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U.S. Department of State 
Kenya Country Commercial Guide 
Office of the Coordinator for Business Affairs 
                               COUNTRY COMMERCIAL GUIDE 
                                      K E N Y A 
                                  FISCAL YEAR 1996 
     AmEmbassy Nairobi Means Business! 
                TABLE OF CONTENTS 
This Country Commercial Guide (CCG) presents a comprehensive look at 
Kenya's commercial environment through economic, political and market 
The CCGs were established by recommendation of the Trade Promotion 
Coordinating Committee (TPCC), a multi-agency task force, to consolidate 
various reporting documents prepared for the U.S. business community.  
Country Commercial Guides are prepared annualy at U.S. Embassies through 
the combined efforts of several U.S. governement agencies.   
     CHAPTER  I 
                                   EXECUTIVE SUMMARY 
In recent years, Kenya has undergone a significant economic and 
political transformation conducive to developing a more positive 
commercial environment.  In 1992,  multiparty parliamentary politics was 
allowed after almost 30 years of single party rule.  On the economic 
front, the Government took positive macro-economic policy reform 
initiatives: elimination of price and import licensing controls, 
liberalization of the foreign exchange system to include market 
determined exchange rates, development of more disciplined monetary and 
fiscal policies, and enforcement of greater monetary discipline with 
respect to the commercial banks.   
The Kenyan economy has responded positively: Gross Domestic Product 
(GDP) grew by 3.0 percent in 1994 compared to 0.2 percent in 1993.  
Foreign exchange reserves increased from just under two weeks of annual 
average imports in March 1993 to $506 million or 3 months cover as of 
December 1994.  Inflation fell to below 10 percent in May 1995, from 41 
percent a year before, and a high of over 100 percent in 1993.  At the 
end of 1994, balance of payments showed a surplus of 1 percent of GDP on 
the current account.  (The current account is the net of imports, 
exports, invisible trade (tourism), and aid grants.)  Investment 
portfolio grew by 13.4 percent in 1994 as compared to a decline of 3.6 
percent in 1993.  The government foresees this economic expansion 
continuing in 1995 by 5 percent and 5.6 percent in 1996.  The overall 
level of business confidence is optimistic for 1995.  Kenya is committed 
to a program whereby the private sector will become the engine of the 
country's future economic growth.   
Kenya has undertaken economic and political reforms largely in response 
to World Bank, IMF, and other multilateral and bilateral donors' 
initiatives.  Not all elements of the Government of Kenya (GOK) have 
fully supported the reforms and there has been, therefore, some 
regression since December 1994.  Because of the slippage, donors and the 
GOK scheduled a mini-Consultative Group meeting in Paris on July 24, 
1995.  However, the overall trend of economic, and, to some degree, 
political reforms since 1991 has been significant and positive. 
Agriculture and tourism dominate Kenya's economy, and are Kenya's main 
foreign exchange earners.  Total 1994 earnings in the two sectors were 
estimated at $1,796 million.  The manufacturing sector has historically 
been import substitution focused.  The country's main imports are 
petroleum and industrial goods, including, machinery, equipment, and 
agro-chemicals.  The country has no known mineral resources of 
commercial significance.  In 1994 the country's imports were valued at 
$2,568.7 million while exports were valued at $1,860.7 million.   
Significant investment, from domestic and international sources, 
including the U.S., is expected to increase slowly.  Kenya has a vibrant 
and expanding stock market; the 1995 GOK budget doubled the permitted 
level of foreign ownership of locally traded shares to 40 percent.  The 
country has an emerging secondary capital market besides the merchant 
and investment banking services offered by multinational banks. 
Kenya has been politically stable since independence in 1963.  Relations 
with the United States have been friendly and cordial.  The country has 
adopted a multiparty system with a vibrant parliamentary opposition.  In 
recent years, the press has enjoyed a great deal of freedom, but 
incidents of intimidation and harassment of the independent papers 
continue to occur.  The next general election is expected in 1997.  
Although there has been general unhappiness among non-reformers over the 
effects of Kenya's structural adjustment program and the government's 
visible reform lapses, the general consensus is that reform is 
inevitable and irreversible. 
About 75 American companies maintain offices in Kenya, and the U.S. is 
Kenya's third largest trading partner after the United Kingdom and 
Germany with 1994 U.S. exports estimated at $170 million.  Principal 
U.S. exports included wheat, maize (corn), fertilizer, aircraft parts, 
and petroleum/bituminous products.  The country is open and hospitable 
to trade and investment from the U.S.  However, its traditional ties to 
the United Kingdom, the former colonial power, its almost exclusive use 
of British business laws and practices, a relatively less developed 
market, and its distance from the U.S. are all factors which have served 
to limit direct U.S. business relationships in this country.  Many U.S. 
firms market in Kenya via their European affiliates, thus making it more 
difficult to track U.S. sourced goods and services provided via Europe.  
The 1994 Kenyan import market was estimated at $2,568.8 million.  Almost 
all balance of payments assistance was suspended from late 1991 to 1993 
by multilateral development banks and bilateral donors, but resumed in 
1994 at lower levels.  Foreign exchange reserves have greatly improved 
from a few days of imports at the end of 1992 to three months at the end 
of June 1995.  The Paris Club debt, according to the June 1995 budget 
speech, is 29.5 percent of overall 1995/96 budget.  Government debt was 
rescheduled in the Paris Club.  Kenya is meeting its debt repayment 
schedule.  Importer interest in sourcing from the U.S. is increasing as 
the country's economy liberalizes and diversifies and as U.S. products 
and services become more competitive with the more attractive 
shilling/dollar rate. 
Investment opportunities exist in the tourism, agriculture, and 
manufacturing sectors.  Specific areas of interest to U.S. business 
include the hotel industry, ecotourism, power generation equipment, 
telecommunication equipment, agricultural inputs, and food processing 
and packaging equipment.  Kenya's liberalized economy and the country's 
constitutional guarantee of investment protection provide investment 
incentives.  Other incentives include lucrative tax and investment 
incentives such as an investment allowance, duty remission, and tax 
exemptions in the country's export processing zones and its 
manufacturing under bond system.  U.S. firms are encouraged to consider 
using Kenya as a base to assess and penetrate the larger combined East 
and Central African market. 
The Commercial Service (U.S.& Foreign Commercial Service), with a 
regional operation based in Nairobi, along with the Foreign Agricultural 
Service (FAS) and other Embassy elements, stands ready and eager to 
assist U.S. businesses in their efforts to penetrate this relatively 
dynamic and regional market hub. 
Country Commercial Guides are available on the National Trade Data Bank 
on CD-ROM or through the Internet.  Please contact Stat-USA at 1-800-
STAT-USA for more information.  To locate Country Commercial Guides via 
Internet, please use the following world wide WEB address:  WWW.STAT-
USA.GOV.  CCGs also can be ordered in hard copy or on diskette from the 
National Technical Information Service (NITS) at 1-800-553-NTIS. 
     CHAPTER  II  
                           ECONOMIC TRENDS AND OUTLOOK 
The government has made significant strides in the implementation of 
economic reform measures necessary to stabilize the economy and restore 
sustainable economic growth in Kenya.  By April 1994, the government had 
removed nearly all administrative controls on producer and retail 
prices, imports, foreign exchange and grain marketing.  The lifting of 
price controls on petroleum products in October 1994 and the 
announcement in December 1994 that, beginning 1995, foreigners would be 
permitted to invest in the Nairobi Stock Exchange signalled the end of 
the significant remaining controls.  Some problems however, have 
continued to arise.  In August 1994 and again in April 1995, the 
government reintroduced bans on agricultural imports, in one case on 
maize, in the other on maize, wheat, sugar and milk, but the bans were 
short lived. 
While the overall consumer price index generally declined in 1994, 
initially wages failed to match escalating basic day to day living 
expenses as price decontrols elicited price increases on basic foods and 
commodities unmatched by commensurate wage increases.  The 
liberalization of foreign exchange regulations contributed initially to 
a stronger Shilling, which was allowed to seek its own market level when 
dollars and other hard currencies flowed into the country.  A 
liberalized import system impacted on heretofore protected domestic 
producers.  After the Structural Adjustment Program (SAP) initiated with 
the World Bank and an Enhanced Structural Adjustment Facility with the 
IMF in late 1993 were in place, the Government of Kenya (GOK) in 1994/95 
introduced various social action programs to ameliorate the short-term 
impact of the SAP.  The last quarter of 1995 saw some regression in the 
agricultural sector reform program.  Concerned by these slippages, and 
even more by increasing political repression, donors called for a  mini-
Consultative Group (CG) meeting with full GOK participation.  Since 
1993, Consultative Group meetings have been held in June and 
November/December to review reform efforts.  The overall trend in 
economic and, to some degree, political reforms has been significant and 
Serious efforts have been undertaken to mop up excess liquidity and 
improve management of the financial sector.  Management of the financial 
sector, and banks in particular, has generally improved.  Weak banks 
have been closed or brought under statutory management while irregular 
advances have been curbed.  Meridien BIAO Bank is the latest (March 
1995) to be put under statutory management.  Inflation was brought down 
to below 30 percent by December 1994 compared to a peak of 100 percent 
in mid 1993; it is expected to be approximately 8 percent in 1995. 
The country made a moderate recovery in 1994, with an estimated annual 
GDP growth rate of 3 percent as the economy responded to economic 
reforms.  In the first quarter of 1995, the economy grew at a rate of 
6.3 percent.  The positive effects of the reform measures, however, 
remain dampened by repressive measures on the political front.  The 
pluralistic brand of politicking introduced in 1991 has yet to grow into 
sensible competitive multi-party politics.  The economy still suffers 
from a large (but declining as compared to 1993) government budget 
deficit of 5 percent of GDP, according to the World Bank.  The budget 
deficit is largely due to inadequate implementation of parastatal 
divestiture, a bloated civil service and fiscal indiscipline. 
In the area of regional cooperation, there has been renewed interest 
among the East African leaders of Kenya, Uganda, and Tanzania in 
reviving the East African Economic Community.  They have signed an 
economic cooperation treaty which provides for removal of trade 
barriers.  However, tension between Kenya and Uganda appears to have 
retarded progress. 
After years of slow progress in economic reform, in 1993 the government 
embarked on substantive economic reform measures to bring the economy 
back on track.  In a relatively short period, the government instituted 
several measures to open the economy to market forces.  By the end of 
the first quarter of 1994, the government had dismantled most foreign 
exchange controls, allowed a free-floating exchange rate, removed import 
licensing and liberalized domestic marketing of all major items 
including grain.  At the same time, government decontrolled prices of 
all major items except petroleum products.  Petroleum products were 
later decontrolled in October  1994.  The efficacy of these policy 
measures is best demonstrated by the results: GDP grew from 0.2 percent 
in 1993 to 3.0 percent in 1994, foreign exchange reserves stabilized at 
$506 million or equivalent to three months import coverage up from just 
under two weeks in March 1993.  Inflation fell to below 10 percent in 
May 1995, from 41 percent a year before, and a high of over 100 percent 
in 1993.  At the end of 1994, balance of payments showed a surplus of 1 
percent of GDP on the current account. 
The government foresees this economic expansion continuing in 1995 with 
a 5 percent GDP growth rate and 5.6 percent GDP growth rate in 1996.  
The overall level of business confidence is optimistic for 1995.  Kenya 
is committed to a program whereby the private sector will become the 
engine of the country's future economic growth.   
The reforms were implemented with the support and guidance of the 
IMF/World Bank.  They have largely removed some of the major impediments 
to doing business in Kenya.  Implementation of the new policies has been 
reasonably progressive.  However, by the end of 1994 and early 1995 some 
serious signs of slippage on the reform program began to emerge.  
Backtracking on agricultural sector reform, due in part to problems of 
handling sudden surpluses after two years of drought, elicited fears 
among reform-watchers that reversals might occur in other sectors.  The 
primacy of the government grain marketing board (NCPB) was reinstated 
for grain purchases, an inflated indicative price of KSh. 950/90 kg bag 
in effect reintroduced price controls on grain, and in April 1995 the 
GOK banned importation of maize, soft wheat, sugar, and milk.  The ban 
was rescinded in June 1995. 
A decision in January 1995 to build a third international airport at 
Eldoret at a cost of $85 million raised questions about the wisdom of 
GOK priorities, especially regarding infrastructure and commercial 
borrowing.  Finally, the GOK commitment to curbing corruption was called 
into question in view of the perceived foot-dragging on the infamous 
Goldenberg/Exchange Bank case.  This case has become the litmus test of 
how the GOK intends to deal with corruption in the future. 
In spite of concerns in certain quarters as to whether Kenya will 
continue and enhance economic reforms, as well as pursue seriously 
related political reforms, much has been accomplished since 1991 to 
improve the commercial and economic  climate.  It is not unexpected that 
in undertaking such significant reforms not all elements of government 
and the political system are fully in favor of all aspects of the 
IMF/World Bank led SAP.  Despite some backsliding as Kenya struggles to 
integrate the SAP into its own political and economic framework, the GOK 
appears to be fully committed to proceeding with the SAP. 
During the 1994/95 time frame the Central Bank of Kenya (CBK) continued 
to enforce monetary discipline begun in 1993 and added a number of 
measures.  Five locally-owned banks were closed in the first half of 
1995 when they failed to meet an increased paid-up capital requirements 
of 7 percent introduced in December 1994.  In the first quarter of 1995 
the GOK imposed a foreign exchange exposure limit of 20 percent of a 
bank's capital.  Meridien BIAO was affected after transferring large 
amounts of foreign exchange to its parent bank in the Bahamas.  It was 
put under statutory management in March 1995.  The required commercial 
bank cash ratio was decreased from 20 to 18 percent in the third quarter 
of 1994 and remains at that level. 
Beginning the last quarter of 1994, the CBK worked on establishing 
foreign exchange bureaus to handle small transactions.  More than twelve 
bureaus had been licensed by the second quarter of 1995.  As of July 
1995, only five had become operational.  CBK requirements are reportedly 
stiff, but bureaus are attracting interest.  It is hoped that with the 
opening of the foreign exchange bureaus, there will be more competition 
and that better exchange rates will be available for smaller 
transactions.  Finally, non-bank financial institutions were required to 
become full banks.  As of July 1995, four have converted while ten are 
making preparations, and four others will merge with parent companies. 
The Central Bank has stopped lending to the public sector.  Commercial 
bank lending to the public sector nearly doubled and total credit to the 
private sector increased by 29 percent between December 1993 and 
December 1994.  The popularity of Treasury Bills declined as interest 
rates went down from 70 percent in 1993 to the mid-teens by June 1995. 
Although growth in the money supply remained stable in the first half of 
1994, it accelerated to 31 percent in the third quarter.  During 1994, 
funds continued to enter the commercial banking system in the form of 
productive transfers, speculative transfers and assistance flows.  Cost 
overruns of various GOK departments forced them to borrow from the 
Central Bank.  Also, the government as a whole continued to borrow 
Short and medium term commercial credit has followed the trend of 
lowered inflation and declining government interest.  Commercial bank 
base interest rates averaged 15 percent in the period ending June 1995, 
although effective borrowing rates were almost 10 points higher.  
Interest on savings accounts grew.   
Kenya's budding, but vibrant stock exchange, has received government 
support.  As of June, 1995 foreign participation of up to 40 percent was 
permitted.  Since foreign participation in the local stock market was 
allowed in mid-December 1994,  about $2.5 million from foreigners has 
been invested in stocks traded on exchange.      
Kenya's financial sector has 36 commercial banks, 51 finance houses, six 
building societies, seven development finance companies, five 
representative offices of foreign banks, a post office savings bank, 37 
insurance companies and over 1,500 poorly structured cooperative savings 
and credit unions.  The banking sector is dominated by two multinational 
banks (Barclays and Standard Chartered) and two parastatal banks.  U.S. 
owned Equator Bank has a subsidiary (Kenya Equity Management) and 
Citibank a branch.  Other U.S. banks have correspondence relationships 
with Kenyan banks.  
The financial sector includes a young and vibrant Capital Markets 
Authority.  The Capital Markets Authority retains significant regulatory 
powers over the stock market which has one securities exchange based in 
Nairobi (Nairobi Stock Exchange) and 20 brokerage firms.  The Nairobi 
Stock Exchange (NSE) handles 56 listed firms with a virtually non-
existent secondary capital market.  The low listing is largely due to 
government requirements for detailed information many firms consider 
confidential.  Requirements for financial discipline, availability of 
subsidized credit in the money market, disclosure and reporting 
requirements are some of the other factors militating against public 
quotation.  The stock market, and stockbroking, were on January 1, 1995 
opened up for direct foreign participation.  The limit on foreign share 
ownership is 40 percent.   
At the beginning of 1994, shares traded at the NSE shot up dramatically 
due to significant shifts from Treasury Bills to shares.  The interest 
rate offered on Treasury Bills reached its lowest level in February, 
1994 prompting investors to scramble for the limited shares offered in 
the NSE.  At the time, there were large sums of cash still floating in 
the economy which have since been effectively mopped up. 
Although the Nairobi Stock Exchange trading floor is currently 
computerized, it has been using, up to late 1994, outdated trading 
practices such as notice board call-overs.  However, it is no longer a 
closed shop.  Despite the presence of such multinational banks as 
Barclays, Stanbic, Citibank, Equator Bank, and Standard Chartered, 
merchant and investment banking is still underdeveloped.  A local firm 
has established operations dealing with commercial paper and the 
secondary and tertiary market, but it is still in its infancy.  In the 
insurance sector, restrictive legislation and the government's 
interventionist approach have forestalled more flexibility in the 
investment strategy of the insurance companies.  Therefore, sources of 
long term capital such as corporate bond markets and discount houses are 
limited in Kenya. 
Kenya's trade policy has improved significantly.  Import licensing 
controls were dismantled in 1993, except for a small negative list based 
on health, environmental and security concerns.  Imports are still, 
however, subject to some approvals.  All imports with F.O.B. value of 
more than KSh. 100,000 ($1,613) are subject to preshipment inspection 
for quality, quantity, and price and require a Clean Report of Findings 
by a government-appointed inspection agency (Cotecna Inspections, Inc., 
Bureau Veritas, and SGS).  Commercial banks are required to ensure that 
importers have submitted Import Declaration forms, invoices, and a Clean 
Report of Findings as well as a copy of the Customs entry before 
releasing foreign exchange to importers.  Prior exchange control 
approval must be obtained for imports of machinery and equipment which 
are regarded as a contribution toward equity capital or are purchased 
via loans.  Authorized banks in Kenya may not issue shipping guarantees 
for the clearance of imports until they receive the report.  All goods 
purchased by importers in Kenya must be insured with companies licensed 
to conduct insurance business in Kenya.   
Trade barriers on certain products are maintained by high import duties 
and value added tax.  The June 1995 budget, however, reduced duties on 
some high tech equipment - computers, went from 20 percent to 10 
percent, and photocopiers from 30 percent to 10 percent - and the 
standard value added tax (VAT) was reduced from 18 percent to 15 
percent.  Discriminatory application of these taxes has in the past 
distorted trading, especially in sugar, maize, and milk powder.  
Procurement decisions can be dictated by donor-tied aid, or influenced 
by corruption.  Customs and immigration rules are detailed and rigidly 
implemented. These restrictions have seriously inhibited manufacturing 
under bond schemes.  A strict constructionist attitude among customs 
officials often leads to delays in clearing both imports and exports.   
As Kenya carries out and enhances its Structural Adjustment Program 
(SAP), the implementation of its trade policy will see certain 
adjustments and modifications.  For example, in April 1995, the 
government banned most grain imports contrary to SAP protocols.  
However, the ban was lifted in June, 1995.  Notwithstanding this 
backsliding, the overall trend is to continue with the economic reforms 
initiated in 1993 and 1994.   
In October, 1993, the market and the official exchange rates were 
unified and opened up to market fluctuation.  Since then, the Shilling 
has grown stronger, rising from a peak of KSh. 83/$1 in November 1993 to 
KSh. 63 at end of March 1994, and KSh. 33/$1 in October, closing 1994 at 
KSh. 45/$1.  As of July 1995, the exchange rate was Ksh 54/$1.  In 
February 1994, the government announced more liberal foreign exchange 
measures which will eventually replace the highly restrictive foreign 
exchange control legislation.  All exporters are allowed to retain all 
foreign exchange proceeds in foreign currency accounts at commercial 
banks in Kenya.  They may use the retained proceeds to finance business-
related current expenses and debt service payments or sell them to banks 
at the market determined exchange rate.  Banks are permitted to sell the 
foreign exchange they purchase in the retention market for their own 
accounts, and to offer forward exchange contracts to exporters and 
importers at market-determined rates.  No limits apply to the amount or 
period of cover.   
There are no official schemes for currency swaps or exchange rate 
guarantees for external debt servicing, except for the Exchange Risk 
Assumption Fund, which covers the foreign exchange losses associated 
with exchange fluctuations occurring after July 1, 1989 for three 
development finance institutions. 
Measures announced in February, 1994 permit Kenyans and other residents 
to operate foreign currency accounts and borrow from the off-shore 
market at the LIBOR interest rates provided they do not seek a 
government guarantee.  The measures give foreign investors in Kenya 
access to local credit and tourists a chance to settle their bills, 
obtain air tickets and pay airport taxes in either Kenya Shillings or 
foreign currency.  Restrictions on remittance of new foreign investment 
income have been removed.  Remittances of funds in blocked accounts can 
be made at a rate of $100,000 per year through commercial banks.  Non-
residents on a work permit in Kenya may operate foreign currency 
accounts and remit after-tax employment earnings without government 
approval.  International travelers  are allowed to carry up to KSh. 
100,000 in Kenyan currency, a move that is particularly beneficial to 
travelers within the Eastern Africa region where the Kenya Shilling is 
convertible.  The recently licensed foreign exchange bureaus should 
reduce the large spread between the buy and sell rates, especially for 
smaller transactions.  
The foreign exchange market, as is expected, is not highly developed nor 
sophisticated.  In October 1994, for example, the Kenyan shilling 
appreciated against all major currencies, reaching KSh. 33 to the 
dollar.  Fluctuations in the exchange rate of Kenya shillings occur from 
time to time, but these are the result of small amounts -- five to eight 
million dollars are traded during an average week -- compared to some 
900 to 1,300 million dollars in Kenya.  Traditionally, speculators have 
moved funds to Kenya to take advantage of relative economic stability 
and higher interest rates compared to what can be earned is the United 
Kingdom (currently 17 percent in Kenya versus 7 percent in U.K.). 
Taking into account a 5 percent interest risk spread used by the 
speculators, the result has been an inflow of speculative funds.  Other 
sources of excess foreign exchange liquidity include flight capital from 
surrounding countries, official regional development and disaster funds, 
deposits by NGOs and religious organizations operating in surrounding 
less stable countries, and dollars received by higher coffee and tea 
prices.  Almost all of these funds, which are in short term monetary 
instruments, could be transferred out of the country in a matter of 
hours.  They are not a source for long term, 20 year horizon investments 
which are needed for job creation and sustained economic development. 
Kenya, as part of its SAP, agreed to Section 8 of the IMF, declaring it 
would not arbitrarily set exchange rates for the future.  The GOK, 
however, does have other monetary and fiscal policies and regulations at 
its disposal.  The SAP does not call for an ideal exchange rate, but 
rather stresses that the rate should be market determined.  However, the 
IMF/World Bank and GOK are interested in maintaining a fairly stable 
exchange rate, free of short term wild fluctuations.  The exchange rate 
which went from KSh. 26/$1 in March 1991 to KSh. 83/$1 in November 1993, 
and KSh. 33/$1 in October 1994, has now appeared to stabilize in the 
KSh. 50-55/$1 range. 
The government took major steps in dismantling grain marketing controls 
in 1993.  Supported by the donor community, the government decontrolled 
producer and retail prices of grain including maize (corn).  In August 
1994, the government imposed a temporary ban on the import of certain 
grain.  However, in the face of strong World Bank/IMF and donor 
pressure, this ban was lifted a month later. 
Currently private traders are allowed to import cereals; although in 
April 1995 the GOK imposed a six/nine month ban on imports of maize, 
soft wheat, sugar, and milk.  The ban was lifted for all products except 
milk in June 1995.  Domestic movement controls have been eliminated, 
thereby, effectively ending the maize marketing monopoly of the state-
owned National Cereals and Produce Board.  These are substantial steps 
toward full liberalization of maize marketing reform.  However, the 
government-owned National Cereals Produce Board (NCPB) still maintains 
minimum produce prices for all the cereals and is an active importer.  
The NCPB, which receives considerable subsidies from the government, has 
yet to rationalize (privatize) some of its countrywide infrastructure in 
line with its reduced role in grain marketing. 
