Dipping a toe in the Kenyan market

Turning challenges into success

Despite the rosy picture and the many advantages the country enjoys over its neighbours, trading with Kenya is not free from challenges. Ranked 109^th out of the 183 economies around the world and ninth out of the 46 Sub-Saharan African economies in World Bank’s Ease of Doing Business Ranking 2012, Kenya, like many emerging markets, requires traders’ careful evaluation and close management.

While governments in Africa have taken a slew of measures to foster an environment conducive to business, customs corruption and red tape remain a problem in the region, including Kenya. In this regard, Hong Kong’s exporters should allow for additional customs clearance time to Kenya and ensure that Kenyan buyers are fully informed of the shipping schedules and routing so that they or their customs agents can prepare all the documents as required by the customs authority in advance to expedite clearance.

With little doubt, the problem of trade financing can be an obstacle to deter many potential traders in Kenya, especially when dealing with small- and medium-sized companies which cannot provide sufficient guarantees for letters of credit. Against this background, it’s not uncommon for Kenyan buyers to ask for open credit, while they generally accept upfront deposit payment terms for purchases from Asia. To play safe, Hong Kong companies can seek assistance from Kenya National Chamber of Commerce and Industry (KNCCI) and other private banking institutions such as KCB Group (which has recently been named the “Best Trade Finance Bank” in Kenya) to verify the creditworthiness of their new business partners before extending credit.

Finally, personal and cargo security have long been a headache on the African continent, so it is on the East due to the piracy off the coast of Somalia and other poverty-driven crime such as kidnapping, armed robbery and car theft in the region. Situated next to Somalia and Ethiopia, Kenya is not immune from the problems of violence and crime, especially in areas close to the borders. To travel or do business in Kenya, especially around areas outside major cities, traders should remain vigilant and attentive to local customs; for example, wearing conservative clothing and not walking alone at night or in dark alleys will reduce the risk of being targeted.

[1] Robusta is also grown but only accounts for a very small proportion of Kenya’s overall coffee production.