Kenya is having an estimated population of 45 million as of 2014. The average income of people monthly is around 147,950 KES i.e. 1394.19 USD. Kenya’s urban population was counted to be around 10,990,890, around 25% the population in 2014.
Kenya is the economic and transport hub of East Africa. Kenya’s real GDP growth has averaged around 5% for the past several years. According to recently rebased national statistics, Kenya’s GDP for 2013 was $55.3 billion, placing Kenya among the low middle income countries with per capita income of $1,300. Agriculture remains the backbone of the Kenyan economy, contributing 25% of GDP. About 80% of Kenya’s population of roughly 42 million work at least part-time in the agricultural sector, including livestock and pastoral activities. Over 75% of agricultural output is from small-scale, rain-fed farming or livestock production.
What do we know about Kenyan customers?
- With an economic growth of around 5.4% in 2014, Kenya became a lower middle-income country. Increased competition in the manufacturing sector is the reason for growth and job creation in next few years.
- The richest 10% holds around 39% of the income of the country and poorest 10% just around 2% of the income.
The top exports of Kenya are:
- Tea ($915M)
- Refined Petroleum ($680M)
- Cut Flowers ($642M)
- Coffee ($209M)
- Legumes ($162M)
Using the 1992 revision of the HS (Harmonized System) classification.
Its top imports are:
- Refined Petroleum ($2.92B)
- Cars ($538M)
- Hot-Rolled Iron ($407M)
- Packaged Medicaments ($377M)
- Wheat ($339M)
The top export destinations of Kenya are:
- Zambia ($680M)
- Uganda ($533M)
- the Netherlands ($489M)
- the United States ($439M)
- the United Kingdom ($419M)
The top import origins are:
- India ($3.93B)
- China ($3.22B)
- Japan ($892M)
- South Africa ($793M)
- the United Kingdom ($660M)
What are the major ports of Kenya?
- Major ports of the country used for global trade are Port of Mombasa, Port of Lamu and Port of Malindi.
- Nairobi's Jomo Kenyatta International Airport is the largest airport in Kenya. Moi International Airport in Mombasa and Kisumu Airport are also serving international service now.
Import Regulations by Kenya Customs
- All arms, explosives and ammunition are currently banned from entering the country unless a prior police permit has been obtained.
- A special Plant Import Permit will be required in order to import any plant or plant products into the country.
- Meat and meat products must be declared at customs and will not be permitted entry.
- Any animals being imported into the country can only travel as cargo. Cats and dogs will need a general good health certificate from the country of origin and an additional certificate less than a month old clearing the pets of Rabies. Wild birds being imported from countries currently suffering from bird flu will need a sanitary import permit to be issued by the Director of Veterinary Services.
- Other restricted items include various forms of unprepared ivory, precious metal and stones, historical artifacts, imitation firearms, children’s toys and fruit.
- Restricted items include gold and diamonds and skin or game trophies, which are not obtained from the authorized personnel of the Government of Kenya.
Import duty & taxes when importing into Kenya
- Kenya applies duties and tariffs of the East African Community (EAC) Common External Tariff. Customs duty is levied at rates between 0% and 100%, with an average rate of 25%.
- Imports into Kenya are subject to a standard VAT rate of 16%, levied on the sum of the CIF value, duty, and other applicable taxes.
- There is no minimum threshold for imports into Kenya; therefore duty and taxes are payable regardless of the value.
- Other taxes and customs fees
- Excise duty is charged on products like alcoholic beverages and tobacco. Excise can be ad valorem, i.e. charged as a percentage on the sum of the CIF value and duty; or specific, i.e. based on units of measure.
- Import Declaration Fee is charged on all imports at a rate of 2.25% of the CIF value, or Ksh. 5000 per import, whichever is higher.
Since the enactment of a new VAT Act, which took effect 2 September 2013, VAT applies to the following transactions:
- The supply of goods and services in Kenya by a taxable person
- Taxable imported services received by a taxable person in Kenya to the extent that they relate to exempt supplies
- The importation of goods from outside Kenya, regardless of the status of the importer (unless the importer is listed as zero-rated in Part B of the Second Schedule to the VAT Act)
The exportation of goods and taxable services is zero-rated if, subject to the satisfaction of the Commissioner of Domestic Taxes, the supply takes place in the course of a registered person’s business.
Knowledge of the customer base, major gateways, legal matters as well as the distribution structure will be beneficial to your expansion. Having a local partner will help you navigate around Kenya’s market and ensure optimal results for your strategies.