As a means of providing protection to domestic growers from cheap grains 
imported at subsidized prices under the liberalized marketing system, 
the government in September 1994 introduced a variable import duty for 
maize, wheat, rice, sugar and milk.  The duty was applied whenever the 
import reference price fell below the domestic reference price.  The 
import reference price was calculated from the FOB price of the product 
plus the sea freight charges, port charges, and a profit margin of 20 
percent for the importer.  The domestic reference price was based upon 
the minimum buying price from the domestic producer plus transport and 
handling costs to the port of Mombasa.  The June 1995 budget replaced 
the variable import duty with an ad valorem duty and specific duty rates 
whichever is greater.  The rates under the new structure are equivalent 
to the most recent variable import rates. 
During the first quarter of 1994, Kenya's predominantly agricultural 
economy suffered the impact of inadequate rains in 1993.  This increased 
the country's dependence on food imports and hindered a quick recovery 
from the 1992-1993 slump.  Real GDP grew by a paltry 0.2 percent in 
1993, but then recovered and reached 3.0 percent in 1994.  Poor weather 
in 1993, intermittent tribal clashes, high inflation and interest rates 
which reached record levels in November 1993 prevented a fuller economic 
recovery in 1994.  
The current economic environment has significantly improved, when 
compared to the situation up to 1993.  The Government has pursued tight 
monetary policies to counter the inflationary pressure experienced in 
Kenya during 1993/94.  Interest rates were brought down by instituting 
such measures as open market monetary operations, sales of Treasury 
Bills, and restriction of commercial banks access to credit from the 
Central Bank.  Significantly, discount rates on Treasury Bills dropped 
from a high of 40.0 percent in fiscal 1993 to a more realistic and 
market driven 18 percent in fiscal 1994, and stabilized at 17 percent in 
June 1995.  These monetary policies coupled with the removal of controls 
on prices, interest rates, importation, and exchange rates improved the 
conditions of doing business in Kenya. 
Kenya's main growth sectors include agriculture, tourism, power 
generation, and manufacturing.  Agriculture is the mainstay of the 
Kenyan economy, providing livelihood to approximately 75 percent of the 
population.  The agricultural sector currently contributes an estimated 
28 percent of the GDP, and generates 60 percent of the total foreign 
exchange.  The sector has strong linkages with the manufacturing sector 
offering opportunities in technology infrastructure such as packaging, 
storage, and transport while creating demand for such inputs as 
fertilizer, herbicides and fungicides. 
Tourism is currently Kenya's single largest foreign exchange earner.  In 
1994 the country was host to over 864,000 tourists earning it about $546 
million.  The sector offers investment opportunities in accommodation, 
recreation, and entertainment facilities, including hotels, health spas, 
holiday centers and ecotourism.   
Horticulture -- producing flowers and fresh fruits and vegetables for 
the European market -- is the fourth largest earner of foreign exchange 
and the fastest growing sector in the Kenyan economy.  The earlier 
appreciation of the Kenyan shilling against all major foreign currencies 
had adversely affected this sector as well as tourism.  With the 
shilling in the range of KSh. 55/$1, it is expected this sector will 
continue to expand rapidly. 
The manufacturing sector is one of the expanding sectors of the economy.  
The Government of Kenya pursues a policy of import substitution and has 
given priority to the manufacturing sector.  Major opportunities exist 
in agro-processing, textiles  and apparels, automotive components 
assembly, electronics, plastics, paper and paper products, chemicals, 
and pharmaceuticals. 
The new economic policy is expected to place a greater stress on export 
manufacturing, rather than just import substitution.  As a result of 
import substitution, the manufacturing base in Kenya and neighboring 
countries is competitive, rather than complementary.  With a growing 
emphasis on export manufacturing, Kenya hopes to become an African 
"tiger," (more properly a "lion," as there are no tigers in Africa) by 
the year 2010.  
The country has a reasonably well established power generation network 
consisting of hydro, thermal, and geothermal plants.  Current power 
generation is 3,396.3 GWH.  Demand for electricity energy is growing at 
an estimated 17 percent while generation is growing at a rate of only 
2.5 percent.  The government is keen on developing both thermal and 
geothermal power production to supplement hydro power generation.  
However, due to allegations of mismanagement and corruption, 
multilateral and bilateral donors in 1991 suspended funding for power 
generation projects.  This created a gap in the funding pipeline for 
power generation resulting in a wide gap between existing and planned 
generating capacity and current and future demand.  Brownouts and 
blackouts may become more frequent over the next several years until 
capacity catches up with demand.  Sales  opportunities currently exist 
in geothermal power equipment for an additional three plants which have 
been earmarked for immediate development. 
Tourism is Kenya's second largest foreign exchange earner after 
agriculture, that is, including all agricultural exports -- coffee, tea, 
horticulture, etc.  Tourism levels stagnated in 1993-94, due in large 
part to the appreciation of the shilling and the consequent increased 
cost of goods and services plus security concerns.  Nevertheless, the 
country received an estimated 864,000 tourists in 1994 thus earning 
about $546 million which surpassed 1993 earnings of $359 million.  
Europeans account for some 55 percent of Kenya's tourists; Americans 
account for about 10 percent.  The 1994 tourism earnings were only 
slightly below combined revenues from coffee and tea exports.  The 
coastal beaches, wildlife, and unique scenery are Kenya's main 
attractions.  Unfortunately, insecurity, disintegrating infrastructure, 
and growing competition from neighboring countries threaten a rapid 
expansion of this lucrative industry.  On the other hand, political 
pressures stemming from competing land uses between humans and animals 
makes conservation a high profile issue.  Fiscal incentives in the 
tourism industry and the recent liberalization of the foreign exchange 
regime are likely to reduce costs in the industry and make Kenya an 
attractive destination.  A plan to permit hunting in a limited basis, if 
approved, may also boost revenue.  This will improve bed occupancy rates 
which declined from 52 percent in 1993 to 43 percent in 1994. 
Kenya is dependent upon petroleum products for 80 percent of its 
commercial energy.  Despite over 30 years of exploration, no 
commercially viable petroleum has been found.  GOK parastatals are 
involved in petroleum operations including refining and bulk 
transportation; the government recently liberalized pricing modalities.  
At the marketing level, seven private international and local oil 
companies are involved.  The seven oil companies together with the 
government-owned National Oil Corporation are licensed to purchase crude 
oil and to market petroleum products.  In late 1994, the government 
decontrolled petroleum prices but imposed a Road Maintenance tax on 
petrol and diesel.  The net effect of these changes was an increase in 
petroleum retail prices by an average of 10 percent.  The new tax 
replaces all toll stations except those at the international borders.  
The 30-year-old Kenya Petroleum Refineries Ltd. (KPR) refines crude oil 
into LPG, motor spirits, jet fuel, kerosene, diesel, gas oil and fuel 
oil.  The refinery has a total throughput of 2.08 million metric tons 
(95,000 barrels per stream day) and is operating at about 65 percent of 
plant capacity. 
The World Bank is understood to be studying the possibility of funding 
LPG facilities.  Due to the lack of any facilities to import and store 
LPG, a product essential for cooking and lighting, the refinery runs a 
crude mix to maximize LPG production.  The government owns 50 percent of 
the share capital of the refinery, while the balance is spread evenly 
among Shell International (U.K. Inc.), Caltex and Esso.  Management is 
provided by the government with assistance from Shell in an advisory 
role.  The government recognizes the need to upgrade the technology in 
the aging refinery if it is to compete effectively with other refined 
product suppliers.  KPR has an uphill task to reduce the lead content in 
gasoline.  In the past, the refinery has been able to do this using the 
installed plant and equipment.  Further improvements would require 
substantial rehabilitation work and the substitution of expensive non-
lead additives to produce unleaded gasoline.  Petroleum products (white 
oils) are transported inland mainly by pipeline.  The 14-inch Mombasa-
Nairobi-Eldoret pipeline belongs to the government-owned Kenya Pipeline 
Company (KPC).  Pipeline extensions, one to Kisumu and another to the 
Kenya - Uganda border town of Malaba, are expected to be constructed 
Kenya spends over 21 percent of its foreign exchange earnings on imports 
of crude oil and petroleum products.  In 1994 the country imported 
petroleum products valued at $398 million.  Energy demand in Kenya is 
growing at about 8 percent a year; the country is therefore looking for 
alternative sources.  Both hydro-electric generation and geothermal 
power have been identified as good possibilities for the future.   
Development for these two energy subsectors has been slow due to poor 
economic performance and a shortage of donor aid.  The government has, 
however, steadily increased hydro-electric and geothermal power 
generation in the last five years to supplement the more expensive 
petroleum fuels.  Generation of electricity from other sources is being 
actively explored as an alternative to petroleum fuels.  The World Bank 
has funded a project to develop more geothermal power stations including 
Ol'Karia Domes, Eburu,and Suzwa.  Potential exists for the use of fuel-
efficient stoves and small-scale solar panels for rural inhabitants. 
The country has an installed capacity of 604 MW hydro, 159 MW thermal 
oil and 45 MW geothermal electricity.  Hydro-electricity supplies 3,068 
GWH, including power from Uganda.  By the year 2000 the country will 
require 949 megawatts to meet national demand.  Renewable energy sources 
are largely undeveloped.  The country depends on imported solar panels.  
Animatics, which sells panels from ARTCO Solar Company, is one of the 
several major solar companies operating in the country.  Biomass, though 
cheaper to use and in plentiful supply in rural Kenya, remains untapped. 
Kenya's manufacturing sector policy was initially focused on import 
substitution.  This policy, however, has recently been replaced by 
export-oriented manufacturing.  Opportunities exist for direct and joint 
venture investments in various sectors, including: agro-processing, 
textile and apparel manufacture, automotive components assembly, 
electronics, plastics, paper, chemicals and pharmaceuticals, metal and 
engineering products.  Specific opportunities are available in: 
Paper Products:  Kenya imports about 20,000 tons of coated white lined 
chipboard and other boards for packaging, and 5,000 tons of newsprint, 
waste paper, printed paper, and other types for local consumption.  
Investment opportunities exist in paper production using forest 
products, bagasse, sisal waste, straw, and waste paper. 
Metal and Engineering:  Kenya has built up a substantial basic metal 
sector making a variety of downstream products from local and imported 
steel scrap, steel billets, and hot rolled coils.  The country possesses 
a broad based metal products sector and imports approximately 277,000 
tons of various metals annually.  There are various opportunities in the 
development of a nucleus foundry.  
Vehicle Parts and Assembly:  The country's active motor vehicle 
population is approximately 350,000 with about 15,000 new entrants each 
year.  Manufacture of components for use in local assembly and for 
export to regional markets is expanding. 
Electrical Equipment:  Manufacture of electrical equipment in Kenya is 
limited.  Investment potential exists for the production of fractional 
horsepower motors, circuit breakers, transformers and switchgears, 
capacitors, resistors, and integrated circuit boards. 
Electronics:  Key opportunities for direct investment, joint-ventures 
and subcontracting exist in the assembly of a wide range of electronic 
goods in Kenya.  These include the production of: consumer electronics, 
such as color televisions, VCRs, printers, floppy disk drives, printed 
circuit boards, computer power supplies, transmission equipment, and 
industry support items, including cables, cords, and metal plating. 
Plastics, Chemicals and Pharmaceuticals:  There are many investment 
opportunities in chemicals, pharmaceuticals and fertilizers.  These 
include production of PVC granules from ethyl alcohol; formaldehyde from 
methanol; melanin from urea; cuprous for coffee bean disease; caustic 
soda and chlorine-based products; and active carbon.   
Agriculture:  Kenya is basically an agricultural country.  In order to 
feed itself, further development in the sector is essential.  Only 20 
percent of its land mass is arable.  The country has reduced its annual 
population growth rate from 4 percent to approximately 3.0 percent.  In 
order to maintain per capita food production levels, more modern 
agricultural methods and inputs are required, as well as expanded large 
and small scale irrigation schemes.  Therefore, growth in the 
agricultural sector is important in the near, medium, and long terms.    
Telecommunications:  A modern telecommunications system will be 
important if Kenya is to continue to play a regional role and as a 
gateway to East and Central Africa.  Currently, Kenya is in the process 
of examining how to liberalize its telecommunications industry.  It is 
expected that telecommunications will become a growth sector in the 
Computers and peripherals:  These will become more important as Kenya's 
economy grows.  The reduction in June 1995 of duties and VAT on 
computers and the need for Kenyan companies to become more competitive 
in the "computer age" should help increase this sector's development.  
Growth in this sector is expected.   
Health Care:  Requirements in this sector will steadily increase with a 
growing economy and population.  With the high level of HIV in certain 
segments of the sexually active population, the development of full 
blown AIDS and associated medical care will only expand.  However, even 
though the need may greatly expand, the demand, or ability to pay, may 
Other Infrastructure Development:  There will be a need to improve the 
highway system and modernize airports.  Much of these areas will depend 
upon World Bank, AFDB, and other multilateral and bilateral funding. 
Privatization and parastatal reforms, a process which is difficult and 
complex in most countries, including Kenya, started in earnest in 1993.  
Reforms proceeded, albeit somewhat slowly, in 1994/95.  By April 1995, 
the GOK had divested its interests in 67 enterprises (most of which were 
either inoperable or under statutory management) out of a 1991 list of 
207 parastatals designated for privatization.  Privatization of 
"strategic parastatals" has been sluggish. In the case of strategic 
parastatals, the GOK intends to "commercialize" them rather than 
"privatize" them. 
The Kenya Railways Corporation has allowed private contractors to 
provide maintenance services.  Kenya Airways is due for privatization by 
the end of 1995.  President Moi in January 1995 stated that 
liberalization of the telecommunication industry should be considered.  
Since then, there have been some opportunities in the area of "add ons" 
such as FAX and telex services, and a tender for a GSM cellular 
telephone network.  The GOK has introduced reforms to ensure more 
transparency in parastatal privatization and to strengthen an otherwise 
not so efficient Parastatal Reform Executive Secretariat.  The GOK has 
stated it intends to periodically review the parastatal reform process 
in order to make it more transparent and responsive to local needs.  
This trend is expected to continue creating opportunities for U.S. 
As the GOK continues with the privatization process, it will have to 
make hard decisions concerning the Railways Corporation, Ports 
Authority, the Electricity Company, and other parastatals which continue 
to be a drain on the budget.  Commercialization or privatization of 
these infrastructure state owned entities will not be easy, but other 
countries have been successful in developing joint ventures, strategic 
alliances, or outright privatization.    
Since the 1992 multiparty elections, the Government of Kenya has 
consistently striven to maintain policy measures which will consolidate 
and reinforce fiscal and monetary discipline for economic growth.  Some 
of these measures include control of government expenditure, budget 
deficit reduction, and programmed restructuring of the economy in favor 
of private enterprise.  Privatization and parastatal reform plans are 
but one indicator of the government's commitment to the implementation 
of the policy measures.   
Even though there is still debate within the government over the pace 
and extent of reforms, the 1995-96 budget continued the government's 
two-year old program of fiscal and monetary reform and economic 
liberalization.  One new measure the Minister of Finance detailed 
concerns how the government intended to increase its revenue by the 
establishment of a new Kenya Revenue Authority scheduled to start 
operation July 1, 1995.  The budget, as is the case in most countries, 
including the U.S., should be looked upon as a guideline.  The public 
reaction, including that of the business community, was favorable. 
The country's balance of payments situation is heavily dependent on the 
performance in the agricultural sector.  The agricultural import bill 
exceeds agricultural export earnings, but the deficit is made up by 
earnings from tourism and external grants.  Since 1992, the country's 
terms of trade have steadily improved.  Export prices of coffee, 
horticulture, pyrethrum and cement rose.  However, prices and export 
earnings from tea and vegetable oil declined.  The main source of export 
growth in 1994 was non-traditional exports such as manufactured products 
and horticulture. However, export performance of the manufacturing 
sector is not likely to improve in 1995 owing to stiff competition from 
the international market, although it may greatly benefit from imports 
of intermediate goods.  
In 1993 and 1994, the value of both exports and imports grew by an 
average of 15 percent annually.  Food shipped in to cover production 
shortfalls encouraged by the liberalization of import and foreign 
exchange controls, has made up an increasing proportion of imports in 
the last three years.  The volume of wheat imports rose from 100,000 
tons in 1992 to 350,000 tons in 1994, maize from 430,000 tons to 760,000 
tons and sugar from 150,000 tons to 270,000 tons. 
For 1995 favorable weather, improved terms of trade and improved net 
long term capital inflows will likely be unable to offset the faster 
growth in imports.  The outcome of the July 24, 1995 donor Consultative 
group meeting with Kenya may be critical in determining future aid 
levels.  Kenya has a large external debt, close to $ 6.5 billion, which 
places a heavy burden on debt repayments.  By the end of 1994, Kenya had 
accumulated arrears of debt repayments totalling $529 million.  Most of 
the arrears occurred prior to 1994.  The rescheduled government Paris 
Club (government) debt, according to the June 1995 budget speech, is 
29.5 percent of overall 1995/96 budget.  Kenya, however, is current on 
its debt repayment.  
Foreign exchange reserves have seen a dramatic change from being 
equivalent to just six days worth of imports at the end of 1992 to four 
months cover ($583 million) in December 1994.  By June 1995, reserves 
had fallen to three months ($472 million).  These reserves can be 
expected to fluctuate over time.   
The Government of Kenya recognizes the critical role of an efficient 
infrastructure in economic development.  At one time, Kenya had one of 
the best infrastructures in Africa.  For a variety of reasons, this 
infrastructure has deteriorated or failed to keep up with increasing 
demands.  With assistance from the World Bank, African Development Bank 
(AFDB), and other multilateral and bilateral donors, the Government is 
implementing reforms aimed at increasing the efficiency of existing 
facilities through improved maintenance, rehabilitation, upgrading, and 
expansion.  The International Development Association (IDA) is providing 
$430 million to be spent on infrastructure reforms including the Mombasa 
water project, Nairobi-Mombasa road rehabilitation, Kenya Railways 
restructuring, and urban transport.  Negotiations for infrastructure 
rehabilitation loan facilities are taking place between GOK, World Bank, 
AFDB, and other international lending agencies. 
a)  Airports:  Kenya has a reasonably well developed international and 
domestic air transport infrastructure.  The country has two 
international airports: Nairobi's Jomo Kenyatta International Airport 
(JKIA) and Mombasa's Moi International Airport, and more than 150 
airstrips spread throughout the country.  JKIA serves more than 30 
airlines providing scheduled services to international cities.  In 
addition to passenger handling services, it has air cargo handling 
facilities, including recently installed chilling facilities for storage 
of cut flowers before shipment to Europe.  Wilson Airport in Nairobi 
handles light aircraft and general aviation, and is the busiest in 
Africa.  Expansion of the airport at Eldoret to international status has 
begun at a cost of $85 million.  Some of the existing airport facilities 
in Nairobi and Mombasa are currently being refurbished.  
b)  Seaports:  The Port of Mombasa is Kenya's main seaport and serves 
most East and Central African countries.  It is a deep water port with 
21 berths, 2 bulk oil jetties and dry bulk wharves which can handle all 
size ships.  The port offers specialized facilities, including cold 
storage, warehousing, and container terminal.  It serves most 
international shipping lines and has an annual freight throughput of 
about 8.0 million tons.  Kenya Ports Authority manages the port 
operations.  Cargo and containers with proper documentation are 
processed through the port fairly quickly.  However, in May 1995, out of 
the 6,000 plus containers at the port, more than 4,000 had been sitting 
there for more than six months, due mainly to a lack of proper 
documentation.  There are plans to replace or refurbish some of the 
equipment at the port.  Currently a private firm is constructing a 
twenty-five million plus dollar bulk handling and storage facility for 
grain and pulses as well as fertilizer in a location adjacent to the 
c)  Road Network:  Kenya has an extensive road network of approximately 
95,000 miles connecting most parts of the country.  All major commercial 
centers are connected by paved roads.  The current state of the roads is 
deplorable as necessary maintenance has long been lacking.  The GOK is 
negotiating with international agencies for funds to rehabilitate and 
expand the road network, including the badly maintained major highway 
from Mombasa, the country's major seaport, to the capital of Nairobi.  
It also has legislated a road maintenance levy to raise additional 
funds.  Kenya and the neighboring countries have established the 
Northern Corridor Transport Agreement for facilitation of freight goods 
from the Port of Mombasa to Uganda, Southern Sudan, Rwanda, Zaire, and 
d)  Railway:  Kenya Railways Corporation, a GOK parastatal, manages 
Kenya's single track railway system which runs from Mombasa through 
Nairobi to the Ugandan border with a branch to central Kenya.  The 
corporation, like most Kenyan parastatals, has heavy operational losses 
with consequent deterioration of services.  South African Railways has 
provided on a lease-hire basis ten 1,200 ton haulage capacity 
locomotives for cargo shunting between Nairobi and Mombasa.  World 
Bank's IDA and the British Overseas Development Administration are 
funding a railways rehabilitation program to make KR commercially 
viable.  IDA has agreed to provide a $60 million facility for the 
railway restructuring.  The GOK has designated KR as a strategic 
parastatal so, to date, has allowed for privatization only of the 
corporation's maintenance services. 
e)  Pipeline:  Kenya Pipeline Authority, another strategic parastatal, 
operates a UK funded white petroleum products pipeline.  Currently the 
pipeline runs between the Port of Mombasa, where the petroleum refinery 
is located, and the western Kenya town of Eldoret through Nairobi.  
Kenya roads are used to haul cargo to and from neighboring land-locked 
countries and parts of Tanzania.  However, recently, as a measure to 
reduce road congestion and increase revenue to the Kenya Pipeline, the 
GOK has tried to institute a policy whereby white petroleum products are 
to be taken off the pipeline at Eldoret instead of being trucked from 
Mombasa.  The GOK also has plans to extend the pipeline to another two 
western Kenya border towns: Kisumu and Malaba.  Unlike other Kenyan 
parastatals, the Kenya pipeline has not experienced much corruption and 
a)  Telecommunications:  The country has one of the most modern 
telecommunication systems in the region.  Kenya Posts and 
Telecommunications Corporation, a GOK parastatal, provides 
telecommunication services including: international direct dialing, 
subscriber trunk dialing, mobile telephones, telex, facsimile, data 
communication and related services.  KP&TC is one of the parastatals 
slated for sectional privatization.  Political interest groups have 
stalled rapid privatization which was intended to modernize the 
corporation's services.  During the June 1995 budget speech, the 
Minister for Finance reiterated the GOK's plan to create autonomous 
postal services and telecommunications entities and hence upgrade their 
services.  Japan, which has been a major source of funds for the 
modernization of telecommunication, is dominant in the sector.  
Investment and strategic alliance opportunities should increase as 
privatization proceeds and demand for modern telecommunication services 
increases.  KP&TC has been providing adequate postal and 
telecommunication services, albeit fraught with shortcomings. To keep 
abreast of rapid technological changes, it will need to liberalize its 
operations and allow for more strategic alliances or joint ventures with 
the private sector.  
b)  Electricity:  Kenya's electricity services are provided by Kenya 
Power and Lighting Company, another GOK parastatal designated as 
"strategic".  The company has similar management and operational 
problems as other parastatals with resultant deterioration of services.  
Power outages and brownouts have become increasingly common due to 
constant breakdowns of aged equipment, which is poorly maintained.  
Equipment replacement funds are still being sought.   Hydro power 
generation coupled with thermal and geothermal generation provide the 
country with 805 megawatts of electric energy supplied at 240 volts, 50 
Hz single phase, and 450 volts, 50 Hz three phase.  The standard 
electrical plug is the British three blade plug. 
c)  Water and Sewerage:  In Kenya's major towns, local authorities 
provide sewerage and drainage systems for residential and commercial 
use.  Water is supplied by local authorities and other licensed 
suppliers.  Increased demand for water in Kenya's main urban areas has 
led to multi-million dollar water projects in Nairobi and Mombasa.  
Water shortages have become a permanent feature although water quality, 
for the most part, has been maintained at acceptable international 
standards.  However, visitors are advised to filter, boil, distill 
and/or treat the water, or purchase bottled water. 
Kenya has a well developed financial sector with 33 national and 
internationally affiliated banks.  These banks offer a range of services 
including:  mail and cable fund transfer, export and import finance, 
letters of credit, and purchase and sale of shares and stocks among 
other services.  Most of the banks are competent in international 
banking practices and provide merchant banking services.  Their 
services, although lacking competent information technology, is within 
acceptable levels.  Financial consultancy and management in the country 
is still in infancy, but the pioneers have versatile and international 
backgrounds.  It is anticipated that the major banks will continue to 
modernize their data processing equipment and use faster data transfer 
means, including satellite links to outlying branches. 
