cigarette with filters (Hinge lid and soft cap)  2,500/mille  2,630/mille  
 Cigarettes without filters (plain cigarettes)  1,800/mille  1,893/mille  
 Other manufactured tobacco and manufactured tobacco substitutes; 
"homogenous" and "reconstituted tobacco"; tobacco extracts and 
essences  7,000/kg  7,364/kg  
Others     
 Food supplements  10% Unchanged  
 Cosmetics and beauty products of tariff heading No. 3303, 3304, 3305 
and 3307  10% Unchanged  
 Motor vehicles excluding locally assembled motor vehicles and school 
buses for use by public schools of tariff heading 87.02, 87.03 and 
87.04  20% Unchanged  
 Motor cycles of tariff 87.11 other than motor cycle ambulances and 
locally assembled motor cycles  10,000/unit  Unchanged  
 Plastic shopping bags  120/kg  
2709.00.10  Condensates  Not included  6,225/'000 
l@20°C  
Source:  Excise duty Act, 2015; Finance Bill 2018, and Civil Aviation Act.