The country has a widespread health service network.  Services are 
concentrated mainly in urban areas; they are sparsely available in rural 
areas.  Sophisticated medical treatment is only available in Kenya's two 
main towns of Nairobi and Mombasa where most qualified medical 
practitioners practice.  Although the country has a contingent of 
internationally trained medical personnel, they are few in number and 
lack modern equipment backup and highly trained support medical staff.  
Nairobi Hospital and Aga Khan Hospital in Nairobi provide some of the 
most modern medical services in the country, but are overstretched.  For 
additional details see Chapter IX - "Business Infrastructure". 
Quality, reasonably priced residential and office accommodation is 
readily available in Nairobi and Mombasa.  There are new housing 
developments, mostly with adequate utilities.  Utility connections, 
telephone, FAX, telex, lines to existing office space usually can be 
accomplished in a reasonable amount of time.   
                              POLITICAL ENVIRONMENT 
Kenya has had an elected civilian government since independence in 1963.  
It became a de facto one-party state not long after attaining self rule 
and was a de jure one-party state between 1982 and 1991.  On December 2, 
1991, multiparty democracy was reintroduced, but without substantial 
change in Kenya's one party constitution.  The Government of Kenya 
appointed task forces to resolve the discrepancies in order to implement 
an effective and smooth transition to multi-party democracy. 
Multiparty elections took place in December 1992, and there have been 
nineteen by-elections since then.  The United States has contributed to 
this process through funds for voter education and the Electoral 
Commission.  Only about five of the ninety-one petitions filed soon 
after the 1992 elections are still pending in the high court.  While not 
perfect, most observers of the 1992 elections believe the elections 
reflected the general will. 
America has maintained cordial relations with the Government of Kenya 
since just before independence when several hundred Kenyan students were 
airlifted (Kennedy Airlift) to the U.S. for university-level studies.  
The U.S. has given substantial development and military assistance to 
Kenya as a pillar of stability in a region where most of its neighbors 
were engulfed in conflict.  Kenya and the U.S. have cooperated most 
recently in providing emergency assistance to Somalia, Sudan, and 
Notwithstanding the long-term cordial relations between the U.S. and 
Kenya, there have been differences concerning the pace of political and 
economic reforms over the years, particularly human rights concerns.  
These differences are not unique to the U.S., but have been voiced by 
other bilateral and multilateral donors.  In December 1991, donors 
suspended balance of payments assistance.   AID to projects continued.  
This was followed by a World Bank/IMF led Structural Adjustment Plan.  
Some of the strife and rhetoric associated with the lead up to the 
December 1992 multiparty elections has subsided.  Within the last two  
years, a more normal diplomatic relationship has returned with U.S. and 
Kenyan officials engaged at all levels. 
Internal politics influences the Kenyan business climate.  Corruption is 
a pervasive issue.  Appointments to ministries, parastatals, and 
financial institutions based on political connections occur.  Tenders 
have been awarded on the basis of political correctness.   
The U.S., in cooperation with the Government of Kenya, has implemented a 
special assistance program to help resolve these problems by promoting 
accountability, a responsible, effective parliament, an enhanced 
research capability, and strong, independent institutions within civil 
The ethnic dimension of Kenyan politics centers around the differences 
between the large groups that led Kenya to independence, notably the 
Kikuyu and Luo, and the smaller groups, including the Kalenjins who feel 
they should access a larger share of the national pie.  Some of the 
latter are now leading the movement for "majimbo" or federalism, which 
in the Kenyan context has been used to promote ethnic uniformity within 
certain regions. 
Between September 1991, when pressure began to mount on the KANU 
government to introduce pluralism, and September 1994, over 1,000 
Kenyans died in "ethnic-land" clashes.  Many more were injured or 
maimed, and over 300,000 were displaced, mainly non-Kalenjins living in 
the Rift Valley.  Property worth millions of shillings was also 
destroyed.  The United Nations Development Program (UNDP) engaged in a 
resettlement and assistance program for displaced persons, with one-
third resettled by September 1994.  The program collapsed in December 
1994 and has yet to be resumed. 
There is a small, but crucial, business community of South Asian origin 
which dominates Kenyan business and is linked internationally to many 
other South Asians.  This group tends to stay out of politics and to 
operate behind the scene.  Although resentment against this group has 
never resulted in major anti-Asian outbreaks, native African groups 
evince concern that they not be dominated by Asians. 
On the whole there is, and has been, an enabling commercial climate.  
Recent political and economic reforms have increased the level of 
business confidence and augmented the commercial environment.  Even 
though further economic and political reforms need to be taken, such 
industries as tourism have continued to grow.  The rapid increase in 
horticulture exports -- flowers and fresh fruits and vegetables to the 
European market -- is another example.   Kenya looks particularly 
appealing relative to other countries in the region and in Africa. 
Kenya must compete with the entire developing world, including the 
former Soviet Union and Eastern Europe, for investment.  At the moment, 
long-term investment, both domestic and international, is not flowing to  
a significant degree to Kenya.  In the main, existing investors have or 
are refurbishing existing plants.  It will take some time for investors, 
who are by nature conservative, to be reassured that economic and 
political reforms will be enhanced and continued.   
Nonetheless, Kenya has seen substantial economic and political reforms 
since 1991.  There is a depth to the Kenyan political and economic 
system which could serve as a solid platform upon which the country -- 
both government and the private sector -- can base overall sustained 
PRESIDENT:       His Excellency Daniel T. arap Moi 
VICE PRESIDENT:  The Honorable George Saitoti 
CABINET:         Twenty-three cabinet ministries 
Centralized, largely modeled on British pattern.  Central government 
administrative control exercised through a system of commissioners 
appointed by the President for the 8 provinces and 55 Districts.  Kenya 
is a member of the British Commonwealth. 
Unicameral.  Consists of 200 voting members, 12 nominated by the 
President.  Attorney General and Assembly Speaker are ex-officio, non-
voting members.  Procedures generally follow British pattern.  
Legislative term is five years. 
There are eleven registered parties in Kenya, four of which are 
paramount:  the Kenya African National Union (KANU), the Forum for 
Restoration of Democracy-Asili (FORD-A), the Forum for Restoration of 
Democracy-Kenya (FORD-K), and the Democratic Party.  President Moi, re-
elected to a five-year term in 1992, belongs to KANU.  Under the new 
multiparty system, presidents may serve no more than two five-year 
terms.  KANU also holds a majority of seats (119) in the assembly.  
FORD-K has 32 seats, Ford-A, 24, and DP, 22.  FORD-K, as the largest 
opposition party, hold  the "official opposition" title. 
Two smaller parties, the Kenya National Congress (KNC) and the Kenya 
Social Congress (KSC) each have one elected MP.  The Party of 
Independent Candidates of Kenya (PICK) lost its only seat to KANU in a 
by-election on January 19, 1995.  The Kenya National Democratic Alliance 
(KENDA), holds no seat, but often speaks on national issues.  The 
Islamic Party of Kenya (IPK) has never been registered due to the ban on 
parties with an ethnic or religious basis. 
There is universal suffrage for all citizens over 18.  Voting is by 
secret ballot at the party nomination stage.  Secret ballot general 
elections among the top three candidates are then held.  Electoral 
supervision is by central government civil servants.  First general 
election was in 1963; the last general election was in December 1992.  
The next elections are scheduled to be held by December 1997.  However, 
elections could be called earlier. 
Kenya represents an excellent market for U.S. goods and services.  U.S. 
exporters are advised to seek markets here which can service elsewhere 
in Eastern and Central Africa.  Standard international marketing and 
distribution methods are widely used in Kenya.  The country has sizeable 
and experienced wholesalers and resalers who have represented 
international manufacturers and service providers.  Local advertising 
agents and affiliates of international advertising agencies, affiliates 
of international market research companies, and a vibrant and competent 
media provide commercial services for manufacturers and international 
Product representation may be achieved through one of the following 
--Establishing a local representative/distributor. 
--Selling through an agent or distributor who can cover the entire 
region including the neighboring countries of East Africa. 
--Selling through established dealers. 
The Kenyan market presents no unique marketing problems for U.S. 
suppliers.  Price usually is the major consideration when deciding to 
purchase goods.  Establishing a local representative is the most 
realistic market penetration strategy for U.S. exporters to Kenya and 
the region. 
Kenyan businesspeople prefer to buy from international sources with an 
established after sales service.  An effective servicing and after sale 
system is recommended in this market to be competitive.  Since Kenyan 
dealers and retailers generally do a smaller volume of business than 
their American counterparts, U.S. exporters should be prepared to sell 
smaller lots. 
The distribution system, especially at the retail level, consists of 
small outlets by American standards.  Wholesalers are also retailers.  
They purchase goods from manufacturers and then distribute them either 
directly, or through retail outlets to their customers. 
Common methods of selling are through the retail outlets, agents or 
distributors, established wholesalers or dealers, or selling directly to 
the end-users who include government agencies and other private local 
There are no Kenyan laws requiring the retention of a local agent or 
distributor for a foreign or U.S. company exporting to Kenya.  However, 
it is advisable that a U.S. company trying to penetrate this market 
consider retaining a person or persons residing in Kenya.  If the 
product to be exported requires servicing, then qualified service 
personnel and a reasonable supply of spare parts must be considered.  
Failure to address the issue of after sales support and service would be 
an impediment to success in this market.  To locate a local agent, 
distributor, or partner, U.S. businesspeople should contact the U.S. 
Department of Commerce District Office nearest to them and request an 
agent/distributor search service (ADS) or a World Trade Data Report 
(WTDR).  ADS is a service intended to assist U.S. exporters find 
interested and competent foreign representatives and agents.  A WTDR is 
a composite trade profile of a foreign firm and contains such company 
details as commercial background, information on the reliability of the 
firm, credit standing, summary evaluation of the firm, and a 
recommendation as to the suitability of the firm as a trade contact.  
The Commercial Service at the U.S. Embassy in Nairobi also provides 
counselling services for visiting U.S. businesspeople.  A nominal fee is 
usually charged for the ADS and WTDR services.   
Other than for the multinational Coca Cola Co., franchising in general 
has not been successful in Kenya.  The main impediments have been 
infringement of the franchise agreement by the franchisees and 
incompetent management.  The distance between the U.S. and Kenya has 
made franchisee supervision and training difficult.  Local 
businesspeople lack knowledge about, and exposure to, franchising.  To 
successfully enter the Kenyan market, U.S. franchisors will need to 
reassess franchising terms with a view to accommodating local 
conditions.  Local inquiries for such franchises as McDonald's, Burger 
King, Pizza Hut, etc., would seem to indicate some interest in these 
types of franchises.  
Direct marketing of U.S. products in Kenya would only succeed for big 
ticket items.  This would include major tender (bid) items, and/or 
single sale items.  For these items, the Commercial Service in Nairobi 
originates "Trade Opportunities" (Tops) and "Foreign Government Tenders" 
(FGTs) which are then distributed through the electronic Economic 
Bulletin Board (EBB) and National Trade Data Bank (NTDB) of the Office 
of Business Analysis, Department of Commerce.   U.S. businesspeople can 
subscribe to these sources through their nearest U.S. Department of 
Commerce District Office. 
Unlike franchising, joint ventures and licensing are common features of 
the Kenyan business scene; they are understood and practiced.  While the 
Nairobi U.S. Commercial Service office recommends joint ventures or 
licensing as a practical arrangement for entering the Kenyan market, 
because it combines local marketing expertise and U.S. manufacturing 
competence, we caution that such arrangements should only be finalized 
through a local attorney.  As indicated above under franchising, there 
is a tendency in Kenya for local businesspeople to infringe on product 
and other rights and more so where those rights may not be specifically 
protected by Kenyan laws.  The local attorney should include a clause in 
the agreement stipulating infringement penalties based on Kenyan 
commercial law and enforceable by Kenyan courts.  Joint ventures and 
licensing arrangements are generally recognized and protected by Kenyan 
commercial law. 
As a means of establishing a legal presence in Kenya, U.S. firms should 
register with the Kenyan Registrar of Companies as a foreign company 
rather than register a business name or incorporate in Kenya.  
Incorporation of a company in Kenya as a subsidiary of a U.S. 
corporation, as opposed to the registration of a U.S. firm, is more 
complicated and usually more expensive.  The registration entails: 
within 30 days of establishing a place of business in Kenya, deliver to 
the Registrar of Companies, at the Companies Registry, Attorney General 
Chambers, Nairobi the following: 
(1)  A copy of the charter, statutes or Memorandum and Articles of 
Association or other instrument constituting or defining the 
constitution of the company certified accurate by a Notary Public; 
(2)  A list of the company directors and the secretary containing 
details of their full names, physical and/or postal address, 
nationalities, business occupation and directorships (if any) of Kenyan 
(3)  A statement of all mortgages or charges (if any) created by the 
company over any property situated wholly or partly in Kenya; 
(4)  The names and postal addresses of one or more people resident in 
Kenya authorized to accept service of legal proceedings or notices on 
behalf of the company; 
(5)  The full physical and postal address of the company's Head Office 
or registered office; and 
(6)  The physical and postal address of the company's place of business 
in Kenya. 
The Registrar of Companies issues a "Certificate of Compliance" that the 
requirements of the Kenyan Companies Act have been fulfilled.  This 
allows the company to obtain trading licenses from the local authority 
and the Ministry of Commerce and Industry. 
The Commercial Service recommends U.S. firms obtain the services of a 
local attorney to undertake the registration.  Kenyan-based well 
established legal firms will provide the services for a nominal fee of 
$500.00 plus a value added tax.  Interested U.S. firms should contact 
the Commercial Service for a list of attorneys, or see the list in 
Appendix E(12).    
Kenya has, in the main towns of Nairobi and Mombasa, well-established 
realtors specializing in all areas of real estate management.  U.S. 
firms with assistance from the Nairobi U.S. Commercial Service can 
select the realtors best positioned to provide office accommodation 
Catalogs and product brochures are useful tools for selling in Kenya.  
They serve as convenient reference points for both resalers and end 
users.  The Kenyan market is still unsophisticated and requires visual 
representation for most products.  Catalogs and brochures are ideal for 
this and more so for technical details.  Technical details are important 
in product brochures since Kenyan technical personnel are poorly trained 
and, for complex equipment, the brochures serve as reference for 
maintenance details.  They supply both end-users and importers with up-
to-date product information, including prices and the latest 
technological developments.  U.S. firms should, as far as practical, use 
Kiswahili as a second language on the flyers, with English being the 
first language. 
Import licenses are no longer required in Kenya.  Import tariffs have 
been harmonized and lowered: from July 1, 1995, duty rates have been 
reduced to  between 40 percent and zero.  The Government of Kenya 
requires exporters to obtain certificate of inspection for quality and 
price comparison from Cotecna Inspections, S.A. of Switzerland (U.S. 
address: Cotecna Inspections, Inc. 11305 Sunset Hills Rd., Reston, VA 
22090, Phone: 703-689-0805), or the Society Generale de Surveillance 
S.A., 1 Place des Alpes, B.P. 898, CH-1211 Geneva 1, Switzerland (U.S. 
address:  SGS Control Services Inc. 42 Broadway, New York NY 10004).  
Under new Kenyan regulations, the inspection agency also establishes the 
customs classifications of the goods to be imported.  It is important 
for American exporters to ensure that their shipments are classified at 
the lowest legal tariff rate. 
The most widely used advertising media in Kenya are press, radio, and 
television.  The development and use of other media is limited and not 
cost effective.  Kenya has three main daily newspapers:  The Daily 
Nation, East African Standard, and Kenya Times; seven weekly newspapers:  
The People, Sunday Times, Sunday Nation, Sunday Standard, East African 
Chronicle, The East African, The Target; two weekly magazines:  Economic 
Review, and Weekly Review; four monthlies:  The Option, Finance, 
Presence and Law Monthly; and a professional journal:  East African 
Computer News; all with national distribution.  The government-owned 
Kenya Broadcasting Corporation (KBC) operates both radio and television 
on a commercial basis.  Government radio air time is 5:00 am to 12 
midnight, while government television air time is limited to about 12 
hours daily.  Kenya Television Network, run by the ruling party, runs a 
24 hour channel with considerable CNN programming.  The GOK continues to 
be reluctant to license private radio and television companies.  A new 
KBC cable station is expected to start up shortly.  
Some of the leading international advertising agencies, including Ogilvy 
& Mather, and Young & Rubicam, have local offices or affiliates.  
Although there are no restrictions on importing ready-to-use advertising 
materials, U.S. firms should closely liaise with locally based 
advertising firms to obtain leads on accepted advertising norms and help 
adapt the material to fit local situations including translation 
services as necessary. 
The U.S. Commercial Service in Nairobi would be pleased to assist 
individual firms in conducting solo exhibitions or technical seminars on 
a reimbursable basis.  The U.S. Cultural Center multi-media room can be 
reserved and booth materials can be supplied for such exhibitions and 
seminars upon prior notice.  The U.S. Commercial Service also 
periodically sponsors industry-wide, as well as industry-focused, trade 
shows in Nairobi.  Interested parties should contact the Commercial 
Service in Nairobi as follows: 
    Senior Commercial Officer 
    The Commercial Service 
    Unit 64100, Box 51 
    APO AE 09831-4100 
    Fax: + (254)-(2)-216-648 
    Tel: + (254)-(2)-334-141, Ext. 407 
    Telex: 22964 AMEMB  
The Nairobi International Trade Fair, an annual six day all products 
exhibition organized by the Agricultural Society of Kenya, is an 
appropriate venue for exhibition and promotion of such products as 
agricultural machinery, equipment and inputs, construction equipment, 
food processing and packaging equipment, and road construction 
equipment.  There also are some specialized trade exhibitions organized 
annually in Nairobi covering computers, horticulture and medical and 
telecommunications equipment.  U.S firms marketing regionally should 
examine the possibility of participating in solo U.S. Regional Trade 
Fairs and in U.S. pavilions organized in other countries in East and 
Central Africa.  U.S. firms should contact the U.S. Commercial Service, 
U.S. Embassy, Nairobi, Kenya for details on these trade exhibitions.  
Although many U.S. firms prefer to quote prices f.o.b. U.S. port, price 
quotations for Kenyan-destined goods should be on c.i.f. Mombasa or 
Embakasi (Nairobi) basis, i.e. costs, insurance, and freight to the 
point of disembarkation; Mombasa for sea freight and Embakasi for air 
freight.  The c.i.f. quote in U.S. dollars is generally acceptable and 
preferred by Kenyan importers as they are familiar with customs charges, 
including taxes, that are levied at the local ports/airports, and 
brokerage and handling charges.  
U.S. firms exporting big ticket and other durable items to Kenya should 
show a willingness and ability to provide trained headquarters service 
personnel, to train local staff, and to establish strong liaison with 
end-users for continuous equipment performance assessment.  
Manufacturers, in conjunction with the local representative, should 
provide detailed product information, including operating instructions.  
This is important because most of the operating personnel in Kenya are 
undertrained and the end-users's support staff are prone to mishandle 
equipment if they do not receive initial instructions and are not 
provided with comprehensive manuals.  Strong integrated back-up service 
is also important as is ready availability of spare parts.  
All major Government of Kenya procurements are done through a tendering 
(bidding) system.  The Commercial Service in Nairobi notifies potential 
U.S. suppliers of the GOK's intended procurements by preparing a 
"Foreign Government Tender" (FGT). The FGT, just like TOP referred 
earlier, is distributed by the Office of Business Analysis of Department 
of Commerce through an Economic Bulletin Board (EBB).  It is also 
included in the monthly National Trade Data Bank (NTDB) database.  Both 
EBB and NTDB are available at Department of Commerce District Offices 
located in major U.S. cities.  U.S. firms responding to large World 
Bank/Multilateral donor projects should be competitive and follow tender 
instructions especially in financing.  Some government tenders are 
invited only from prequalified firms.  The U.S. Commercial Service is in 
the process of determining how interested U.S. firms may prequalify.  
Interested U.S. Firms should contact the U.S. Commercial Service in 
Nairobi for further information. 
Kenya is a member of the Paris Union International Convention for the 
Protection of Industrial Property (Patents and Trademarks).  It also has 
among its statutes legislation enacted in 1990 for protection of patents 
and trademarks.  Trademarks are protected for a period of seven years 
from the date of application.  The 1990 legislation created the Kenya 
Industrial Property Office (KIPO) for receipt of IP international 
applications, issuance of industrial property rights, screening 
technology transfer agreements and licenses, and dissemination of patent 
Kenyan protection of copyrights is neither extensive nor efficient.  The 
Copyright Act of 1989 has provisions for protection from audio copyright 
infringement, but not for video.  Kenya has law firms with IPR-
specialized attorneys who can advise U.S. firms on Kenyan IPR 
legislation.  The U.S. Commercial Service in Nairobi will gladly assist 
U.S. firms wishing to contact such law firms. 
The Kenyan legal system is based on English law.  Although not 
substantially unlike the U.S. legal system, Kenyan legal practices and 
procedures differ, hence requiring services of either a Kenyan based 
attorney or an attorney licensed to practice within the British 
Commonwealth, commonly referred to only as the Commonwealth.  U.S. firms 
should ensure they seek services of such attorneys whenever legal 
services are required; contravention of the Kenyan legal practices and 
procedures, including using the services of a non-Commonwealth attorney 
could result in serious repercussions such as deregistration of the 
company, loss of IPR protection, and nullification of any and all legal 
agreements, contracts, charges, etc.  U.S. firms are advised to seek 
clarification of all legal terminologies as legal terms in Kenyan 
English may differ in meaning for the same legal terms in American 
English.  See appendix E Section 12 for a list of attorneys familiar 
with commercial law, regulations, and practices. 
     CHAPTER   V 
RANKING     PRODUCT                     Est. Total     Est. Imports 
                                        Market         from U.S. 
                                      (In $ Million)  (In $ Million) 
  1.  Telecommunication Equipment         89.5             15.0 
  2.  Electrical Power Systems            51.0              8.4 
  3.  Industrial Chemicals                72.0             37.0 
  4.  Food Processing & Packaging Eq.     24.7              2.4 
  5.  Automobile Parts & Service 
        Equipment                        101.5              1.5 
  6.  Plastic Materials & Resins          83.6              3.6 
  7.  Agricultural Machinery & Equipment  24.0              2.7 
  8.  Laboratory Scientific Instruments   23.0              2.7 
  9.  Computers & Peripherals             20.2              5.4 
 10.  Aircraft and Parts                  53.5             16.5 
1.  Telecommunications Equipment (TEL) 
There is no significant local production of telecommunication equipment.  
U.S. know-how is respected in this market, but U.S. firms have a 
continuing problem in matching the financing terms (concessionary and 
mixed credits) offered by other competitors.  The telecommunications 
sector is the key to the sustained development of Kenya.  The GOK has 
accepted that liberalization of this sector is essential.  There should 
develop in the near future opportunities in strategic alliances or joint 
ventures, especially in the areas of cellular telephone and value add-
ons to the traditional telephone system.  With the liberalization of the 
telecommunications sector, Kenya could possibly play more of a regional 
role, especially if AT&T's Africa One Fibre Optics project goes ahead. 
                                     1994      1995      1996 
                                           ($ Millions) 
Total Market Size                    84.0      87.4     89.5 
  Total Local Production              N/A       N/A      N/A 
Total Exports                         N/A       N/A      N/A 
Total Imports                        84.0      87.4     89.5 
Imports From the  U.S.               12.1      13.0     15.0 
MOST PROMISING SUB-SECTORS:     Market Size Est. 1995 
Line Telephone & Telegraph Apparatus          $35.5 
Navigational Equipment & parts                  2.2 
2.  Electrical Power Systems (ELP) 
Kenya's annual capital expenditure for transmission lines and substation 
investment will trend upward over time although the government will have 
to balance its intention to provide electricity for all Kenyans with 
budgetary constraints.  Areas of particular interest to foreign 
suppliers include the continuing Rural Electrification Program and the 
World Bank-sponsored geothermal power generation project.  Demand for 
replacement equipment for existing facilities also will be a 
considerable factor.  There is no local production of any of the items 
covered in this category. 
                                          1994      1995      1996 
                                                ($ Millions) 
Total Market Size                         45.2       48.3      51.0 
Total Local Production                     NIL        NIL       NIL 
Total Exports                              NIL        NIL       NIL 
Total Imports                             45.2       48.3      51.0 
Imports from U.S.                          7.0        7.8       8.4 
MOST PROMISING SUB-SECTORS:     Market Size Est. 1995 
Switchgear Motors/Engines                 $8.2 
  Equipment                               $6.0 
3.  Industrial Chemicals (ICH) 
Kenya imports all its industrial chemical requirements.  European 
suppliers are the current market leaders.  New investment in 
manufacturing is encouraged by the Government of Kenya.  Thus, this 
sector has growth potential as new industrial materials are required.  
U.S. industrial chemical manufacturers/suppliers should actively 
consider utilizing Kenya as a base for penetrating the entire Eastern 
and Central African market. 
                                             1994      1995      1996 
                                                ($ Millions) 
Total Market Size                              70.5      71.3      72.0 
Total Local Production                        NIL       NIL       NIL 
Total Exports                                 NIL       NIL       NIL 
Total Imports                                70.5      71.3      72.0 
Imports From U.S.                            36.0      36.5      37.0 
MOST PROMISING SUB-SECTORS:     Market Size Est. 1995 
Hydrocarbons                              $8.0 
Carboxylic Acids & derivatives             6.0 
Synthetic Organic dyes                     6.5 
4.  Food Processing & Packaging Equipment (FPP) 
Domestic production of food processing machinery is limited to small 
commercial ovens used in the baking industry.  No significant expansion 
is expected in local production in the near future; for all practical 
purposes, imported machinery has the total market.  With a greater 
emphasis being placed on food security in the Greater Horn of Africa, 
there will be an increasing demand for food processing storage and 
distribution.  In addition, the June 1995 budget cut tariffs on FPP 
significantly.  Thus, this sector should see continuing solid growth for 
the future. 
                                       1994      1995      1996 
                                                ($ Millions) 
Total Market Size                      22.6       24.0     24.7 
Total Local Production                  N/A        N/A      N/A 
Total Exports                           N/A        N/A      N/A 
Total Imports                          22.6       24.0     24.7 
Imports from U.S.                       2.1        2.3      2.4 
MOST PROMISING SUB-SECTORS:     Market Size Est. 1995 
Vegetable Oil Milling Machinery    $12.1 
Sugar Processing Equipment           1.2 
5.  Automotive Parts & Service Equipment (APS) 
Automotive parts and service equipment are imported mainly from Europe 
and from East Asia because Japan and Europe dominate the auto and truck 
market.  Kenyan statistics mix CKD kits with auto parts and service 
equipment.  Thus, the breakdown of the total market and import figures 
are estimates.  By local standards this is a large market with great 
potential for expansion considering that neighboring countries of 
Uganda, Tanzania, Southern Sudan, Ethiopia, Rwanda and Burundi are also 
supplied through this market.  With the deplorable state of roads, plus 
the influx of used cars in recent years, there is a growing demand for 
spare parts and vehicle maintenance.  With U.S. firms perhaps becoming 
more competitive in Japan, there should be some potential market growth 
in Kenya and East Africa.  Opportunities exist in this sector, but 
success will require aggressive marketing. 
                                      1994      1995      1996 
                                                ($ Millions) 
Total Market Size                     99.2       100.2     101.5 
Total Local Production                 N/A         N/A       N/A 
Total Exports                          N/A         N/A       N/A 
Total Imports                         99.2       100.2     101.5 
Imports from U.S.                      0.5         1.0       1.5 
MOST PROMISING SUB-SECTOR:      Market Size Est. 1995 
Auto Engine Parts (Aftermarket)   $16.0 
Auto Body Parts                     2.4 
6.  Plastic Materials & Resins (PMR) 
There is no local production of artificial resins.  As economic reforms 
lead to longer-term sustained economic development, consumer demand for 
plastic products is expected to rise.  Thus an increase in future 
exports is expected in this sector.  Competition is from third country 
                                           1994      1995      1996 
                                                ($ Millions) 
Total Market Size                          82.0      83.0       83.6 
Total Local Production                      N/A       N/A        N/A 
Total Exports                               N/A       N/A        N/A 
Total Imports                              82.0      83.0       83.6  
Imports from U.S.                           2.0       2.6        3.6 
MOST PROMISING SUB-SECTORS:     Market Size Est. 1995 
Resins                             $11.0 
Unsupported Film Sheets              4.5 
7.  Agricultural Machinery & Equipment (AGM)  
There is no significant local production of agricultural equipment.  The 
Kenyan market for imported agricultural equipment is growing, but at a 
very spotty rate.  The growth of the market will be influenced by 
external macroeconomic factors such as the international price of coffee 
and tea.  Sugar consumption is growing in Kenya and several large 
projects are underway to increase sugar cultivation.  However, with a 
greater emphasis on food security in the Greater Horn of Africa, there 
will be a greater emphasis on the use of modern inputs to agricultural 
production, transportation, storage and food processing.   
                                          1994      1995      1996 
                                                ($ Millions) 
Total Market size                         21.9      23.5     24.0 
Total Local Production                     NIL       NIL      NIL 
Total Exports                              NIL       NIL      NIL 
Total Imports                             21.9      23.5     24.0 
Imports from U.S.                          1.5       2.1      2.7 
MOST PROMISING SUB-SECTORS:     Market Size Est. 1995 
Tractors                            $8.7 
Dairy Farm Machinery & Parts         5.0 
Horticultural, Poultry & 
Bee Keeping Machinery                3.3 
8.  Laboratory Scientific Instruments (LAB) 
Kenya imports all laboratory scientific instruments.  There is no local 
production of laboratory scientific instruments.  The big consumers are 
schools, government agencies and parastatals.  With many Kenyans 
educated in the U.S., there is a familiarity with U.S. manufactured 
scientific equipment. 
                                1994      1995      1996 
                                      ($ Millions) 
Total Market Size               22.4      22.7      23.0 
Total Local Production           NIL       NIL       NIL 
Total Exports                    NIL       NIL       NIL 
Total Imports                   22.4      22.7      23.0 
Imports from U.S.                2.0       2.4       2.7 
MOST PROMISING SUB-SECTORS:     Market Size Est. 1995 
Measuring and Analyzing Instruments   $9.5 
9.   Computers and Peripherals (CPT) 
The figures below reflect the documented (legal) market.  There are no 
locally produced computers.  A substantial number of personal computers 
are imported illegally, or are imported by affiliates of European based 
U.S. firms, thus, the statistics do not always register U.S. imports to 
Kenya via Europe.  The documented market is, therefore, estimated to be 
more than half the total market.  Mainframes and minicomputers account 
for two-thirds of the market in terms of installed value.  The combined 
duty and VAT on computers is 26.5 percent (10 percent duty, 15 percent 
VAT) down from 135 percent three years ago. 
                              1994      1995      1996 
                                    ($ Millions) 
Total Market Size             18.4      19.0      20.2 
Total Local Production         N/A       N/A       N/A 
Total Exports                  N/A       N/A       N/A 
Total Imports                 18.4      19.0      20.2 
Imports from U.S.              4.8       5.0       5.4 
MOST PROMISING SUB-SECTIONS:    Market Size Est. 1995 
Personal Computers                $2.6 
Local Area Network Equipment       1.3 
Mainframe Computers                1.5 
10.  Aircraft and Parts (AIR) 
Domestic production is nil.  The national carrier, Kenya Airways, needs 
replacement aircraft.  Kenya Airways is reorganizing its management.  A 
consulting subsidiary of British Airways has been given a management 
contract to restructure and privatize the airline.  New aircraft orders 
are expected when the restructuring and possible merger with another 
carrier is completed, and when finances become available.  These 
potential new aircraft have not been included in the estimates below 
because it is unlikely that the planes will be bought before 1996.  
However, U.S. firms are encouraged to maintain their marketing presence, 
as big ticket items take many years before a purchase contract is 
signed.  Nairobi's Wilson airport is the busiest general aviation 
airport in Africa.  Marketers should maintain and expand marketing 
activities for smaller civil aircraft, especially in the face of strong 
marketing by South African firms since the lifting of sanctions. 
                                1994      1995      1996 
                                     ($ Millions) 
Total Market Size               52.7      53.0      53.5 
Total Local Production           NIL       NIL       NIL 
Total Exports                    NIL       NIL       NIL 
Total Imports                   52.7      53.0      53.5 
Imports from U.S.               15.8      16.0      16.5 
MOST PROMISING SUB-SECTORS:     Market Size Est. 1995 
Aircraft Parts                           $3.0 
Aircraft Engines                          2.0 
Aircraft General Aviation                 1.5 
RANKING           PRODUCT           Est. Total        Est. Imports 
                                    Market Size       From U.S. 
                                    (Metric Tons)     (Metric Tons) 
1.                Wheat                620,000      150,000    
2.                Sugar                500,000       20,000     
3.                Oilseed & Products   185,000        6,000 
4.                Rice, Milled          96,000       10,000  
5.                Corn               3,100,000       15,000     
A. Rank: 1 
B. Name of Sector:      Agriculture 
C. ITA or PS&D Code:   Wheat (0410000) 
                                1993      1994      1995      1996 
                                        ('000 Metric Tons) 
D. Total Market Size            580       590       610       620 
E. Total Local Production       150       200       220       230 
F. Total Exports                  0         0         0         0 
G. Total Imports                532       300       460       400 
H. Total Imports from U.S.      407       150       200       150 
I. Exchange Rate             58.81/      562/ 
1/  Based on annual average 
2/  Quoted on August 2, 1994 
Kenya does not produce enough wheat to satisfy domestic requirements; 
imports are needed.  Kenya produces about 30 percent of its annual wheat 
requirements estimated at 620,000 tons.  The production outlook for the 
1995/96 season is 230,000 tons, 4.5 percent above the previous year's 
estimate.  To cover the production deficit, the industry is expected to 
import close to 400,000 tons.  The greatest demand is for hard or high 
protein wheat used in blending for bread flour as Kenya does not produce 
this type of wheat. The total import volume from the U.S. is forecast to 
drop to 150,000 tons in 1996, down from 200,000 tons a year earlier.  
The decline is a result of the GOK's decision to impose both dumping and 
ad valorem or specific duties to protect its local industry from the 
influx of cheap imported wheat.  The dumping duty is equal to the export 
subsidy. Prospects to import wheat also suffered from the import ban on 
soft wheat and other agricultural commodities instituted by the GOK in 
April, 1995.  The ban was lifted effective June 15, 1995. 
A. Rank: 2 
B. Name of Sector:    Agriculture 
C. ITA or PS&D Code:  Centrifugal Sugar (0612000) 
                                 1993      1994      1995      1996 
                                        ('1000 Metric Tons) 
D. Total Market Size              452       460       500      500 
E. Total Local Production         382       380       400      400 
F. Total Exports                    0         0         0        0 
G. Total Imports                   70        60        90      120 
H. Total Imports from U.S.         10        15        20       20 
I. Exchange Rate                58.8 1/     56 2/      
1/  Based on annual average 
2/  Quoted on August 2, 1994 
Although sugar is considered to be Kenya's second most important food 
item after corn, the health of this vital sector continues to 
deteriorate.  Over the past 10 years sugar imports have maintained an 
upward trend as domestic production has failed to satisfy demand.  The 
industry is plagued by frequent factory breakdowns, soaring cost of 
inputs, and inadequate credit facilities to expand cane production.  In 
an attempt to protect the industry from massive imports, the GOK imposed 
a variable duty on sugar.  This duty has been replaced by an ad valorem 
duty, currently at 15%. 
Kenya's normally substantial sugar consumption levels are declining.  
The current retail price of sugar in Nairobi and other major cities has 
limited the purchasing power of the majority of Kenyans.  Although the 
GOK's consumption forecast is estimated at 600,000 tons in 1996, post 
believes that total consumption will not exceed 500,000 tons. 
A. Rank: 3 
B. Name of Sector:      Agriculture 
C. ITA or PS&D Code:    Oilseed and Products (06001) 
                                 1993      1994      1995      1996 
                                        (' 000 Metric Tons) 
D. Total Market Size             165       173       180      185 
E. Total Local Production         75        76        80       80 
F. Total Exports                   0         0         0        0 
G. Total Imports                  90        97        80      130 
H. Total Imports from U.S.         4         4         5        6 
I. Exchange Rate               58.8 1/      56 2/ 
1/  Based on annual average 
2/  Quoted on August 2, 1994  
Increased edible oil production in Kenya remains a problem largely due 
to the relatively low cost of imported palm oil.  Low yielding seed 
varieties, inadequate farm credit, and poor technical farm advisory 
services are additional factors which have discouraged domestic oilseed 
Although Kenya's oilseed production has picked up slightly in the past 
several years, production continues to fall significantly short of 
installed capacity estimated at 160,000 tons.  Domestic production of 
edible fats and oils has risen from 17,000 tons in the mid-1980's to a 
forecast of 80,000 tons in 1996.  The country's oilseed production is 
dominated by sunflower oil, accounting for 90 percent of total output.  
The Cotton Board estimates that the demand for cottonseed by crushers is 
approximately 25,000 tons per year.  In recent years, about 8,000 to 
10,000 tons of edible oil was produced from corn.  With the past 
season's good harvest of corn crop, corn oil production is projected up 
A. Rank:  4 
B. Name of Sector:  Agriculture 
C. ITA or PS&D Code:  Rice, Milled (0422110) 
                                1993      1994      1995      1996 
                                        ('000 Metric Tons) 
D. Total Market Size             91        92        94        96 
E. Total Local Production        28        31        34        40 
F. Total Exports                  0         0         0         0 
G. Total Imports                 61        60        60        65 
H. Total Imports from U.S.       10        10        12        10 
I. Exchange Rate              58.8 1/     56 2/ 
1/  Based on annual average 
2/  Quoted on August 2, 1994 
Over the past three years Kenya's rice production has averaged 31,000 
tons, milled basis.  The implementation of a new rice irrigation scheme 
and the rehabilitation of existing projects continue to run behind 
schedule.  Rice is an important food item for the Kenya's Asian 
community and in the coastal and lake regions of the country. 
Approximately 80 percent of Kenya's paddy production is accounted for by 
the National Irrigation Board's (NIB) 4 rice schemes.  The Board's 
largest irrigation projects are located in Mwea, Central Province, about 
60 miles northeast of Nairobi.  Mwea contributes close to three-fourths 
of the Board's total rice output.  The other three rice schemes are 
located in Western Kenya around Lake Victoria.  Together these 4 
irrigation schemes have close to 8,000 hectares devoted to rice 
Rice imports run about 60 to 65 thousand tons annually.  Imported rice 
usually is supplied by Pakistan and Thailand and consists of basmati or 
aromatic type.  Imports are being handled by private traders who 
maintain that U.S. rice is not competitively priced against other 
A. Rank: 5      
B. Name of Sector:   Agriculture 
C. ITA or PS&D Code:   Corn (0440000) 
                                1993      1994      1995      1996 
                                      ('000 Metric Tons) 
D. Total Market Size            2808      2900      3000      3100 
E. Total Local Production       2100      2700      2700      2900 
F. Total Exports                   0         0         0         5 
G. Total Imports                 600       762       200        10 
H. Total Imports from U.S.        77        50        35         2 
I. Exchange Rate              58.8 1/     56 2/  
1/  Based on annual average 
2/  Quoted on August 2, 1994 
In response to large stocks, depressed prices, and the abundant harvest 
during the 1994/95 season, the GOK has implemented several measures to 
protect the country's corn growers.  These measures included: (1) a 
sharply increased variable import levy (replaced in June 1995 by an 
equivalent ad valorem or specific duty system); (2) authorizing the 
National Cereals and Produce Board (NCPB) to purchase corn from local 
growers; and (3) permission for millers to export wheat flour provided 
they use the revenues to purchase corn.  In addition, the NCPB invited 
domestic tenders for the sale of wheat in order to generate extra funds 
to purchase locally produced corn. 
The renewed large role of the NCPB in the local corn market runs counter 
to the direction that the Kenyan government took at the end of 1993 to 
increase privatization in the grain trade.  Another aspect of the 
liberalization was to allow private traders to import corn directly.  As 
the private trade entered the import market, foreign purchases 
increased, reaching the record level of 762,000 tons in CY 1994. Partly 
due to large imports, internal corn prices were depressed as supplies 
mounted, and the GOK felt pressed to intervene. 
It is feared that the prevailing low market prices will discourage corn 
planting during the 1995/96 season, and that less fertilizer will be 
applied, resulting in lower yields.  At the same time, lower market 
prices are expected to lead to an increase in consumption of corn, which 
is a staple in the Kenyan diet, but stocks at the end of the 1994/95 
marketing season are still projected at a very high level. 
Kenya has a number of growth areas which have not been fully developed.  
The Government of Kenya through its Investment Promotion Center has 
identified those sectors which the government has prioritized for 
investment.  The U.S. Commercial Service, Nairobi, has identified those 
sectors below in which U.S. firms may be interested in seeking more 
A.  HORTICULTURE:  The horticultural sector is one of the fastest 
growing sectors in the economy.  Opportunities exist in the production 
and export of products such as cut-flowers, French beans, pineapples, 
mushrooms, asparagus, mangoes, macadamia nuts, avocados, passion fruit, 
melons and carrots. 
B.  AGRICULTURE SUPPORT:  Investment opportunities exist in seed 
production, manufacture of sprayers and pesticides, veterinary services, 
and installation of irrigation systems.  Opportunities also exist in 
support and product distribution, such as cold storage and transport of 
horticultural produce. 
C.  AGRO-PROCESSING:  Numerous investment opportunities exist in this 
area.  Kenya produces excellent beer utilizing locally-grown barley.  
There is potential for additional investment due to rapidly increasing 
domestic demand.  Coffee roasting and grinding are carried out in Kenya, 
and further potential such as production of decaffeinated coffee for 
export, exists. 
Sugar production is below the domestic requirement.  Molasses, a by-
product from sugar production, is processed into power alcohol, potable 
alcohol, and baker's yeast.  There is also considerable potential for 
the expansion of chocolate and confectionery products.  Investment for 
development of palm oil processing is sought. 
D.  POULTRY PRODUCTS:  Hatcheries for the production of chicken both for 
domestic and regional consumption represent an under-exploited 
E.  FISHERIES:  Kenya's water resources in the Indian Ocean and Lake 
Victoria provide vast fishing potential.  At present, deep sea fishing, 
prawn and trout farming are in their infancy, but growing rapidly.  
Opportunities also exist in fish processing (filleting and fish meal 
production), as well as fisheries-support infrastructure. 
F.  LEATHER AND LEATHER GOODS:  Approximately 1.5 million hides and 5 
million skins are available in Kenya each year.  Most hides and skins 
are processed into the wet blue stage for export.  Investors have 
recently begun producing finished leather, offering potential for the 
manufacture of shoes and other leather products. 
G.  LIVESTOCK:  Investment opportunities exist in the rearing of 
livestock for meat and dairy products.  Non-conventional livestock 
farming, for example  ostrich and crocodile, farming represent an 
exciting new area of investment.  Approximately 70 percent of Kenya is 
suitable for ranching.  American-owned Solio Ranch is a good example. 
H.  PAPER PRODUCTS:  Kenya has one major plant producing paper and paper 
board from renewable forest products in an integrated pulp and paper 
mill.  Investment opportunities exist in the production of paper from 
other raw materials such as bagasse, sisal waste, straw and waste paper. 
I.  TEXTILE AND APPARELS:  The textile industry in Kenya has 
traditionally concentrated on cotton textile manufacture,  predominantly 
using local cotton fibre.  The basic raw material inputs such as dyes 
and chemicals are imported, as is all textile equipment and most spares.  
Investment opportunities exist in manufacturing under bond and the 
Export Processing Zones for the production of items such as yarn and 
garments for export. 
J.  METAL AND ENGINEERING:  The country possesses a broad-based metal 
products sector with various independent engineering foundries and 
metal-workshops.  Opportunities exist in the development of a nucleus 
foundry making precision castings. 
K.  VEHICLE PARTS AND ASSEMBLY:  The motor vehicle component industry is 
rapidly developing to supply the needs of the three motor vehicle 
assemblers.  Opportunities exist for manufacturing of components. 
L.  ELECTRICAL EQUIPMENT:  Only a few activities of this type exist in 
Kenya.  Investment potential exists in the full range of this sector. 
M.  ELECTRONICS:   Although Kenya's electronics industry is still in its 
infancy, key opportunities for direct investment, joint-ventures and 
subcontracting exist. 
N.  PLASTICS, CHEMICALS and PHARMACEUTICALS:  Many attractive investment 
opportunities in this sector remain unexploited. 
O.  MINING AND MINERAL PRODUCTS:  Investment potential exists in 
prospecting and mining of minerals such as gold, precious stones and 
P.  CONSTRUCTION:  With the increase in population, opportunities exist 
in the construction of residential housing, including prefabricated, 
low-cost housing. 
Q.  TOURISM:  Enormous opportunities exist for investment in 
accommodation, recreation and entertainment facilities in the following 
areas:  health spas; new tourist class hotels, villas, holiday centers; 
a floating ship hotel on Lake Victoria; and water sports facilities.  
There also are opportunities in ecotourism. 
For more information on the above sectors interested U.S. firms should 
contact the Commercial Service, U.S. Embassy, Nairobi. 
The Government of the United States acknowledges the contribution that 
outward foreign direct investment makes to the U.S. economy.  U.S. 
foreign direct investment is increasingly viewed as a complement or even 
a necessary component of trade.  For example, roughly 60 percent of U.S. 
exports are sold by American firms that have operations abroad.  
Recognizing the benefits that U.S. outward investment brings to the U.S. 
economy, the Government of the United States undertakes initiatives, 
such as Overseas Private Investment Corporation (OPIC) programs, 
investment treaty negotiations and business facilitation programs, that 
support U.S. investors. 
Kenyan business has been overregulated in the past.  Economic reforms 
initiated in 1993 and continuing today allow, for instance, decontrol of 
prices, foreign exchange, and imports; as well as deregulation of the 
grain sector; these liberalizations have all enhanced the Kenyan 
business environment. These actions coincide with a trend in Kenya over 
the past two years during which Kenya consistently lowered tariffs and 
reduced licensing requirements.  Customs rules are still detailed and 
rigidly implemented, and they have affected smooth operations of such 
practices as manufacturing under bond.  This strict constructionist 
approach has led to serious delays in clearing both the import of inputs 
and the export of finished goods.  Although some manufacturers believe 
the delays are generated purposely so illegal payments can be made to 
customs officers, the Government of Kenya is currently streamlining its 
Customs Department operations to make it more user-friendly while 
maximizing revenue collection.  This is supported by continuous review 
and reduction of various duty rates. 
Some negative factors do exist, such as foreign investors having limited 
access to domestic credit markets and being excluded from some 
government tenders.  Kenyan importers  must use local insurance 
companies to insure imports.  Insurance companies must reinsure part of 
their business with a GOK parastatal reinsurance company.  All 
commodities imported into Kenya are subject to pre-shipment inspection, 
including price comparison, by a Government of Kenya (GOK) appointed 
inspection firm. 
The U.S. Commercial Office in Nairobi continues to contribute to the 
U.S. Mission's dialog on reforms and the problem of overregulating 
commercial activities.  
Kenya applies tariffs which are based on the international harmonized 
system (HS) of product classification.  GOK's FY '95 budget proposals 
reduced the number of tariff rates from six to five, and the maximum 
tariff rate from 50 percent to 40 percent.  The budget placed some items 
which were previously allowed in duty-free on a lower tariff category.  
Duties on a number of manufactured items have been reduced; for example 
computer imports are assessed a duty of 10 percent as compared to a 
previous 20 percent; and combined duty and value added tax on 
automobiles ranges from 65 to 131 percent, as compared to over 200 
percent previously. 
The government maintains lower duties and value added tax for selected 
items which it considers important for priority sectors. Those items 
include: palm oil and tallow, bicycles, steel billets, wire rods, 
graphite lead, windmills, power transformers, cables, and active 
ingredients used for preparation of human and veterinary 
pharmaceuticals, fungicides and pesticides. 
In September 1994, the GOK introduced a variable tariff for key imported 
food commodities -- wheat, rice, milk, maize (corn), and sugar.  The 
duty was applicable whenever the import reference price fell below the 
predetermined domestic reference price. The import reference price was 
based on the F.O.B. price plus freight cost, port charges, and a profit 
margin of 20 percent for the importer. The domestic reference price was 
based on the minimum buying price from the domestic producer plus 
transportation and handling costs to the port of Mombasa.  The variable 
tariff has been replaced by an equivalent system of ad valorem or 
specific duties. 
Non tariff barriers include the requirement to use a GOK appointed 
inspection firm for imports.  Some U.S. firms may find packaging and 
labelling requirements difficult to meet.  The lack of certain 
intellectual property rights (IPR) protection, e.g. on videos, results 
in U.S. firms being reluctant to export their goods and services to 
Kenya.  Insurance of imported items being restricted to companies 
licensed in Kenya also may result in constraints.  
Kenya's eight tax treaties normally follow the Organization for Economic 
Cooperation and Development model for the prevention of double taxation 
of income.  At the moment there is no tax treaty between Kenya and the 
United States; however, a negotiation framework is being pursued. 
All imports with F.O.B. value of more than $1,613 must undergo a 
preshipment inspection for quality, quantity, and price; they must be 
issued with a Clean Report of Findings by one of the three Government of 
Kenya (GOK) appointed inspection agencies: Cotecna Inspections SA ( U.S. 
address: Cotecna Inspections Inc., 11305 Sunset Hills Rd., Reston, VA 
22090, Tel: 703-689-0805); Bureau Veritas, and Societie General de 
Surveillance (U.S. address: SGS Control Services Inc. 42 Broadway, New 
York, NY 10004).  Customs valuation is based upon the price determined 
by the government appointed inspection firm.  U.S. firms should ensure 
that the lowest possible price evaluation is used for customs valuation 
purposes by the  preshipment inspection firm. 
Import licensing controls were dismantled in 1993 except for a small 
number of imports bearing health, environment and security concerns. 
Imports are, nevertheless, still subject to some paperwork and 
approvals.  Imports of machinery and equipment classified as equity 
capital or loan purchases must receive prior exchange approval; banks 
are not to issue shipping guarantees for clearance of imports in absence 
of the approval.  All goods purchased by Kenyan based importers must be 
insured with companies licensed to conduct business in Kenya.  
Importation of animals, plants, and seeds are subject to quarantine 
regulations.  Certain pets require an import license.  Feline and canine 
animals are issued with an import license only after a veterinary 
surgeon has certified the animal to have been vaccinated against rabies 
and has no symptoms of any contagious disease.  The Kenyan Embassy in 
Washington, DC and in other countries may issue the import license.  
Importation is allowed only at designated entry points.  
Kenyan export regulations are generally liberal and contain few export 
restrictions.  The country allows export of all items except for the 
following which are considered either of aesthetic value to the country 
or have national security importance: military equipment and munitions; 
antiques and works of art; bullion and coins; archives; live animals 
other than livestock and pets; wood charcoal and lumber; ivory, rhino 
horn and other products related to the endangered species; human bones; 
and specially built transport equipment and automotive vehicles (e.g. 
armored cars and tanks).  Export of these items must receive prior 
authorization by the relevant Kenyan Ministry before an export license 
is issued.  
All Kenyan imports are required to have the following documents:  
customs entry forms and import declaration forms from the Kenyan Customs 
Department, valid invoices from the exporting firm, and a clean report 
of findings from the preshipment inspection firm.  Firms exporting from 
Kenya need to obtain Form C 29 from Customs Department; and the 
following documents, which serve as certificates of origin, from Kenya's 
Ministry of Commerce: G.S.P. Form A for U.S. destined goods, EURO 1 for 
exports to the European Union, PTA Certificate of Origin for exports to 
the PTA(COMESA) area, and Ordinary Certificate of Origin for exports to 
all other parts of the world. 
Kenya allows entry into the country free of duty goods destined for 
neighboring countries or for transshipment.  Bonds must be executed.  
Such goods must be held in bonded warehouses designated by Kenyan 
Customs.  Release of the goods into the Kenyan market is prohibited and 
only allowed after making statutory customs payments.  Samples and 
exhibits/displays for trade fairs may be imported into the country duty 
free.  It is a Customs Department requirement, however, that the items 
are re-exported or are certified destroyed by a customs certification 
officer after use.  An importing firm which fails to meet these 
requirement will be surcharged import duty and value added tax on the 
presumed value of the items.    
Special labelling is required for condensed milk, paints, varnishes, 
vegetables, and butter ghee.  In addition, imports of prepackaged paints 
and allied products must be sold by metric weight or metric fluid 
measure.  Some U.S. firms may have to adjust to these metric 
requirements.  Manufacturers are required to indicate on the labels of 
all consumables both the date of manufacture and expiry date.  Weights 
and measure indicators must be in metric form or both metric and 
imperial forms.  Labelling for pharmaceutical products should include: 
therapeutically active substances, inactive ingredients, name and 
percentage of any bactericidal or bacteriostatic agent, expiry date, 
Batch number, any warnings or precautions, name and business address of 
manufacturer, and registration number of the product. 
It is illegal to import the following items unless exemption has been 
granted by the relevant Kenyan Minister: plants, soil, endangered 
species, arms and munitions, and non-pharmaceutical drugs.  As the list 
of prohibited imports is continuously changing, importing firms should 
always check with the Kenyan Customs Department, Ministry of Finance, 
P.O. Box 30007, Nairobi, Kenya, Fax: 254-2-718417, Tel: 254-2-715540.   
The Kenya Bureau of Standards (KBS) is a government regulatory body 
under Kenya's Ministry of Commerce and Industry which is mandated to 
ensure conformance to International Standards Organization (ISO) product 
standards.  KBS conducts product testing for individual product category 
and undertakes certification. To indicate conformance with mandatory 
product requirements, a KBS mark is placed on the certified product.  It 
is a legal requirement that all locally manufactured consumer products 
bear the KBS mark before they are presented for sale.  Kenya Bureau of 
Standards has legal authority to stop sale of uncertified products, and 
to prosecute the offending parties.  KBS conducts random checks on 
imported products to ensure they conform to ISO standards; those 
products that do not meet the standards are withdrawn from the market 
and the importer is prosecuted.  To obtain the KBS standards, U.S. 
exporters should contact: The Kenya Bureau of Standards, P.O.Box 54974, 
Nairobi, Kenya, Tel: 254-2-502211, Fax: 254-2-503293.  
The Pest Control Products Board (PCPB) registers all agricultural 
chemicals imported or distributed in Kenya following local testing by an 
appointed research agency.  It also inspects and licenses all premises 
involved in the production, distribution, and sale of the chemicals.  
The board has the right to test chemicals sold locally to assure their 
compliance with originally certified specifications.  No chemicals can 
be imported into Kenya without prior PCPB authorization and chemicals 
can only be sold for the specific use permitted by the board.  
Unfortunately violations do occur, endangering the environment.  For the 
most part, however, major horticulture producers and exporters apply 
strict European Union and U.S. standards in the application and use of 
agricultural chemicals. 
All organizations involved in the manufacture, distribution, and sale of 
agricultural chemicals in Kenya are members of the Pesticide Chemical 
Association of Kenya (PCAK).  Members have to sign a "Code of Conduct" 
based on the U.N.'s Food and Agriculture Organization Code.  This 
document requires rigid controls in manufacture, packaging, labeling, 
and distribution. It also mandates an ethics code.  For specific 
requirements, both PCAK and PCBP can be contacted at: Pest Control 
Products Board, P.O.Box 14733, Nairobi, Kenya, Tel: 254-2-446-115. 
The Kenya Bureau of Standards is currently reviewing all standards.  
There are about 1,500 standards which still need to be reviewed.  The 
U.S. government is looking at possible technical assistance for this 
Sameer Industrial Park is Kenya's only privately owned export processing 
zone (EPZ).  Located in Nairobi's industrial area, it has been 
operational for over five years.  The Government of Kenya has 
constructed another at Athi River a nearby Nairobi suburb; a third one, 
also government owned is under construction in Mombasa, Kenya's main 
seaport.  Export Processing Zones are exempted from import duty and 
value added tax on imported plant, equipment, and raw materials.  They 
are accorded a ten-year tax holiday followed by a 25 percent tax levy 
(as compared to a regular 35 percent corporate tax levy) for the 
subsequent ten years.  For the first ten years the zones are exempted 
from withholding taxes on dividends and non-resident payments.  
Withholding tax is imposed on royalties, interest, dividends, and 
management fees. 
The Manufacturing Under Bond (MUB) scheme has been operational in Kenya 
since 1988.  The MUB scheme is accorded most of the incentives of EPZ's 
without the requirement of location at predetermined sites.  The only 
requirement for the manufacturer is to reimburse GOK all costs of the 
customs officer and guards at site.  During the GOK's FY 96 budget 
speech, the Minister for Finance liberalized manufacturing-under-bond 
rules to allow tax deductions for purchase of used equipment on leased 
The Export Processing Zone Authority (EPZA) is a Kenya Government 
parastatal tasked to facilitate participation in manufacturing in the 
EPZs.  Details on joining the EPZs can be obtained from:  Executive 
Chairman, Export Processing Zone Authority, British-American Center 
Bldg, P.O. Box 50563, Nairobi, Kenya, Fax: 254-2-713-704.  The 
Commercial Service of US&FCS, Nairobi, will be glad to assist in 
obtaining specific EPZ details for interested U.S. firms. 
Nairobi and Mombasa, Kenya's main trading and importing towns, have 
sufficiently large warehousing facilities.  Most of the warehouses are 
for private warehousing; however, some specialized ones provide bonded 
warehousing services.  Dutiable goods entering Kenya may be stored in 
the bonded warehouses without payment of duty and value added tax; but 
duty and tax become due and payable when the goods are released from the 
bonded warehouse for commercial use.  Prevailing tariff rates then 
Kenyan customs regulations have no special provisions for importation of 
goods.  All goods must be duty rated; however, Kenyan customs 
legislation allows the Minister of Finance to waive part or all rated 
duty.  Legislation disallows waiver on commercial imports.  In practice, 
waivers are sometimes granted to politically connected individuals. 
Kenya is a member of Common Market for Eastern and Southern Africa 
(COMESA) former Preferential Trade Area (PTA).  Under the COMESA/PTA 
agreements, Kenya exports are accorded preferential treatment; nominal 
tariffs are levied in the country of final destination.  COMESA/PTA 
member countries are working towards a harmonized taxation system.  
Kenya is also a signatory to major international trade agreements such 
as the United Nations Conference on Trade and Development, World Trade 
Organization, and the Lome Convention. 
The three east African countries of Kenya, Uganda, and Tanzania have 
established a protocol, known as the East African Cooperation Treaty, 
intended to revive the operations of the long defunct East African 
Community.  The East African Cooperation (EAC) intends to enhance and 
promote economic, trade, and development programs within the east 
African region through integration of infrastructural services; 
harmonization of inter-territorial trade & tariffs; and in long term, 
currency re-alignment.  Political foot-dragging has delayed opening of 
the EAC Secretariat, which will be based at the old East African 
Community Headquarters in Arusha, Tanzania.            
                           INVESTMENT CLIMATE 
The Government of Kenya encourages foreign investment, as it has done 
since independence.  It stresses investments both for the Kenyan market 
and for re-export.  The government recognizes the need to improve the 
investment climate, especially to generate employment, skills and 
foreign exchange.  This climate, however, is marred by bureaucratic 
inefficiencies, delays in privatization and parastatal reforms, and a 
clique of influential politicians, who also have substantial interests 
in the private sector, and view foreign investors with suspicion.  A new 
investment code aimed at making Kenya more attractive for foreign 
investment is nearing completion.  The code is expected to set clear 
guidelines for processing investment applications through the Investment 
Promotion Center (IPC).  This legislation is intended to strengthen the 
one-stop office of the IPC which approves applications and gives 
permission for an investor to start operating in the country.   
The government has undertaken major economic reforms which have opened 
up the Kenyan market to free competition.  Major policies undertaken 
include government expenditure rationalization, price decontrol, tight 
monetary control, export promotion, interest rate and foreign exchange 
rate liberalization, and capital market development.  The de facto 
restrictions on the repatriation of profits, dividends, license fees and 
royalties, as well as on capital gains, that had been a major 
disincentive have been removed.  The Investment Promotion Center has 
reduced delays in granting approvals.  
In approving new investments, the government gives preference to foreign 
equity capital which brings with it management skill, technical know-
how, risk bearing and profitability.  The investors are expected to be 
domestic resource-use intensive and base their operations outside the 
congested centers of Nairobi and Mombasa.   
The Government has relaxed restrictions on remittance of income from 
foreign investments earned after February 28, 1994.  Such earnings can 
be remitted without Central Bank of Kenya (CBK) approval, provided all 
taxes have been paid.   
Non-Kenyans on a resident work permit in Kenya are permitted to operate 
foreign currency accounts and remit after-tax employment earnings 
without GOK approval.  They may use the funds in their accounts without 
The GOK has not fully liberalized restrictions on capital transfers.  
Foreign investors are allowed limited participation in the local stock 
market.  The limit on portfolio investment by foreigners in Kenyan 
companies quoted on the stock exchange is 40 percent and the limit on 
individual portfolio holdings is 5 percent. 
The investment legislation does not discriminate against foreign 
investors.  Following liberalization of foreign exchange controls, the 
GOK allows exporters to retain all their foreign exchange earnings in 
export retention accounts.  Current restrictions on the use of the funds 
remain unchanged.  In April 1994, the GOK relaxed restrictions on local 
borrowing by foreign firms operating in the country.  Although the firms 
are not limited on the amount they can borrow, the GOK has cautioned 
commercial banks to exercise their prudential credit policy in assessing 
the viability of each borrower.  Previously, such firms were permitted 
to borrow only up to an equivalent of 20 percent of their share capital 
and reserves.  Currently the firms are permitted to borrow 100 percent 
of their requirements.      
The GOK has no restrictions on the amount all firms operating in Kenya 
may borrow from the off-shore market to finance their investment, 
including working capital requirements, provided interest on such 
borrowing does not exceed the London Inter-bank Offering Rate (LIBOR) by 
more than two percentage points.  Local lending rates range from 20 
percent to 30 percent.  Most foreign companies, including American firms 
operating in Kenya, find it more attractive to borrow from the off-shore 
market at lower interest rates.  This encourages parent companies to 
procure raw materials abroad on credit for their local Kenyan branches.    
The Kenyan constitution prohibits the nationalization of private 
property without prompt and full compensation.  There has not been any 
cases of expropriation.  The government of Kenya accepts binding 
international arbitration of investment disputes between foreign 
investors and the state.   
There have been some investment and contract disputes since 
independence.  They include Firestone's 1981 claim with the Overseas 
Private Investment Corporation (OPIC) over Firestone's inability to 
repatriate dividends.  American Life Insurance Company of Kenya (Alico) 
and Galana Ranch both faced difficulties being compensated for their 
assets.  The Firestone claim was settled when the Government of Kenya 
reversed its decision and permitted repatriation of dividends.  Alico's 
dispute over the sale of assets was resolved after a contentious seven-
year negotiation with the government.  Galana's owners received fair 
compensation for their property about seven months after they vacated 
the premises. 
There are other pending disputes or trade complaints involving 
parastatal or private entities and U.S. firms.  At times, resolution of 
these disputes is delayed either due to the influence of the person 
involved, or because authorities are reluctant to take action because of 
the perceived political importance of the individuals.  U.S. firms are 
advised to take all normal business precautions in conducting their 
affairs in Kenya, just as they would at home and in other countries.  
Once made, errors in business judgements or practices are often 
difficult to rectify. 
Kenya is a member of the International Center for the Settlement of 
Disputes (ICSID). 
Kenya has been politically stable since independence in 1963.  This does 
not mean that a certain amount of violence associated with politics has 
not occurred.  There was a coup attempt in 1982 by certain elements of 
the military against the government.  However, the military in Kenya is 
known for being apolitical.  Recent ethnic clashes have marred the 
political scene.  These, for the most part, have not had an effect on 
investment and doing business and trade in Kenya.  There has occurred 
from time to time conflicts in the border areas.  Again, these are 
removed from where most foreigners travel or do business.  Publicity 
concerning criminal activity, both in the cities and game parks, 
detracts from the commercial environment.  On the whole, international 
companies doing business in Kenya and potential investors do not 
consider political violence as a significant factor in their investment 
decisions.  Criminal activities, car hijacking, and street violence 
create more concern than political violence. 
The government has developed a duty exemption scheme that provides all 
exporters with relief from import duty payments on inputs that are 
subsequently re-exported.  There are 40 enterprises housed within three 
export processing zones in Nairobi, Athi River and Mombasa.  Several 
Manufacture Under Bond schemes in Nairobi, Mombasa, Nakuru and Eldoret 
also exist.  The GOK has abolished export duties and most export 
licensing requirements.  The three major export institutions are the 
Export Processing Zones Authority, the Export Promotion Council and the 
Export Promotion Programs Office under the Ministry of Commerce which 
coordinates export promotion activities.   
The government grants a one time 35 percent investment allowance tax 
deduction for the cost of investment in industrial buildings, fixed 
plant, and machinery in Nairobi and Mombasa, and 85 percent for those 
located outside these towns.  This has an overall effect of reducing 
income taxes in the early years of a project. 
Exporters to the Common Market for Eastern and Southern Africa (COMESA) 
regional market covering 22 countries receive taxation advantages and 
have the option of trading in local currencies.  The market has a total 
population of 320 million and a GDP of 80 billion dollars.  The aim of 
COMESA is to establish a common market with no barriers across member 
countries' borders by the year 2000.  Currently COMESA member countries 
enjoy a 70 percent duty reduction on a reciprocal basis.  Kenya, Uganda 
and Tanzania also have signed an agreement for the formation of the East 
African Community (EAC).  However, the formation of a parallel regional 
community in Southern Africa (Southern African Development Community 
(SADC), of which Tanzania is a member, has weakened progress in both 
Kenya required until implementation of recent reforms that international 
investments include local content and employment targets.  The local 
content requirements have been lifted.  Obtaining work permits for 
expatriates has always been difficult, and thus, except for some senior 
management and operational control positions, employees and workers are 
Kenyan.  Foreigners also must meet certain total investment 
Kenya is a member of major international trade organizations such as 
UNCTAD and WTO, and is a signatory to the Lome Convention and Uruguay 
Round.  It is therefore subject to various requirements agreed to under 
these umbrellas. 
Foreign and domestic private entities have a right to establish and own 
land and business enterprises and engage in all forms of remunerative 
activity in Kenya, except in utilities which are the preserve of the 
government, and retail trade which is mainly in the hands of Kenyans.  
The GOK investment regulations provide for the right of private entities 
to freely establish, acquire, and dispose of interests in business 
enterprises.  Private and public enterprises have equal access to the 
domestic product market, business licensing and acquisition of inputs.  
In April 1994, the GOK relaxed restrictions on local borrowing by 
foreign firms operating in the country.  Although the firms are not 
limited on the amount they can borrow, the GOK has cautioned commercial 
banks to exercise their prudential credit policy in assessing the 
viability of each borrower. 
Kenya is a member of the Paris Union - International Convention for the 
Protection of Industrial Property (Patents and Trademarks) - along with 
the U.S. and 80 other countries.  Businesses and individuals from 
signatory states are entitled to protection under this convention, 
including national treatment and "property right" recognition of 
patents.  Although a unified system for the registration of trade marks 
and patents for Anglophone Africa was signed in 1976, the effort has 
remained stagnant due to lack of cooperation among the signatory states.  
A future prospect for patent, trademark, and copyright protection is 
embodied in the African Intellectual Property Organization, although its 
enforcement and cooperation procedures are as yet untested.  Kenya also 
is a member of the African Regional Industrial Property Organization. 
PATENTS:  In 1990, the Kenyan Government enacted industrial property 
legislation and established an Industrial Property Office for granting 
industrial property rights, screening technology transfer agreements and 
licenses and providing patenting information to the public.  The office 
issues patents, utility model certificates and industrial design 
certificates.  It also acts as a receiving office for international 
applications.  The Act established an independent national patent law 
which replaced the use of pre-independence British procedures. 
In March 1994, KIPO issued the first patent certificate under the Kenya 
Industrial Property Act to three Kenyan scientists for their work in the 
development of a tick resistance vaccine, Novel Tick Resistance 
Antigenic Indicators (TRAI).  In its fourth year of operation, KIPO has 
received 127 patent applications and 38 industrial designs which are 
being processed.  Of these 127, 93 are foreign and 34 are local.  
Similarly, of the 38 industrial design applications 15 are local. 
COPYRIGHTS:  Although Kenyan laws regarding copyrights are not as 
extensive as those offered in many developed countries or elsewhere in 
Africa, the Copyright Act of 1989 does provide for protection from audio 
copyright infringement.  Video copyright infringements are not covered 
by the law and are widespread. 
TRADEMARKS:  Trademark protection is available from the Kenyan 
government for a period of seven years from the date of application.  
The first applicant for trademark protection is entitled to 
Kenyan regulations allow for the establishment of public and private 
corporations, as well as joint ventures, and branches.  The law does not 
permit manufacturers to distribute their own products.  They also are 
required to supply information about their distributors.  The GOK has 
legislation to control monopolies.   
Private foreign investment in Kenya is governed by Kenya's Foreign 
Investment Protection Act (FIPA).  The Act is being reviewed in the 
light of recent liberalization of foreign exchange and import controls 
which have made a number of provisions redundant.  For example, FIPA 
rules require foreign investors to apply for a certificate of approved 
enterprise from the Treasury which allows them to repatriate capital and 
profits.  Such restrictions have been done away with.  There are no 
formal requirements on minimum local participation in either equity or 
There are no legal limitations on the percentage of foreign ownership, 
but the government seeks higher levels of Kenyan participation in all 
foreign investments.  It is clear that Kenyans prefer foreign investors 
form partnerships with local private investors, rather than 100 percent 
foreign ownership.  Foreign investors are required to sign an agreement 
with the government stating training arrangements for phasing out 
expatriates.  Expatriate work permits are increasingly difficult to 
renew or acquire.  Government approval for ventures in agriculture, 
distributive trade, and small-scale enterprises have become more 
difficult to get as the government seeks to indigenize these sectors.  
Under the parastatal reform program, the GOK has proposed to introduce a 
bill that will facilitate privatization of certain aspects of the public 
utilities.  Such a reorganization should provide opportunities for 
foreign investment in telecommunications, power and railways. 
There are no special requirements imposed on foreign investors.  All 
investors (foreign and local) receive the same treatment in the initial 
screening process.  The government screens each private sector project 
to determine its viability and its implications for the development 
aspirations of the country.  For example, a rural agro-based enterprise, 
with many forward and backward linkages is likely to receive licensing 
fairly quickly.  However, new foreign investment in Kenya has in the 
past been constrained by a time-consuming and highly discretionary 
approval and licensing system that has been vulnerable to corrupt 
practices.  To counter this, the government amended the Investment 
Promotion Center Act in September 1992 to required the Center, through 
its "one-stop-office," to process applications for foreign investors 
within one month. 
Despite the changes in 1992, the process still  does not work well. The 
GOK has proposed, therefore, to adopt a new investment code which will 
cover local and foreign investment and govern the Investment Promotion 
Center.  The code is expected to set clear guidelines for processing 
investment applications and will incorporate the means to ensure 
transparency and accountability.  It will provide information on various 
incentives to investors, including the procedures for obtaining such 
information, and how the incentives are implemented.  At present, the 
IPC, lacks proper authority to implement many available incentives and 
Incoming foreign investment through acquisitions, mergers or takeovers 
is governed by antitrust legislation that prohibits restrictive and 
predatory practices that prevent the establishment of competitive 
markets.  The legislation is also aimed at reducing the concentration of 
economic power by controlling monopolies, mergers and takeovers of 
enterprises.  Mergers and takeovers are subject to the Companies Act, 
the Insurance Act (in the case of insurance firms) or the Banking Act 
(in the case of banks). 
Although the GOK has officially stated it will conduct the privatization 
process in a fair and transparent manner, it is not yet clear how this 
will be done.  Senior officials, government and non-government, have 
repeatedly stated that local people should be given higher priority.  
Divestiture through public share issues provides little opportunity to 
corporate investors.  As has been the case in past divestitures, shares 
are thinly spread over many applicants thereby ruling out a possibility 
of a foreign investor acquiring a big stake in a single company.   
Under a World Bank export development program, the GOK has abolished, 
except for a few categories, export licensing requirements and initiated 
three export incentive schemes for both local and foreign investors.  It 
provides import duty/value added tax remission to importers of raw 
material inputs used for the manufacture of exports.  Manufacturing 
under bond facilities and export processing zones exist.  In addition, 
the GOK has an Exporter Assistance Scheme and an Export Development 
Support project, both of which provide grants for export promotion 
including export market studies and seminars.  
In 1990, the GOK strengthened the law on health and safety in factories.  
The revised Act authorizes the Labor Minister to undertake formal 
investigations of occupational accidents and disease.  Factories which 
employ over 20 employees are required to have a safety and health 
committee.  The GOK also has established a National Advisory Committee 
on Occupational Health and Safety and an Occupational Health and Safety 
Kenya has a small capital market consisting of the six-year-old 
government-owned Capital Markets Authority (CMA), one securities 
exchange (the 36-year-old Nairobi Stock Exchange, or NSE), twenty 
brokers, several dealers and numerous financial advisors.  There is no 
securities exchange outside Nairobi.  The NSE trades in stocks from 56 
publicly quoted companies.  The daily volume of trade varies from KSh. 
10 million to KSh. 30 million, involving about 250 transactions.   
In July 1994, the NSE acquired a new trading floor with a capacity to 
accommodate 100 dealers and 20 brokers.  The settlement period takes an 
average of seven days.  The facility is fitted with computer terminals, 
and 20 boards catering for about 400 companies.  The new facility has a 
200-seat public gallery and boards able to take 800 listings.  The 
trading floor has been designed to accommodate foreign companies in 
anticipation of such listings after the capital market is fully 
liberalized.  The NSE is in the process of introducing new instruments 
and has a separate facility (board) where small and medium-size 
companies can seek listing.  In addition to normal stocks, the NSE has 
issued Treasury Bills and Bonds.  The instruments traded in the capital 
market are, however, few.  A secondary market for these instruments 
remains largely underdeveloped, though at least one private company is 
attempting to expand the market.  Plans also are under way to trade 
corporate and municipal bonds, mortgage-backed securities and other 
investment vehicles.  Activity in the stock market will significantly 
increase when a compensation fund for investors, an independent central 
depository and a credit rating agency are established.  These are in the 
planning stage.  
Local lending rates have remained much higher than international rates, 
largely due to the tight monetary policy maintained by the government in 
1993 and 1994.  Weekly sales of Treasury Bills at attractive rates by 
the Central Bank of Kenya have reduced the availability of credit to the 
private sector.  Foreign investors have no access to credit offered at 
below market rates.  Although there are no restrictions on local 
commercial credit to foreign investors, the high rates make it 
unattractive. Merchant banking, though in an immature stage of 
development, is rapidly expanding.  At least five of the 23 commercial 
banks operating in the country have established subsidiary merchant 
It is anticipated that as more parastatals are privatized the stocks of 
these companies will be listed on the NSE.  Between 1992 and June 1995, 
the government privatized 67 parastatals out of a possible 212 public 
sector enterprises.  The privatization process has, however, slowed down 
due to criticism from potential investors over the government's lack of 
transparency and a clear privatization policy.  The government is 
expected to offer its shares to potential local investors in many of the 
remaining parastatals.   
Kenya has bilateral investment agreements with the United States 
(Overseas Private Investment Corporation and ExImBank programs only) and 
the Netherlands. 
OPIC offers investment insurance in Kenya against the risks of 
expropriation, war, revolution, insurrection, and civil strife.  OPIC's 
total insurance exposure now totals approximately $100 million.  Kenya 
is off cover for ExImBank programs.  
Kenya's estimated 3.0 percent demographic growth rate far outstrips 
economic development and job creation, with rising social costs for 
health care placing an extra burden on wage-earners.  Both men and women 
are active in the work force.  In 1995, an estimated 1.1 million males 
and 360,000 females engaged in formal wage employment.  In the formal 
sector, women worked overwhelmingly in services, men in agriculture, 
education, manufacturing, building and construction, trade, and 
transport.  The highest percentage of female formal sector workers was 
in education, where women constituted one-third of the total work force.  
Over one-quarter of the women worked in this area, but only 15 percent 
of men.  Women also constituted more than 25 percent of the work force 
in finance, insurance, and other business services and over 20 percent 
in public administration and agriculture.  Some textile factories, 
however, are staffed almost exclusively by women. 
An estimated 60 percent of Kenya's population is under fifteen years of 
age.  Providing these youth with jobs will be a great challenge for 
Kenya.  Unemployment is high among urban youth, while underemployment is 
prevalent in rural areas.  Many university and secondary school 
graduates can no longer find jobs.  Urban unemployment is estimated at 
over 20 percent in the formal sector; rural unemployment is estimated by 
the government at 12 percent, but underemployment may be as high as 60 
percent.  The gap between population and jobs has led to periodic 
outbursts of unrest, especially in poor areas of the capital, Nairobi.  
The majority of Kenyans, especially women, work in agriculture at low 
wages or for small returns.  The informal sector increasingly accounts 
for job growth, about 75 percent of all new jobs created outside small-
scale agriculture.  An estimated 28 percent of employed Kenyans now work 
in the informal sector.  Non-wage employees, largely self-employed and 
unpaid family workers, in the modern sector, usually engaged in trade 
and agriculture, also has increased in recent years. 
Kenya has a tripartite structure (government, labor, and business) 
active in and knowledgeable about international labor affairs.  It had 
ratified 46 ILO conventions as of March 1994.  Although Convention 87, 
Freedom of Association and Protection of the Right to Organize is not 
among them, the right of freedom of assembly and association is 
contained in Chapter 5, Article 80 of the Kenyan Constitution.  Article 
80 (d) addresses specifically the question of registration of trade 
unions.  Fundamental rights and freedoms of the individual, protection 
of freedom of conscience, expression and movement are among the other 
constitutional rights. 
Kenyan labor law and practice derive from British models.  Most laws 
predate independence, but have been revised since then.  In 1990, the 
Kenyan parliament amended the 1951 Factories Act, broadening its scope 
to include agricultural, service, and government sectors.  Kenya also 
has laws, however, which are inconsistent with its constitution.  The 
Public Security Act and the Chiefs' Authority Act, among others, have an 
adverse effect on labor freedoms and rights. 
Kenya's laws provide many safeguards and benefits for workers, with 
mechanisms and procedures to address complaints relating to worker 
rights.  The Regulation of Wages and Conditions of Employment Act sets 
the normal working week at not more than 52 hours spread over six days 
per week.  A worker on night duty works not more than 60 hours per week, 
and cannot work more than 144 hours during any two-week period 
(including overtime).  Overtime on a workday is calculated at one and a 
half times normal hourly rates.  On holidays or normal rest days, this 
rises to twice the normal rate.  The normal work week for shop 
assistants is not more than eight hours per day and no more than 50 
hours per week.  Shop assistants are entitled to the afternoon off 
(after 1 p.m.) on at least one weekday per week. 
After twelve consecutive months of service, every employee is entitled 
to not less than twenty-one working days leave with full pay.  Employees 
with only two months' consecutive service are entitled to 30 days' sick 
leave with full pay and a maximum of 15 days with half pay in each 
consecutive twelve-month period.  A woman may receive two months' 
maternity leave, but in that case shall forfeit annual leave in that 
year.  Since pregnancy is not an illness, women are not entitled to 
medical benefits for childbirth.  On the other hand, women cannot lose 
privileges or their jobs during periods of maternity leave. 
The Employment Act of 1976 proscribes the employment of children under 
the age of 16 in any industrial undertaking.  The law does not apply to 
the agricultural sector, where about 70 percent of the labor force is 
employed, or to children serving as apprentices under the terms of the 
Industrial Training Act.  Ministry of Labor officers are authorized to 
enforce the minimum age statute.  Given the high levels of adult 
unemployment and underemployment, the employment of children in the 
formal wage sector in violation of the Employment Act is not a 
significant problem.  Night work for women is also prohibited.  A task 
force appointed by the Attorney General is now reviewing laws related to 
women.  Children often work as domestics in private homes, in the 
informal sector, and in family businesses and farms. 
Kenya has a minimum wage scale for twelve different categories of 
workers, from unskilled to skilled.  In May 1995, the government raised 
the minimum wage for Nairobi and Mombasa to KSh. 1,904 per month, but 
wage levels for formal sector workers in rural areas were set at less 
than KSh. 1,100 per month.  The agricultural minimum wage rose by only 8 
percent to KSh. 669 per month.  The highest minimum wage on the twelve-
rank scale was KSh. 4,296 per month.  Kenyans across the tripartite 
spectrum agree that the lowest minimum wages place families far below 
the poverty level. 
Organized workers, through collective bargaining agreements (CBAs), 
normally receive much higher amounts than the minimum wage.  CBAs in 
Kenya normally cover a two-year term.  Wage guidelines, which provide a 
complicated formula by which workers may receive raises based on 
increases in the cost of living, were relaxed in 1994 to permit larger 
Benefits account for a high proportion of Kenyans' compensation package, 
usually between 25 and 50 percent, sometimes even more.  Benefits range 
from housing, health, protective clothing, and transportation, to home 
travel allowances, meals, and loans for small and large purchases.  In 
the 1990's, inflation eroded the value of all cash payments.  Housing, 
though, remained a boon as costs skyrocketed.  The complicated nature of 
wages and benefits in Kenya have led some employers to adopt a unified 
salary/benefits structure. 
The Factories Act of 1951, as amended in 1990,  establishes detailed 
health and safety standards protects nearly all workers in the formal 
and informal sectors, including agriculture, services, and the 
government sector.  An ILO project to improve health and safety 
inspection in the work place by better training of inspectors and follow 
up has cut down on work accidents and complaints.  Actual practice, 
however, does not always embrace safeguards.  Workers, for a variety of 
reasons, often refused to utilize their health and safety equipment. 
AIDS is now a major issue in Kenya with up to 30 percent HIV infection 
rates among the sexually active population near Uganda and Lake Victoria 
and along the major trans-African transportation routes.  Nairobi and 
Mombasa and the routes between them also show a 10-20 percent infection 
rate within the same group.  The HIV-positive population elsewhere 
remains under 10 percent.  Government studies have shown, however, that 
the prevalence of HIV among Kenyans working in the modern sector is 
twice that of Kenyans in the small-farming sector.  Women also are far 
more vulnerable than men.  AIDS-affected workers and their families 
quickly exhaust health benefits.  The government has taken a broad-based 
approach to HIV/AIDS, but AIDS education in the work place is still 
Kenyan workers receive the following national holidays: New Year's Day 
(January 1), Good Friday, Easter Monday, Labor Day (May 1), Madaraka Day 
(June 1), Moi Day (October 10), Kenyatta Day (October 20), Independence 
Day (December 12), Christmas Day (December 25), and Boxing Day (December 
26).  Id ul-Fitr, and Id al-Adha are holidays for Muslims, while Diwali 
is a holiday for Hindus.  The government announces the specific dates 
for these holidays. 
Two main bodies represent Kenyan private employers and labor, 
respectively: the Federation of Kenya Employers (FKE) and the Central 
Organization of Trade Unions (COTU).  COTU has 29 affiliates and 245,000 
dues-paying members.  Forty-five percent of all modern wage sector 
employees work in the highly-organized public sector.  The government 
employs some 200,000 teachers (most of them members of the independent 
Kenya National Union of Teachers, KNUT) as well as civil servants and 
parastatal workers.  All workers are free to join unions of their own 
choosing, except for central government civil servants.   At least 33 
unions represent approximately 350,000 workers, or 20 percent of Kenya's 
industrialized work force.   
In theory, the Trade Disputes Act permits workers to strike provided 
that 21 days have elapsed following the submission to the Minister of 
Labor of a written report detailing the nature of the dispute.  Doctors 
and university academic staff formed unions and struck during 1993-4 but 
without achieving recognition of their associations.  Other major 
strikes in 1994-5 involved the transport sector.  Strikes also hit banks 
(the highest-paid sector), guard companies, and factories, most 
privately-owned.  No strikes, except the doctors' and professors' 
strikes, lasted more than a few days.  The military, police, prison 
guards and members of the National Youth Service are precluded by law 
from striking.  Kenyan labor legislation is silent on the issue of 
national strikes. 
Internationally, COTU is affiliated with both the continent wide 
Organization of African Trade Union Unity and the International 
Confederation of Free Trade Unions.  COTU affiliates are linked to 
international trade secretariats of their choice. 
While not having the force of law, the 1962 Industrial Relations 
Charter, executed by the government, COTU and the Federation of Kenya 
Employers, gives workers the right to engage in legitimate trade union 
organizational activities. 
Both the Trade Disputes Act and the Charter authorize collective 
bargaining between unions and employers.  Wages and conditions of 
employment are established in the context of negotiations between unions 
and management.  In 1994, government wage policy guidelines, which 
limited salary increases, were relaxed relative to employers' ability to 
declare workers redundant.  Collective bargaining agreements must be 
registered with the Industrial Court.  The Export Processing Zone 
Authority has decided that local labor laws, including the right to 
organize and bargain collectively, will apply in EPZs.  Although 
conditions in the EPZs aroused public criticism in 1994, minimum wages 
tend to exceed those of workers outside the zones. 
The constitution proscribes slavery, servitude, and forced labor.  Under 
the Chiefs' Authority Act, a local authority can require people to 
perform community service in an emergency, but there were no known 
instances of this practice in 1994.  People so employed must be paid the 
prevailing wage.  The International Labor Organization's (ILO) Committee 
of Experts has found this provision of Kenyan law to contravene ILO 
Conventions 29 and 105 concerning forced labor. 
In 1995, minimum unskilled worker salaries averaged less than thirty 
dollars per month, but this figure was achieved mainly through an upward 
revaluation of the Kenya shilling.  The normal work week, by law, is 
limited to 52 hours, except for nighttime employees (60 hours) and 
agricultural workers (excluded).  Non-agricultural employees receive one 
rest day in a week minimum, one month's annual leave, and sick leave.  
By law, total hours worked (i.e., regular time plus overtime), in any 
two-week period for night workers cannot exceed 144 hours; the limit is 
120 hours for other workers.  The Ministry of Labor is tasked with 
enforcing these regulations, but reported violations are few.  
Inspection of work sites continued to improve.  "Whistle blowers" are 
not protected, however.  Kenya's worker compensation regulations do not 
yet comply with provisions of ILO Convention No. 17. 
In 1990, the government established an Export Processing Zones (EPZA) 
Authority charged with the responsibility of developing the legal 
framework for EPZs in the country.  Three EPZ parks have been 
established, one each in Nairobi, Athi River and Mombasa, with 40 
companies.  Two others, in Nairobi and Mombasa, are single company 
zones.  Four others are in the process of being established or 
In 1987, the government established a manufacturing under bond (MUB) 
program exclusively for export.  The MUB program is coordinated by the 
government's Investment Promotion Center which offers information on 
investment rules, procedures and opportunities.  To qualify for the MUB 
scheme, an investor must provide firm documentary evidence showing 
financial ability, technical know-how and market availability.  An 
investor must prove that the total value of exports will be in excess of 
$440,000 per year, or alternatively, demonstrate that the enterprise can 
create employment for at least 50 Kenyans.  There are 30 local and 
foreign firms operating in the MUB scheme.  These are mainly garment 
firms that export exclusively to the European and U.S. markets.  The 
stumbling block is high operational costs and export and import delays 
at customs.  The clearing process at Mombasa harbor, the main seaport, 
is slow, and charges at the ports of entry high. 
Government economic reforms have encouraged the return of flight 
capital, liberalized exchange rate policies and repatriation of foreign 
capital.  Restrictions on the repatriation of profits, dividends, 
license fees and royalties have been removed.  The Government has 
relaxed restrictions on remittances of income from foreign investment 
earned after February 28, 1994.  Such earnings can be remitted without 
Central Bank approval, provided all taxes have been paid.  Unremitted 
funds earned before February 28, 1994 may be remitted by commercial 
banks at a rate of $100,000 per year.  Remittances in excess of this 
amount require CBK approval.  Foreign life insurance companies face 
specific limits on the percentage of profits which can be repatriated.  
Kenyans may only invest $500,000 outside the country without Central 
Bank of Kenya authorization. 
The flow of direct foreign investment in Kenya stagnated in the 1980's 
owing to a deterioration of the investment climate.  Investors 
complained of excessive government regulation, high taxation and delays 
in profit and dividend repatriation which had fallen three years in 
arrears.  During this period, corruption increased and infrastructure 
deteriorated.  In the 1990's the GOK began implementation of a series of 
policy measures aimed at improving the investment climate.  These 
include liberalization of exchange controls for exporters, price 
decontrol of most items, interest rate decontrol and development of 
export processing zones.  These changes have substantially improved the 
business environment.  
Kenya does not keep data on the value of foreign direct investment 
(position/stock and annual direct investment capital flows) by country 
of origin or by industry sector destination.  Neither is data available 
on Kenya's direct investment abroad. 
A reliable source for the value of foreign investment in Kenya is 
lacking.  From available information, over 200 multinational 
corporations have invested in Kenya.  The British lead with about $2.0 
billion.  The book value of U.S. investment is estimated at $83 million, 
while the market value is over $285 million.  Investment from Far 
Eastern countries, including China and Japan, though insignificant, is 
rapidly rising.  Major investors in key subsectors of the economy are 
listed below. 
                        NAME OF FOREIGN 
SUBSECTOR                  INVESTOR            COUNTRY 
Canned Fruits            Del Monte               Britain 
Oils, Fats and Fruit     Unilever Inc.           Britain 
Tea and Coffee           Brooke Bond Liebig      Britain 
Mineral Water and 
Confectionery            Cadbury Schweppes Ltd   Britain 
Paper                    Oriental Paper Mill     India 
Cement                   Bamburi Portland Cement Britain 
Knitted Fabric           Raymond Woollen Mills   India 
Metal/packaging cans     CMB (owned jointly by 
                         Metal Box Ltd UK & 
                         Carnaud Ltd)            France 
Vehicle Assembly         General Motors          U.S.A  
                         Leyland Motors          Britain 
Pharmaceutical           Sterling Drug           U.S.A 
Toiletries               Colgate Palmolive       U.S.A 
                         Unilever                Britain 
Cosmetics & Allied 
Industries               Cheeseborough-Pond's    U.S.A 
                         Henkel                  Germany 
Synthetic resin 
emulsions and other 
chemicals                Hoechst                 Germany 
Pharmaceutical and 
Cosmetics                Nicholas Kiwi           U.S.A. 
Pharmaceutical and 
Infant Food              Glaxo Holdings          Britain 
Electric and 
Electronic Equipment     Philips                 Holland 
                         SANYO                   Japan 
Equipment                Siemens                 Germany 
                         L.M. Ericson            Sweden 
Textiles                 Amatex T. OmbH & Co     Germany 
                         S.I.F.I.D.A.            France 
                         Hisata Spinning Co.     Japan 
                         Khatau Group            India 
Petroleum Refining/      Esso                    U.S.A. 
  Distribution           Caltex                  U.S.A. 
                         Total                   France 
                         Shell/BP                UK/Netherlands 
                         Agip                    Italy 
                      TRADE AND PROJECT FINANCING 
Although Kenya inherited at the time of independence a financial system 
typical of all British colonies in Africa --  a currency board; a 
commercial banking system wholly dominated by two major British banks; a 
Post Office Saving Bank and a small number of non-bank financial 
institutions (NBFIs) providing mortgage finance, insurance and other 
near bank financial services -- the sector has grown into a substantial, 
sophisticated one.  The sector comprises: The Central Bank of Kenya 
(CBK); 36 commercial banks with branches, agencies and other outlets 
throughout the country; 51 NBFIs with an excellent branch network in 
Kenya's major cities; 6 building societies; 37 insurance companies; 7 
development finance companies providing long-term finance; the Post 
Office Savings Bank, with a large network of branches around the 
country; and over 1,500 poorly structured savings and credit unions.   
In spite of the number of established banks, the banking sector is 
essentially dominated by four major commercial banks with an established 
tradition of working together.  However, NBFIs recently have exhibited 
an ability to compete with commercial banks, particularly because of the 
less restrictive regulatory framework within which they operate.  On 
paper, NBFIs operate as merchant or investment banks.  In practice, they 
operate as commercial banks, taking deposits and making short-term 
loans.  In June 1994, the Central Bank instructed NBFIs to convert and 
operate as commercial banks.  So far six NBFIS have either converted or 
joined parent companies.  Kenya, already a regional leader, is expected 
to develop one of the largest commercial banking industries in Africa. 
Despite the existence of a relatively developed and sophisticated 
financial system, Kenya's capital market is still in its infancy.  The 
market for short-term securities is dominated by Treasury Bills and 
bonds.  Although there is relatively light trading in commercial paper, 
there is virtually no secondary market in government paper.   
The Nairobi Stock Exchange (NSE) is the only licensed trading exchange 
in the country.  NSE originally started as a private association, but is 
now a fully fledged stock market.  Currently there are 56 companies 
listed and the value of shares traded between October 1994 and March 
1995 was about $40.2 million.  NSE trading has picked up.  The NSE index 
as of December 1994 was 4,559.4  compared to 2,513.7 in December 1993.  
The number of shares traded quadrupled between October 1994 and February 
1995.  The market capitalization as of December 1994 had reached $3.0 
billion as compared to $1.1 billion in December 1993.  The exchange is 
fully computerized.  However the NSE is still in its infancy.  The 
strengthening of the Capital Markets Authority, the exchange regulator, 
through revised legislation in 1994 and new budget measures in June 
1995, should help the exchange grow.  With the right macroeconomic 
framework, it has the potential of joining the ranks of strongly 
emerging markets such as Hong Kong or Thailand. 
In conjunction with the removal of import licensing requirements, Kenya 
has moved to a market-determined exchange rate.  During the June 1995 
budget speech, the GOK announced plans to completely repeal the Exchange 
Control Act legislation before end of 1995.  The repeal will mean 
freeing all the existing controls on foreign exchange.  This policy 
measure is expected to attract foreign investors.  The Central Bank of 
Kenya is already licensing foreign exchange bureaus.  These bureaus will 
be opening longer hours than banks and are expected to increase 
competition in the foreign exchange market.  Currently, only the 
following capital transactions have foreign exchange restrictions: 
1)  Investment by foreigners in shares (set in June 1995 at not more 
than 40 percent of shares  traded on the NSE) and government securities, 
which will continue under exchange control; 
2)  Investments by Kenya residents outside Kenya exceeding $500,000, 
which must be approved by the Central Bank. 
Residents and non-residents are now permitted to buy or sell foreign 
exchange from/to authorized dealers up to the equivalent of $5,000 
without the need to obtain permission from the Central Bank of Kenya.  
The recent GOK-sanctioned setting-up of forex bureaus will facilitate 
smaller forex transactions.  
Exporters are now authorized to retain all their export proceeds in 
foreign currency accounts with local banks or sell such proceeds to 
obtain local currency.  All restrictions on current account transactions 
have been removed, including restrictions with regard to the annual 
maximum amount of foreign exchange remittable.  Unremitted funds earned 
before February 28, 1994, may be remitted by commercial banks at a rate 
of $100,000 per year.  Remittances in excess of this amount require CBK 
approval.  The Central Bank has streamlined the paperwork requirements 
by abolishing the requirement to fill out export forms. 
The Central Bank has also revoked its provision regarding blocked funds.  
Residents may borrow abroad with no limit on the amount.  However, the 
government will not guarantee any borrowing by the private sector.   
Although payments under technical, management, royalty and patent fees 
are freely remittable, the relevant agreements and renewals will be 
subject to approval. 
Persons leaving or entering Kenya are permitted to take or bring into 
the country Kenyan currency up to a maximum of KSh. 100,000 and foreign 
currency equivalent to a maximum of $5,000.  Amounts beyond these limits 
may be taken out or brought into the country, provided they are declared 
at the point of departure or entry. 
U.S. companies doing business or interested in doing business with Kenya 
have the full range of private sector financing available to U.S. firms 
doing business in other countries.  This includes a range of commercial 
financing available to American firms in the U.S.  Most major commercial 
banks in Kenya have correspondence relationships with U.S. banks.  See 
Section E below for a list of such banks.  Interested firms may contact 
their local banker or their nearest U.S. Department of Commerce District 
Office for more details.  Alternatively, U.S. firms may seek advice by 
calling 1-800-USA TRADE.  For specific financing of projects and 
investments in Kenya, U.S. firms may contact financial organizations 
listed below in Section F.  SOURCES OF FINANCE.  
Kenya is currently off cover for all ExImBank programs, but this is 
under review.  A special ExImBank program for Africa has been initiated 
whereby short term ExImBank programs may be made available in the 
private sector for importers with established credit ratings/experience 
with a reputable international bank, even though the country is off 
cover for other programs.  Interested U.S. firms may contact Richard 
Feeney or Annmarie Emmet, ExImBank, Washington, D.C., Telephone (202)  
565-3933, FAX: (202) 565-3921 for further information.           
Multilateral Development Banks, NGO's, and other international aid 
organizations have hard currency sources for financing their imports and 
projects.  The World Bank and the African Development Bank are two major 
sources of loans for commercial projects in Kenya.  Substantial project 
aid was maintained by both bilateral and multilateral donors during the 
period after the end of 1991 when balance of payments support was 
suspended.  World Bank balance of payments support was resumed in 1993.  
U.S. firms may wish to target their marketing in Kenya in the first 
instance to these types of organizations, and then expand to other 
commercial sectors after gaining experience in the market.  Interested 
U.S. firms can contact the Multilateral Development Bank Office, U.S. & 
Foreign Commercial Service, U.S. Department of Commerce, Washington, 
D.C., Tel: (202) 482-3399, FAX: (202) 482-5179 for further information.   
The Government of Kenya does not have a specialized financial 
institution exclusively focusing on export/import business like an 
export/import bank.  Nonetheless, bank services similar to ExImBank-type 
financing and bundling facilities are undertaken by multinational banks.  
Many banks and specialized financial institutions in Kenya finance 
Kenyan exporters and importers.  These banks have adequate liquidity to 
meet the financial demands of Kenyan firms.  The credit supplied is 
highly influenced by the needs of the local firm, its stature in the 
market and the experience and its financial position.  Credit terms are 
stiff to meet, usually requiring fixed assets exceeding one to three 
times the amount of credit requested. 
Differences in business practices extend into export financing.  U.S. 
firms are strongly advised to discuss the best methods and transaction 
details with an experienced international bank familiar with Kenya.  
U.S. firms are advised to determine the range of financing offered by 
competitors.  Further information on financing sources is given in 
Section C. above. 
There are several basic methods of receiving payment for products sold 
in Kenya, the choice of which is determined by the degree of trust in 
the buyer's ability to pay.  Payment alternatives U.S. exporters might 
consider, in order of the most to the least-secure include: 1) cash in 
advance, 2) confirmed irrevocable letter of credit (if concerned about 
the importer and international standing of his bank), 3) irrevocable 
letter of credit (if concerned only about the reliability of the 
importer) 4) documentary drafts for collection (checks drawn on the 
importers bank), 5) open account, 6) consignment sales.  Being paid in 
full in a timely manner is always a major concern of any exporter, as 
well as relative commercial risk. 
U.S. exporters selling to Kenya are advised only to transact business on 
the basis of an irrevocable letter of credit confirmed by a recognized 
international bank.  Any other form of payment is potentially hazardous. 
The U.S. Department of Commerce offers a World Traders Data Report 
(WTDR) service, which provides U.S. exporters with credit information 
and industry standing and reputation of potential Kenyan importers.  
Interested U.S. firms may contact their nearest U.S. Department of 
Commerce District Office for further details.    
Kenya has various types of export financing and insurance schemes which 
are attractive and quite useful to Kenyan exporters.  These include  
overdraft facilities, revolving lines of credit, pre-shipment 
rediscounting facility, and post-shipment financing. 
U.S. firms requiring information on export financing can contact their 
nearest U.S. Department of Commerce District Office, their international 
bankers, or call 1-800-USA-TRADE.  As indicated above in Section, C., 
Kenya is off cover for ExImBank programs, but is initiating a program, 
including insurance, for short term U.S. exports to the private sector. 
The Overseas Private Investment Corporation, Washington, D.C., Tel: 
(202) 336-8400, FAX:  (202) 408-9859 supports and promotes U.S. 
investment in Kenya by financing investments projects through loans, 
loan guarantees, or equity investment and by providing insurance against 
certain types of political risk including non-convertibility, and civil 
disorder.  Further information about OPIC's programs is available from 
the nearest U.S. Department of Commerce District Office.  For other 
sources of export financing available to U.S. firms, please see Section 
C. above.    
Kenyan banks provide the following pre-shipment facilities to Kenyan 
exporters which include the following: 
1)   Advances against contracts; 
2)   Advances against letters of credit (L/C); 
3)   Overdraft facilities; and 
4)   Issue local currency for indirect domestic exporters. 
Eight commercial banks provide post-shipment financing to exporters.  
Some of the facilities available under this scheme are: 
1)   Confirmation of Letters of Credit (L/C); 
2)   Discount sight Drafts Presented under L/C; 
3)   Discount Time Drafts under L/C; 
4)   Discount Time drafts Under Export Collections; and 
5)   Overdraft facilities. 
The receipt of a letter of credit and presentation of the appropriate 
documents evidencing shipment is required for banks to provide post-
shipment facilities.  Acceptances are created under the issuing bank's 
letter of credit in New York or London where a secondary market exists.  
Kenyan banks also create acceptances that are held in portfolio due to 
lack of a secondary market. 
To qualify for any of the above facilities, the client must show 
evidence of appropriate security to the bank.  However, multinational 
companies with lines of credit with foreign banks in London or New York 
do not need collateral.  Advances against collateral vary from about 40% 
of value of the property to as much as 85 percent on more liquid cash 
and securities.  Lending against inventory is not considered by banks.  
Domestic collateral either in real property or in cash and securities 
that is easily accessible to banks is preferred. 
A few banks use the Preferential Trade Area (PTA) arrangement for 
settling letters of credit for their clients.  However, delays in 
payment from some PTA member countries have adversely affected the 
efficiency and operations of this scheme.   
Private export financing in Kenya is a relatively new development.  Many 
banks have called for additional incentives from the government in order 
to provide more funds to exporters.  Some banks refuse firm orders or 
letters of credit as collateral, particularly, if they come from small 
to medium size exporters.  Many financial institutions do not as yet 
undertake transaction-based export financing.  Custom bond facilities 
necessary for control of an exporter's inventory and which can be used 
as collateral are lacking.  Trading of banker's acceptances is limited.  
Commercial banks do not focus exclusively on export credit and the 
traditional working capital lines of credit are fully collateralized 
with cash, securities or property.  The lack of a secondary market for 
export bills acts as a dis-incentive to providing export financing.  
However, despite these problems, export guarantees and insurance have 
played an important role in the development of an export financing 
market in Kenya.   
IDB is a Government funded financial institution.  IDB provides medium 
and long term loan finance, direct equity investment and guarantees for 
loans from other sources.  It also underwrites security issues, shares, 
stocks and similar obligations: 
CONTACT:  Managing Director, IDB, 
          National Bank Building, 18th Floor, Harambee Avenue 
          P.O. Box 44036, Nairobi, Tel. 337079, Fax 335594 
ICDC has been the Government's main conduit for joint venture 
investments and has made equity investments in many industrial and 
commercial ventures along with local and foreign partners.  ICDC 
provides project and commercial financing. 
CONTACT:  Executive Director, ICDC, 
          Uchumi House 
          P.O. Box 45519, Nairobi, Tel. 229213, Fax 333880 
DFCK is owned jointly by the Kenya Government through ICDC, the 
Netherlands Overseas Finance Company (FMO), the Commonwealth Development 
Corporation (CDC), the German Development Bank (DEG) and the 
International Finance Corporation (IFC).  DFCK provides medium-term 
local and foreign currency financing for projects in the industrial, 
agro-processing, and tourism sectors. 
CONTACT:  The General Manager, DFCK 
          Finance House, Loita Street 
          P.O. Box 30483, Nairobi, Tel. 340401/2/3, Fax 338246 
The bank's shareholding is held primarily by the governments of Kenya, 
Uganda and Tanzania.  The EADB provides medium and long-term loans 
designated in foreign currencies. 
CONTACT:  Resident Manager, EADB 
          Bruce House, Standard Street 
          P.O. Box 47685, Nairobi, Tel. 340641, Fax 216651/ 
KIE provides term loans, and a package of other services.  The loans are 
designated in Kenya shillings. 
CONTACT:  The Managing Director, KIE, 
          P.O. Box 78029, Nairobi, Tel. 542300, Fax 553124 
KEM provides equity and term financing, and particularly supports 
existing companies who wish to expand rather than start-up operations. 
CONTACT:  The Managing Director, KEM  
          P.O. Box 62360, Nairobi, Tel. 340549, Fax 227147 
AGF managed by Kenya Equity Management, an affiliate of the U.S. owned 
Equator Bank, invests in the full range of productive businesses, 
including manufacturing, agriculture, finance and service industries.  
Typically, funded projects are between $5 million and $50 million in 
size.  Funding comes from the U.S. Overseas Private Investment 
Corporation (OPIC). 
CONTACT:  The General Manager, AFG 
          P.O. Box 34045, Nairobi, Tel. 721566, Fax 722240 
IFC is an affiliate of the World Bank and finances private sector 
investment projects in agriculture, manufacturing and tourism.  IFC 
extends term loans and makes equity investment in projects entailing 
investment of more than $20 million.  It normally does not finance more 
than 25 percent of the project cost.  The term loans are generally made 
in foreign currencies.  IFC also manages the Africa Enterprise Fund 
which can support projects with lower project costs. 
CONTACT:  Resident Representative, IFC 
          View Park Towers, 
          P.O. Box 30577, Nairobi, Tel. 224726, Fax 219980. 
APDF is a facility established by IFC, UNDP, USAID and The African 
Development Bank (AFDB).  The facility supports medium-sized, African-
owned projects by offering assistance in project preparation, locating 
joint venture partners and negotiating project finance. 
CONTACT:  General Manager, APDF, 
          International House 
          P.O. Box 46534, Nairobi, Tel 337490 
IPS is a venture capital company owned by the Aga Khan, IFC Washington, 
Kenya Commercial Bank, and a merchant bank in the U.K.  IPS offers 
equity investments up to 40 percent of share capital, provides loans and 
management assistance.  IPS also assists in project development and in 
locating sources of technical know-how. 
CONTACT:  Managing Director, IPS 
          IPS Building 
          P.O. Box 30500, Nairobi, Tel. 228026/728207, Fax 214563 
EDESA provides medium and long term financing in foreign and local 
currency.  EDESA offers tailor-made package financing for start-up, 
rehabilitation, and expansion of local ventures which include loans, 
convertible loans, guarantees and equity. 
CONTACT:  General Manager, EDESA Kenya Ltd. 
          P.O. Box 56038, Nairobi, Tel. 822920-4, Fax 822925/822907 
A number of European development banks provide finance to ventures in 
Kenya.  They include the Netherlands Overseas Finance Company in Kenya 
(FMO), the Commonwealth Bank (DEG), the Danish Development Bank (IFU), 
and the Swedish Fund for Industrial Development of Africa (SFIDA). 
Private insurance and pension funds are also important mobilizers of 
long term savings in Kenya.  These institutions normally invest their 
funds in real estate and listed securities. 
Bank                                   Postal Address of Head Office 
ABN Amro Bank                          Box 30262, Fax 713391 Nairobi 
African Mercantile Bank                Box 30090, Fax 333818 Nairobi 
Bank of Baroda                         Box 30033, Fax 333089 Nairobi 
Bank of India                          Box 30246, Fax 334545 Nairobi 
Bank of Oman                           Box 11129, Fax 330792 Nairobi 
Barclays Bank of Kenya Ltd.            Box 30120, Fax 337201 Nairobi 
Biashara Bank of Kenya Ltd.            Box 30831, Fax 221064 Nairobi 
Bullion Bank                           Box 11666, Fax 221338 Nairobi 
Citibank N.A.                          Box 30711, Fax 337340 Nairobi 
Commercial Bank of Africa              Box 30437, Fax 335827 Nairobi 
Consolidated Bank of Kenya             Box 51133, Fax 340213 Nairobi 
Co-operative Bank of Kenya             Box 48231, Fax 330227 Nairobi 
Credit Banking Corporation             Box 75501, Tel 336446 Nairobi 
Daima Bank                             Box 54319, Tel 338079 Nairobi 
Delphis Bank                           Box 44080, Fax 219469 Nairobi 
Euro Bank                              Box 43071, Fax 221781 Nairobi 
First American Bank                    Box 30691, Fax 333868 Nairobi 
Giro Bank                              Box 40263, Fax 230600 Nairobi 
Guilders International Bank            Box 67437, Fax 218030 Nairobi 
Habib Bank AG Zurich                   Box 30584, Fax 218699 Nairobi 
Kenya Commercial Bank Ltd.             Box 48400, Fax 338006 Nairobi 
Meridien Biao Bank of Kenya            Box 30132, Fax 219392 Nairobi 
Middle East Bank Ltd.                  Box 47487, Fax 336182 Nairobi 
National Bank of Kenya Ltd.            Box 41862, Fax 330784 Nairobi 
Prime Bank                             Box 43825, Fax 334549 Nairobi 
Stanbic Bank                           Box 30113, Fax 330227 Nairobi 
Standard Bank Chartered Bank           Box 30003, Fax 330506 Nairobi 
Transnational Bank Ltd.                Box 75840, Fax 210335 Nairobi 
Trust Bank Ltd.                        Box 46342, Fax 334995 Nairobi 
United Bank Limited                    Box 403, Fax 42551, Kisumu 
Each year Kenya receives significant project financing assistance from 
donors.  There are three sources of external assistance, namely, 
multilateral, bilateral and Private Voluntary Organizations (PVOs).  The 
first category can further be divided into United Nations Organizations 
and Non-United Nations Multilateral institutions.  Bilateral donors lead 
in provision of project financing, followed by multilateral and PVOs.  
In FY 1995, project assistance to Kenya was about $509.1  million.  This 
figure excludes PVOs contribution. 
In December 1991, multilateral and bilateral donors temporarily 
suspended balance of payments assistance to Kenya.  There was no 
interruption of project financing flows to Kenya.  A large amount of aid 
goes to NGO's for projects instead of directly to the Government of 
Kenya for balance of payment support or for government infrastructure 
projects.  Only recently have the World Bank and others been seriously 
examining restoring infrastructure  project funding which is expected to 
The largest overall multilateral donor is the World Bank.  World Bank 
funded projects are listed below.  The private lending arm of the World 
Bank Group, International Development Association (IDA), provided 
substantial amounts of finance to the private sector, particularly those 
investments with a potential of generating foreign exchange.   The 
African Development Bank/Fund has not had its concessionary lending 
facility replenished for more that a year and a half.  Thus, the only 
AFDB funded projects were those already funded and in the pipeline.  
These include the $60 million Greater Nakuru Water Supply.  It is 
anticipated that the AFDB will recommence concessionary lending 
operations in the near future.  U.S. firms also should examine the 
possibility of using the private sector window established at the AFDB.  
For more information on opportunities for projects funded by 
multilateral development banks, U.S. firms can contact the Multilateral 
Development Bank Office, U.S. & Foreign Commercial Service, U.S. 
Department of Commerce, Washington, D.C., Tel: (202) 482-3399, FAX: 
(202) 482-5179 for further information.   
Japan tops the list of bilateral donors followed by Germany, the United 
Kingdom and the United States.  In FY 95, U.S. bilateral assistance to 
Kenya, including food aid, was approximately $22.6 million.  This amount 
includes Development Fund for Africa and PL 480 Title II. 
Project assistance covers ten key sectors of the Kenya's economy.  The 
top five sectors in order of importance are Economic Management; 
Agriculture, Forestry and Fisheries; Health; Transport and 
Communications; and International Trade.  Other equally important 
sectors are: Social Development, Human Resources, Natural Resources and 
Industry.  The distribution of assistance in the top five sectors  is 
highly skewed towards the sectors which contribute to economic 
development.  For example, in economic management, over 90 percent of 
the assistance goes to macroeconomic policy planning.  In agriculture, 
over half goes to food crops and support services, while in the 
international trade of goods and services, export promotion subsector 
alone accounts for over 60 percent. 
Listed below are current World Bank funded projects in Kenya: 
   Project                      Funding       Value 
   Mombasa Water  III           World Bank   $105.0 
   Nairobi/Mombasa Road         World Bank   $ 50.0 
   Railways Restructuring       World Bank   $ 60.0 
   Urban Transport              World Bank   $115.0 
   Energy Sector                World Bank   $100.0 
   Arid Lands Rehabilitation    World Bank   $ 21.4 
For further information on project financing available, refer to Section  
F.  Sources of Finance above. 
Almost all major commercial banks in Kenya have either direct or 
indirect correspondent offices in London and the US. They include the 
Stanbic Bank Ltd 
Kenya Commercial Bank  
Standard Chartered Bank  
Bank Indosuez 
Barclays Bank of Kenya 
Bank of Baroda 
Bank of India 
Mashereabank PSC 
Commercial Bank of Africa  
Habib Bank A.G. Zurich 
Habib Bank Ltd 
National Bank of Kenya 
There is solid sales potential for U.S. goods and services in Kenya.  
However, Kenya is a developing country with a complex market.  The U.S. 
exporter should keep certain factors in mind to achieve maximum success.   
Given the good business and political relations between Kenya and the 
U.S., there are significant commercial opportunities for U.S. firms.  
The principles of customary business  courtesy, especially replying 
promptly to requests for price quotations and orders, are a  
prerequisite for exporting success.  In general, Kenya business 
executives are relatively informal and open.  The use of first names at 
an early stage of a business relationship is acceptable.  Friendship and 
mutual trust are highly valued, and once an American has earned this 
trust, a productive working relationship can usually be expected. 
Given the competitive market and increasing experience, Kenyan firms are 
developing expertise in international business.  Kenyan buyers 
appreciate quality and service, and, if justified, are willing to pay 
extra if they are convinced of a product's overall superiority.  The 
market, however, is very price sensitive.  As would be the case in other 
markets, care must be taken to ensure that delivery dates will be 
closely maintained and that after-sales service will be promptly 
honored.  While there are numerous factors that may interfere with 
prompt shipment, the U.S. exporter should allow for additional shipping 
time to Kenya and keep in touch with the buyer.  It is much better to 
quote a later delivery date that can be guaranteed than an earlier one 
that is not completely certain.  Since Kenyan wholesalers and retailers 
generally do a lower volume of business than their American 
counterparts, U.S. firms should be prepared to sell smaller lots than is 
the custom in the U.S. 
U.S. firms should maintain close liaison with distributors and customers 
to exchange information and ideas.   In most instances, mail, fax or 
telephone communications is sufficient, but the understanding developed 
through periodic personal visits is the best way to keep distributors 
appraised of new developments and to resolve problems quickly.  Prompt 
acknowledgement of correspondence by air mail or fax is recommended. 
If the market size warrants, U.S. marketers should seriously consider 
warehousing in Kenya for speedy supply and service of customers.  As 
would be the case in most markets, a vigorous and sustained promotion is 
often needed to launch products.  Products must be adapted to both 
technical requirements and to consumer preferences, as well as meet 
Kenyan Government regulations.  It is not sufficient to merely label a 
product in conformity to national requirements to achieve successful 
market penetration.  Consumers must be attracted to the product by the 
label and packaging as well as ease of use.       
Kenya is a developing East African country known for the wildlife in its 
national park system.  Tourist  facilities are widely available in 
Nairobi, on the coast, and in the game parks and reserves. 
A passport and a visa are required.  Visas may be obtained at any Kenyan 
Embassy or Consulate, or upon arrival at a Kenyan port of entry.  
Evidence of yellow fever immunization may be requested.  There is an 
airport departure tax of twenty U.S. dollars which may be paid in hard 
currency  or Kenyan Shillings.  Further information may be obtained from 
the Embassy of Kenya, 2249 R Street, N.W., Washington, D.C. 20008, 
telephone (202) 387-6101.  There also are Kenyan Consulates General in 
Los Angeles and New York. 
Kenya has recently entered a political transition period, from a system 
of single-party democracy to a system of multi-party democracy.  From 
time to time, political or ethnic tensions, associated with this 
transition, increase resulting in localized areas of instability.  These 
ethnic and political clashes have had little affect on tourism in Kenya 
and have little potential to do so in the future. 
Adequate medical  services are available in Nairobi.  Doctors and 
hospitals often expect immediate cash payment for health care services.  
U.S. medical insurance is not always valid outside the United States.  
Supplemental insurance with specific overseas coverage, including air 
evacuation, has proved useful.  Information on other health matters, 
including the incidence of malaria in the country, can be obtained from 
the Centers for Disease Control's international travelers hotline, 
telephone (404) 332-4559. 
There is a high rate of street crime against tourists in downtown 
Nairobi, Mombasa, and at the coastal beach resorts.  Reports of attacks 
against tourists by groups of two or more armed assailants are on the 
rise.  Pickpockets and thieves are also involved in "snatch and run" 
crimes near crowds.  Visitors have found it safer not to carry valuables 
with them, but to store all valuables in hotel safety deposit boxes or 
safe rooms.  There have been reports of thieves snatching jewelry and 
other objects from open vehicle windows while motorists are either 
stopped at a traffic light or in heavy traffic.  Armed carjackings are 
increasingly common in Nairobi, with approximately ten vehicles stolen 
by armed robbers each day.  There also is a high incidence of 
residential break-ins.  Thieves and con men have been known to 
impersonate hotel employees, police officers or government officials.  
Tourists who accept sweet biscuits, or juice from new acquaintances on 
intercity buses in Kenya have been robbed after being drugged by food 
laced with sedatives.  Highway banditry is common on the roads leading 
to the Somali border.  Air travel is the safest means of transportation 
when visiting any of the coastal resorts north of Malindi.  Walking 
alone or at night in public parks, along footpaths or beaches, and in 
poorly lit areas can be dangerous.  The Kenyan mail system can be 
unreliable, and monetary instruments (credit cards, checks, etc.) are 
frequently stolen.  International couriers such as Federal Express or 
DHL have proven to be the safest means of shipping envelopes and 
The loss or theft abroad of a U.S. passport should be reported 
immediately to the local police and to the nearest U.S. Embassy or 
Consulate.  The pamphlets "A Safe Trip Abroad" and "Tips for Travelers 
to Sub-Saharan Africa" provide useful information on protecting personal 
security while traveling abroad and on travel in the region in general.  
Both are available from the Superintendent of Documents, U.S. Government 
Printing Office, Washington, D.C. 20402. 
There are strict limitations on the amount of Kenyan currency which may 
be taken out of the country.  It is sometimes difficult to exchange 
Shillings for dollars upon departure.  Destruction of Kenyan currency is 
strictly against the law. 
Travelers who do not use the services of reputable travel firms or 
knowledgeable guides and drivers are at risk.  Safaris are best 
undertaken with minimum of two vehicles so that there is a backup in 
case of mechanical failure.  Solo camping is always risky. 
U.S. citizens are subject to the laws of the country in which they are 
traveling.  Penalties for possession, use, or trafficking in illegal 
drugs are strictly enforced.  Convicted offenders can expect a mandatory 
minimum ten year jail sentence and fines no matter the amount and type 
of illegal drugs. 
Water in Nairobi is potable.  In other parts of the country, water must 
be boiled or bottled water used.  Travel by passenger train in Kenya may 
be unsafe, particularly during the rainy season, because of the lack of 
routine maintenance and safety checks. 
U.S. citizens may register at the Embassy in Nairobi and obtain updated 
information on travel and security in Kenya.  The  U.S. Embassy is 
located at the intersection of Moi and Haile Selassie Avenues, Nairobi.  
The telephone number is (254)-(2) 334-141.  The mailing address is P.O. 
Box 30137, Nairobi, Kenya.  The APO address is Unit 64100, APO AE 09831. 
The basic monetary unit is the Kenya Shilling (KSh).  The shilling comes 
in paper currency of Sh. 5, Sh.10, Sh. 20, Sh. 50 Sh. 100, Sh. 200 Sh. 
500 and Sh. 1,000 notes.  Coins are issued in 5, 10, 50, cents, and 1, 
5, and 10 Shilling units.  The Shilling is subdivided into units of 100 
With the freeing of foreign exchange regulations, the Kenya Shilling 
floats daily.  The Shilling has steadily appreciated against major hard 
currencies.  As of June 1995 the mean exchange rate was KSh. 55/$1.  
Visiting business executives should check the financial section of the 
daily newspapers for the current exchange rate which could change 
radically and quickly. 
International major credit cards are usually accepted with proper 
identification such as a passport.  Travelers checks are usually 
accepted by banks and major hotels. 
A 40-hour workweek is the norm for offices and factories.  Offices 
working hours are 8:00 am to 5:00 pm with lunch from 1:00 pm to 2:00 pm.  
Banking hours are from 9:00 am to 3:00 pm.  Most retail stores are open 
from 9:00 am to 6:00 pm. 
The following are the official statutory holidays when most commercial 
offices are closed: 
New Year's Day      January 1 
Id-Ul-Fitr          Variable  
Good Friday         Variable (April) 
Easter Monday       Variable (April) 
Labor Day           May 1 
Madaraka Day        June 1 
Moi Day             October 10 
Kenyatta Day        October 20 
Jamuhuri Day        December 12 
Christmas Day       December 25 
Boxing Day          December 26 
Transportation:  Taxis and rental automobiles are available in large 
towns.  Traffic moves on the left-hand side of the road.  Visiting 
American business executives rarely use the bus system or train. 
Airports:  Kenya has two major airports (Jomo Kenyatta in Nairobi and 
Moi in Mombasa).  Inland passenger and freight are conveyed by the road 
and rail network. 
Lodging:  Kenya has good hotels located in major cities, and a range of 
lodges in the game parks.  Business travelers are advised to make their 
hotel reservations in advance, especially during tourist high season 
from July to March. 
Language:  The official languages of Kenya are English and Swahili.  
However, many different languages and dialects are spoken throughout the 
country.  The commercial language is English.  Language barriers pose no 
problem, but in legal documents it is advisable to have lawyers who can 
interpret between American English and Kenya English usage. 
Communication:  The telecommunications system, which includes direct 
dialing telephone service and fax to the U.S., is available throughout 
the country.  From time to time interruptions in service occur.  Some 
telecommunication links, especially those via microwave, do not meet the 
quality requirements for transmission of high speed business data and 
Housing:  Adequate housing is available.  However, security concerns 
should be seriously considered in the location of housing.  More and 
more expatriate business executives are leasing compound housing as it 
is more modern and more secure. 
Utilities:  Water and 220 volt 50 Hz single phase and three phase 
electricity is available.  The British three blade plug is used widely.  
Interruptions of supply frequently occur, include cuts in industrial 
zones during evening peak hours.  Most housing have attic reserve water 
tanks.  Permanent or long term residents should consider purchase of  
standby electrical generators as electricity demand is expected to 
exceed generating capacity with frequent interruptions or brown outs.  
Bottled LPG is available, but supply cannot always be guaranteed. 
Health:  Adequate medical services are available in Nairobi.    Malaria 
is not prevalent in high elevations, but precautions must be taken in 
lower areas, especially in the coastal regions.  Residents should follow 
a strict sanitary regime in washing and preparing food.  Other 
precautions should be taken to avoid contracting endemic tropical 
Food:  There is plenty of high quality food available, including a large 
variety of fresh fruits, vegetables, meats, poultry and fish.  Fresh 
milk and milk products are available.  With the lifting of import 
controls, a variety of canned and prepared foods are available.  
However, imported foodstuffs are very expensive.  Periodic shortages of 
milk, sugar, flour, etc. have occurred in the past.  Fruits and 
vegetables may be seasonal. 
     CHAPTER  X 
                   COUNTRY DATA 
Population:  25.3 million (1994 estimate). 
Population Growth Rate:  3.0 percent    
Religions:  Christian, Islam, Hindu, and traditional. 
GOVERNMENT SYSTEM: Kenya has a democratic government with an elected 
president and a directly elected parliament modeled on the British 
LANGUAGE:  The official languages of Kenya are English and Swahili. Many 
dialects are also spoken throughout the country.  English is the 
Commercial language; therefore, language is not a barrier to business 
WORKWEEK:  40 hours for both offices and factories.  Working hours are 
8:00 am to 5:00 pm with lunch from 1:00 pm to 2:00 pm.  Monday through 
Friday. Banking hours are 9:00 am to 3:00 pm.    
   APPENDIX  B    
                               DOMESTIC ECONOMY 
                 (In $ millions of unless otherwise specified) 
                             1994     1995 1/  1996 1/    
GDP at Mkt Prices           7,050     7,262   7,480 
GDP Growth Rate (%)           3.0       5.0     5.6 
GDP Per Capita: (in '000)   0.278     0.292   0.308 
Government Spending                
(% of GDP)                   48.6     45.0     41.0 
Inflation (%)                28.8      8.8     10.0 
Unemployment (%)             32.0     34.0     34.0 
Foreign Exchange Reserves   506.0    550.0    580.0 
Av.Exch. Rate: KSh/$         55.3     55.0     60.0 
Debt Service Ratio           31.0    32.3      32.0 
U.S. Economic/Military Assistance 18.2   22.6   18.2 
1/  Estimates 
   APPENDIX    C  
            (In $ million unless otherwise specified)  
                          1994   1995 1/   1996 1/ 
Total Country Exports      1,912   2,008   2,120       
Total Country Imports      2,569   2,697   2,848       
U.S. Exports               169.5     N/A     N/A    
U.S. Imports               108.7     N/A     N/A 
1/ Estimates    
                               INVESTMENT STATISTICS 
                   (In Million $ unless otherwise specified) 
                                 1992   1993   1994 
Total Direct Foreign Inv.      2,040   2,050   2,100 
U.S. Share (%)                  13.5   13.5   13.5 
The flow of direct foreign investment in Kenya stagnated in the 1980's 
owing to a deterioration of the investment climate.  Investors 
complained of excessive government regulation, high taxation and delays 
in profit and dividend repatriation which had fallen three years in 
arrears.  During this period, corruption increased and infrastructure 
deteriorated.  In the 1990's the GOK began implementation of a series of 
policy measures aimed at improving the investment climate.  These 
include liberalization of exchange controls for exporters, price 
decontrol of most items, interest rate decontrol and development of 
export processing zones.  These changes have substantially improved the 
business environment.  
Kenya does not keep data on the value of foreign direct investment 
(position/stock and annual direct investment capital flows) by country 
of origin or by industry sector destination.  Neither is data available 
on Kenya's direct investment abroad. 
A reliable source for the value of foreign investment in Kenya is 
lacking.  From available information, over 200 multinational 
corporations have invested in Kenya.  The British lead with about $2.0 
billion.  The book value of U.S. investment is estimated at $83 million, 
while the market value is over $285 million.  Investment from Far 
Eastern countries, including China and Japan, though insignificant, are 
rapidly rising.  Major investors in key subsectors of the economy are 
listed below. 
                           NAME OF FOREIGN 
SUBSECTOR            INVESTOR             COUNTRY        
Canned Fruits         Del Monte           Britain 
Oils, Fats and Fruit  Unilever Inc.       Britain 
Tea and Coffee        Brooke Bond Liebig  Britain 
Mineral Water and 
Confectionery         Cadbury Schweppes Ltd   Britain 
Paper                 Oriental Paper Mill     India 
Cement                Bamburi Portland Cement Britain 
Knitted Fabric        Raymond Woollen Mills   India 
Metal/packaging cans  CMB (owned jointly by 
                      Metal Box Ltd UK and 
                      Carnaud Ltd)            France 
Vehicle Assembly      General Motors          U.S.A  
                      Leyland Motors          Britain 
Pharmaceutical        Sterling Drug           U.S.A 
Toiletries            Colgate Palmolive       U.S.A 
                      Unilever                Britain 
Cosmetics & Allied       
  Industries          Cheeseborough-Pond's    U.S.A 
                      Henkel                  Germany 
Synthetic resin 
emulsions and other 
chemicals             Hoechst                 Germany 
Pharmaceutical and 
  Cosmetics           Nicholas Kiwi           U.S.A. 
Pharmaceutical and 
Infant Food           Glaxo Holdings          Britain 
Electric and 
Electronic Equipment   Philips                Holland 
                      SANYO                   Japan 
  Equipment           Siemens                 Germany 
                      L.M. Ericson            Sweden 
Textiles              Amatex T. OmbH & Co     Germany 
                      S.I.F.I.D.A.            France 
                      Hisata Spinning Co.     Japan 
                      Khatau Group            India 
Petroleum Refining/   Esso                    U.S.A. 
  Distribution        Caltex                  U.S.A. 
            Total         France 
            Shell/BP      UK/Netherlands 
            Agip         Italy 
   U.S. & Foreign Commercial Service 
   U.S. Embassy, Nairobi 
   P.O. Box 30137 
   Nairobi, Kenya 
   Tel:  254-2-334141 
   FAX:  254-2-216648 
   Contact:  Gene R. Harris, Commercial Counselor 
   Economic Section 
   U.S. Embassy, Nairobi 
   P.O. Box 30137 
   Nairobi, Kenya 
   Tel:  254-2-334141 
   FAX:  254-2-340838 
   Contact:  Donald Cleveland, Economic Counselor 
   Agricultural Attache 
   U.S. Embassy, Nairobi 
   P.O. Box 30137 
   Nairobi, Kenya 
   Tel: 254-2-334141 
   FAX: 254-2-340838 
   Contact:  Henry Schmick, Agricultural Attache 
   Regional Labor Officer 
   U.S. Embassy, Nairobi 
   P.O. Box 30137 
   Nairobi, Kenya 
   Tel:  254-2-334141 
   Fax:  254-2-340838 
   Contact:  Mr. C. Steven McGann, Regional Labor Attache 
   The Multilateral Development Bank Office 
   U.S. & Foreign Commercial Service 
   U.S. Department of Commerce 
   14th and Constitution, N.W. 
   Washington, DC 20007 
   Tel: 202-482-3399 
   Fax: 202-482-5179 
   Contact: Ms Brenda Ebeling, Director 
   Trade Promotion Coordinating Committee (TPCC) 
   Information Center 
   U.S. Department of Commerce 
   Washington, D.C. 20230 
   Tel: 1-800-USA-TRADE 
   U.S. Department of Agriculture 
   Foreign Agricultural Service 
   Trade Assistance and Promotion Office 
   Tel: 202-720-7420 
   FAX: 202-720-7772 
   International Economic Policy (IEP) 
   Office of Africa 
   U.S. Department of Commerce 
   14th & Constitution Avenues, N.W. 
   Washington, D.C. 20230 
   Tel:  202-482-4564 
   FAX:  202-482-5198 
   Contact: Ms. Chandra Watkins, Kenya Desk 
   Kenya National Chamber of Commerce & Industry 
   P.O. Box 47024 
   Nairobi, Kenya 
   Tel:  254-2-334413 
   Contact:  Mr. Kassim Owango, Chairman 
   American Business Association 
   c/o American Embassy 
   P.O. Box 30137 
   Nairobi, Kenya 
   Tel:  254-2-334141 
   Fax:  254-2-216648 
   Contact:  Mr. Paul Fletcher, Chairman 
   American Women's Association 
   P.O. Box 47806 
   Nairobi, Kenya 
   Tel:  245-2-580158 
   Contact:  Jan Carmony, Chairwoman 
   The East African Association 
   Jubilee Insurance House 
   P.O. Box 41272 
   Nairobi, Kenya 
   Tel:  254-2-218317 
   Contact:  Mr. Charles A. Gardner, Resident Representative 
   Marketing Society of Kenya 
   Witu Road 
   P.O. Box 69826 
   Nairobi, Kenya 
   Tel:  254-2-544717 
   Fax:  254-2-544717   
   Kenya Association of Manufacturers 
   Peponi Road 
   P.O. Box 30225 
   Nairobi, Kenya 
   Tel:  254-2-746005/6 
   FAX:  254-2-746030 
   Contact:  Mr. Joe W. Kuria, Chief Executive 
   Federation of Kenya Employers (FKE) 
   Waajiri House, Hurlingham 
   P.O. Box 48311 
   Nairobi, Kenya 
   Tel:  254-2-721929 
   FAX:  254-2-721990 
   Contact:  Mr. Tom Owuor, Executive Director 
   Central Organization of Trade Unions (COTU) 
   Solidarity House, Digo Road 
   P.O. Box 13000 
   Nairobi, Kenya 
   Tel: 254-2-761375 
   FAX: 254-2-762695 
   Contact: Mr. J.J. Mugalla, Secretary General 
   Kenya National Farmers Union (KNFU) 
   Adamali House, City Center 
   P.O. Box 43148 
   Nairobi, Kenya 
   Tel:  254-2-228894 
   FAX:  254-2-339905 
   Contact:  Mr. Joseph K. Waweru, Chief Executive 
   Kenya Bureau of Standards 
   Off Mombasa Road, Nairobi South C 
   P.O. Box 54974 
   Nairobi, Kenya 
   Tel:  254-2-502211 
   FAX:  254-2-503293 
   Contact:  Eng. E.O. Nyamunga, Managing Director 
   SGS Kenya Ltd. 
   Rank Xerox House 
   P.O. Box 72118 
   Nairobi, Kenya 
   Tel:  254-2-751811 
   FAX:  254-2-741468 
   Contact:  Mr. M. Politi 
   SGS Control Services Inc. 
   42 Broadway 
   New York, N.Y. 10004 
   Tel:  (212) 482-8700 
   Cotecna Inspections Inc. 
   1105 Sunset Hills Road 
   Reston, VA 22090 
   Tel:  703-689-0805 
   Bureau of Veritas-Bivac 
   ABC Place 
   P.O. Box 34378 
   Nairobi, Kenya 
   Tel:  254-2-443891 
   FAX:  254-2-447022 
   Ministry of Agriculture 
   Kilimo House 
   P.O. Box 30028 
   Nairobi, Kenya 
   Tel:  254-2-718870, 718879 
   FAX:  254-2-720586 
   Contact:  Eng. Peter Wambura, Permanent Secretary 
   Ministry of Commerce & Industry 
   Co-Operative House 
   P.O. Box 30430 
   Nairobi, Kenya 
   Tel:  254-2-340010 
   FAX:  254-2-226036 
   Contact:  Mrs. Margaret Githinji, Permanent Secretary 
   Ministry of Finance 
   Treasury Building 
   P.O. Box 30007 
   Nairobi, Kenya 
   Tel:  254-2-338111 
   FAX:  254-2-330426 
   Contact:  Mr. Benjamin Kipkulei, Permanent Secretary 
   Department of Defence 
   Office of the President 
   P.O. Box 30510 
   Nairobi, Kenya 
   Tel:  254-2-227424 
   Contact:  Mr. E. Njiru, Deputy Secretary 
   Ministry of Transport & Communication 
   Ngong Road 
   P.O. Box 52692 
   Nairobi, Kenya 
   Tel:  254-2-729200 
   FAX:  254-2-726362 
   Contact:  Mr. Sospeter Arasa, Permanent Secretary 
   Ministry of Planning & National Development 
   Harambee Avenue 
   P.O. Box 30005 
   Nairobi, Kenya 
   Tel:  254-2-338111 
   FAX:  254-2-330426 
   Contact:  Mr. Fares Kuindwa, Permanent Secretary 
   Ministry of Labour and Manpower Development 
   Social Security House 
   P.O. Box 40326 
   Nairobi, Kenya 
   Tele:  254-2-729800 
   FAX:   254-2-726497 
   Contact:  Mr. Stanley K. Murage, Permanent Secretary 
   Customs and Excise Department 
   Ministry of Finance 
   P.O. Box 30007 
   Nairobi, Kenya 
   Tel:  254-2-715540 
   Contact:  Mr. J. Cheruiyot, Commissioner of Customs 
   Industrial & Commercial Development Corporation 
   P.O. Box 45519 
   Nairobi, Kenya 
   Tel:  254-2-229213, 222031 
   FAX:  254-2-333880 
   Contact:  Mr. Hasan Kaittany, Managing Director 
   Investment Promotion Center 
   National Bank Building 
   P.O. Box 55704 
   Nairobi, Kenya 
   Tel:  254-2-221401 
   FAX:  254-2-336663 
   Contact:  Mr. Martin Kunguru, Executive Chairman 
   Kenya Ports Authority 
   P.O. Box 96009 
   Mombasa, Kenya 
   Tel:  254-11-312211 
   FAX:  254-11-311867 
   Contact:  Mr. Simon Mukala, Managing Director 
   Kenya Posts & Telecommunications Corporation 
   P.O. Box 30301 
   Nairobi, Kenya 
   Tel:  254-2-227401 
   FAX:  254-2-339437 
   Contact:  Mr. Samson Chemai, Managing Director 
   Kenya Power & Lighting Company 
   Electricity Hse. - Harambee Avenue 
   P.O. Box 30177 
   Nairobi, Kenya 
   Tel:  254-2-221251 
   FAX:  254-2-337351 
   Contact:  Mr. Samuel Gichuru, Managing Director 
   Export Processing Zones Authority 
   British-American Center Building 
   P.O. Box 50563 
   Nairobi, Kenya 
   Tel:  254-2-712800 
   FAX: 254-2-713704 
   Contact:  Mr. Silas Ita, Executive Chairman 
   Research International (EA) Ltd. 
   Ngano House, Commercial St. 
   P.O. Box 72951 
   Nairobi, Kenya 
   Tel:  254-2-558825 
   FAX:  254-2-558502 
   Contact:  Mr. M.R. Jewell, Managing Director 
   Price Waterhouse Associates 
   Rattansi Education Trust Building 
   P.O. Box 43963 
   Nairobi, Kenya 
   Tel:  254-2-221224 
   FAX:  254-2-335937 
   Contact:  Mr. Joseph Mwangi, Manager-Economic Section 
   Deloitte & Touche 
   Kirungii House, Westlands 
   P.O. Box 40092 
   Nairobi, Kenya 
   Tel:  254-2-441344 
   FAX:  254-2-448966 
   Barclays Bank of Kenya Ltd. 
   Bank House - Moi Ave. 
   P.O. Box 30120 
   Nairobi, Kenya 
   Tel:  254-2-332230 
   FAX:  254-2-213915 
   Contact:  Mr. P.C. Geer, Managing Director 
   Kenya Commercial Bank Ltd. 
   Kencom House, Moi Avenue 
   P.O. Box 48400 
   Nairobi, Kenya 
   Tel:  254-2-339441 
   FAX:  254-2-335219 
   Contact:  Mr. Alexander Kaminchia, Executive Chairman 
   Standard Chartered Bank (K) Ltd. 
   Stanbank House, Moi Avenue 
   P.O. Box 30003 
   Nairobi, Kenya 
   Tel:  254-2-330200 
   FAX:  254-2-330506 
   Contact:  Mr. Tony Groag, Managing Director 
   Citibank N.A. 
   Fedha Towers - Muindi Mbingu St. 
   P.O. Box 30711 
   Nairobi, Kenya 
   Tel: 254-2-333524 
   Fax: 254-2-337340 
   Contact: Paul Fletcher, General Manager 
   First American Bank of Kenya 
   ICEA Building 
   P.O. Box 30691 
   Nairobi, Kenya 
   Tel:  254-2-333960 
   FAX   254-2-230969 
   Contact:  Mr. M. Blasetti, Managing Director 
   Commercial Bank of Africa 
   Wabera Street 
   P.O. Box 30437 
   Nairobi, Kenya 
   Tel:  254-2-228881 
   Fax:  254-2-335827 
   Contact:  John Docherty, Managing Director 
   Stanbic Bank Kenya Limited 
   Kenyatta Avenue 
   P.O. Box 30550 
   Nairobi, Kenya 
   Tel:  254-2- 335888 
   Fax:  254-2- 330337 
   World Bank 
   Hill Park, Upper Hill Road 
   P.O. Box 30577 
   Nairobi, Kenya 
   Tel:  254-2-714141 
   Fax:  254-2-720612 
   Telex: 22022 
   Contact:  Mr. Stephen O'Brien, Representative 
   International Finance Corporation 
   P.O. Box 30577 
   Nairobi, Kenya 
   Tel:  254-2-714141 
   Fax:  254-2-720604 
   Contact:  Mr. Guy Antoine, Chief of Mission 
   African Development Bank 
   01 BP 1387 
   Abidjan 01 
   Cote D'Ivoire 
   Tel:  (225) 204444 
   FAX:  (225) 204902    
   The Kenya Association of Manufacturers Directory 
   P.O. Box 30225 
   Nairobi, Kenya 
   Tel:  254-2-746005 
   FAX:  254-2-746028 
   Contact:  Mr. J. W. Kuria, Chief Executive 
   Kenya Business Directory 
   Nation Marketing & Publishing Ltd. 
   Nation Center, Kimathi Street 
   P.O. Box 30211 
   Nairobi, Kenya 
   Tel:  254-2-221222 
   FAX:  254-2-214047 
   East Africa Business Directory 
   Nation Marketing & Publishing Ltd. 
   Nation Center, Kimathi Street 
   P.O. Box 30211 
   Nairobi, Kenya 
   Tel:  254-2-337710    
   FAX:  254-2-214047 
   The Nation 
   Nation Center, Kimathi Street 
   P.O. Box 49010 
   Nairobi, Kenya 
   Tel:  254-2-337691 
   FAX:  254-2-214047 
   Contact:  Mr. Alfred Kiboro, Chairman 
   The East African Standard 
   Kitui Road, Industrial Area 
   P.O. Box 30080 
   Nairobi, Kenya 
   Tel:  254-2-540280    
   FAX:  254-2-553939 
   Contact:  Mr. Bob Holt, Managing Director 
   The Kenya Times 
   Kingsway House, Muindi Mbingu Street 
   P.O. Box 30958 
   Nairobi, Kenya 
   Tel:  254-2-224251 
   FAX:  254-2-340695 
   Contact:  Mr. Michael Ngwiri,  Managing Editor  
   Economic Review 
   Mitchell Cotts House 
   P.O. Box 44271 
   Nairobi, Kenya 
   Tel:  254-2-219603 
   Contact:  Mr. Peter Warutere, Editor 
   East African Computer News 
   Fatuma Court, Argwings Kodhek Road 
   P.O. Box 67335 
   Nairobi, Kenya 
   Tel:  254-2-567277 
   FAX:  254-2-568756 
   Contact:  Dr. Crowther N. Pepela, Publisher 
   Nairobi International Show 
   P.O. Box 21340 
   Nairobi, Kenya 
   Tel:  254-2-562676 
   FAX:  254-2-565882 
   Contact:  Mr. Alex Kambona, General Manager 
   Archer & Wilcock, Advocates    
   Old Mutual Building - Kimathi Street 
   P.O. Box 10201 
   Nairobi, Kenya 
   Tel: 254-2-227-531 
   Fax: 254-2-335-091 
   Daly & Figgs, Advocates 
   Lonrho House - Standard St. 
   P.O. Box 40034 
   Nairobi, Kenya 
   Fax: 254-2-334-892 
   Kaplan & Stratton, Advocates 
   Queensway House - Kaunda St. 
   P.O. Box 40111 
   Nairobi, Kenya 
   Tel: 254-2-335-333 
   Fax: 254-2-340-827 
   Hamilton, Harrison, & Mathews, Advocates 
   ICEA Building - Kenyatta Ave. 
   P.O. Box 30333 
   Nairobi, Kenya 
   Tel: 254-2-225-981 
   Fax: 254-2-222-318 
The following are FY '95 U.S. Commercial Office, Nairobi industry sub-
sector analysis reports for Kenya: 
   Report Title            Date 
   Vegetable Oil Milling Machinery   04/95 
   Telecommunications Equipment      05/95 
   Sugar Processing Equipment        07/95 
   Resins                            08/95 
   Agricultural Tractors             09/95 
The following are FY '95 U.S. Commercial Office, Nairobi planned 
industry sub-sector analysis reports for FY '96 for Kenya:    
   Report Title            Date 
   Navigational Aid Apparatus      11/15/95 
   Electrical Transformers         01/15/96 
   Synthetic Organic Dyes          02/25/96 
   Dental Instruments & Supplies   03/15/96 
   Food Service Equipment          04/10/96 
   Bakery Machinery                04/30/96 
   Sugar Processing Equipment      05/30/96 
   Computer Software               06/20/96 
   Resins                          07/15/96 
   Agricultural Implements         08/15/96
The U.S. Commercial Office, Nairobi's Industry Sub-Sector Analysis (ISA) 
reports are available on the National Trade Data Bank (NTDB) and through 
local U.S. Department of Commerce District Office.  For information and 
phone orders for the NTDB, contact the NTDB help line (202) 482-1986 
The following is a list of upcoming FAS-Nairobi Commodity Reports and 
Market Briefs including those planned through FY '96. 
   Report Title             Date         Country 
   Tree Nuts Annual         03/01/95      Kenya 
   Grain and Feed Annual    02/17/95      Kenya 
   Sugar Annual             04/16/95      Kenya 
   Coffee Annual            06/17/95      Kenya 
   Report Title             Date         Country    
   Tree Nuts Annual         01/15/96      Kenya 
   Grain & Feed Annual      04/01/96      Kenya    
   Sugar Annual             04/15/96      Kenya 
   Coffee Annual            05/15/96      Kenya 
   Tobacco Annual           06/01/96      Malawi 
   Tea Annual               09/15/95      Kenya 
   Agricultural Sit. Annual 09/30/96      Kenya 
   Grain & Feed Annual      09/30/96      Tanzania 
FAS commodity reports are available from the Reports Office, USDA/FAS, 
Washington, DC 20250. 
The U.S. Commercial Service, U.S. Embassy, Nairobi is examining possible 
appropriate trade events for FY 96.  The possibility of organizing a 
U.S. Pavilion at the Nairobi International Show, September/October 1996 
will be examined.  Post will look at possible spin off delegations from 
the many trade missions and matchmakers and other events being held in 
South Africa.  The Commercial Service will also look at International 
Buyer Delegations to the U.S. now that there has been a freeing of 
foreign exchange restrictions in Kenya.  In addition, U.S. participation 
in other trade events in the region will be considered as an active and 
aggressive regional commercial program is being developed in concert 
with other U.S. Missions in the area. 
Post welcomes opportunities to hold broad based catalog shows with 
products suitable for developing countries.  Post has asked to be 
included in any such shows.  A Products for Development Catalog Show is 
planned for September 1995. 
Post has available a USIA facility suitable for business sponsored 
promotions.  This facility is available to local U.S. firms or visiting 
U.S. companies wanting a solo exhibition. 
U.S. firms should consult the U.S. Department of Commerce Export 
Promotional Calendar in the NTDB, or contact the Commercial Service, 
U.S. Embassy, Nairobi, for the latest information on trade events in 
Kenya and the region. 
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