Catalogs, exhibitions and electronic product brochures serve as convenient starting points for both sellers and end-users. The Kenyan market prefers visual representation for most products, particularly technically detailed goods. Technical details are important in product brochures as they may also serve as references for maintenance. Written materials should supply both end-users and importers with up-to-date product information, including prices and the latest technological developments. U.S. firms should, where practical, use Kiswahili as a second language on flyers, with English as the primary (and official) business language. With mobile phone penetration at 11.4% (an increase of 14.7% per the Communications Authority / KNBS Economic Survey 2019), most telemarketing is focused on mobile phone users.
Trade Promotion & Advertising
Traditional forms of advertising via print, radio, and television remain the most widely used in the country. Most companies and organizations including the government are now adopting new ways of advertising over the internet and through social media platforms. Product complaints are now easily reported via various social media. Companies are increasingly setting up online pages and opening Facebook, Instagram, and Twitter accounts to access their customers more easily. Kenya has several daily newspapers, with Daily Nation and The Standard being the main papers. Most newspaper companies also have online versions of their product.
Many leading international advertising agencies including Ogilvy & Mather, McCann Erickson, Publicis and Omnicom, and Young & Rubicam have local offices or affiliates in Kenya. Although there are no restrictions on importing ready-to-use advertising materials, U.S. firms should consult closely with locally based advertising firms to obtain leads on accepted advertising norms and adapt material to fit local preferences and values, including translation into target languages such as Kiswahili.
Kenya has 42 different ethnic groups, and radio and TV stations have vernacular sub-stations and programs that cater for these groups. Advertising on radio is often translated to fit some of the major tribes.
The U.S. Commercial Service in Kenya assists U.S. companies in conducting market promotion through organizing workshops or technical seminars.
Pricing
Pricing formulas will vary from one product to another based on supply, demand, landed cost, margin expectations, and competitive alternatives. Typically, gross margin expectations range between 15-30%, though others believe this to be true of expected net margin. Landed product costs are arrived at by applying cost formula and the sum total of: Free on Board (FOB) costs, as per bill of lading; net sea/airfreight charges; insurance; shipping agents fee; port charges; and clearing and forwarding charges - generally up to 0.5% of FOB and land transport costs. Kenyan importer preference for price quotations is Cost-Insurance-Freight (CIF) in U.S. dollar to Mombasa or Nairobi rather than FOB at a U.S. port.
Whether quotes are made FOB United States or CIF Kenya, the exchange of title may take place in either location. For example, a U.S. exporter may quote CIF Kenya (including the cost of sea freight and insurance in the invoice) but pass title at the U.S. port in exchange for payment at that time. This offers several benefits to the U.S. seller: the transaction takes place in the U.S. and under U.S. law; the U.S. company won’t find itself owner of merchandise stranded at the Kenyan port of entry; and the importer of record is the Kenyan counterpart, who is always better positioned to manage local customs formalities.
Kenya remains a price-sensitive market where individuals may compromise on the quality if they can get it a lower price. This means that U.S. firms will need to pay attention to the price competitiveness of their products vis a vis existing supplier from the east (e.g., China, India, and parts of the Middle East) who have gained a dominant share in various sectors on lowly priced goods and services.
Sales Service/Customer Support
U.S. firms exporting products to Kenya should fully train local staff and establish a strong liaison with end-users for continuous equipment performance assessment. Manufacturers, in conjunction with a local representative, should provide detailed product information, including set-up and operating instructions. Good local availability of spare parts and strong, integrated back-up service is vital.
Kenyan buyers increasingly demand strong after-sale service and customer support, including warranties, especially for electronics items. Buyers increasingly demand guarantees from retailers to ensure that products remain functional. After-sales repair, technical service, and customer support is particularly crucial given Kenya’s challenging physical infrastructure environment. Products in Kenya often suffer damage from transit, improper installation, and constant power fluctuations. Training and support remain an integral part of the sales cycle and provide an added advantage to one supplier over another.
Local Professional Services
Many U.S. and multinational professional service companies (accountants, consultants, lawyers, etc.) are in Kenya. A list can be found on the American Chamber of Commerce website.
Regarding legal services, one should note that the Kenyan legal system is based on British law, and Kenyan legal practices and procedures often require the services of either a Kenya-based attorney or an attorney licensed to practice in Kenya. It is advisable that U.S. firms seek the services of such attorneys whenever legal services are required. Though not common, a minor contravention of Kenyan legal practices and procedures (including using the services of a non-Commonwealth attorney), can result in serious repercussions such as company de-registration and nullification of legal agreements, contracts, charges, etc.
Particular attention should be made to visa and immigrant issues, as expatriates can be legally liable for administrative mistakes made by their Kenyan staff. U.S. firms are also advised to seek clarification of all legal terminology, as legal terms in Kenyan English may mean something different in American English.
Principal Business Associations
The U.S. Chamber of Commerce (U.S. Africa Business Center) - Key priorities include working with the U.S. and Eastern and Southern African governments and regional bodies to develop trade agreements, encouraging policies that foster innovation and the growth of the digital economy, and promoting greater U.S. business and investment linkages in these critical markets.
American Chamber of Commerce Kenya (AmCham) - AmCham is the principal business member organization representing the American Private Sector ecosystem in Kenya. Its mandate is to promote trade and investment between Kenya and the United States.
Corporate Council on Africa (CCA) - The Corporate Council on Africa (CCA) is a leading U.S. business association focused solely on connecting business interests in Africa.
Kenya Association of Manufacturers (KAM) - Established in 1959 as a private sector body, KAM has evolved into a prominent business association that unites industrialists and offers a common voice for businesses in manufacturing.
Organization of Women in Trade (OWIT International) - Launched in April 2001, OWIT-Nairobi, OWIT International’s first chapter in Africa, is a forum for networking, education, information dissemination, professional growth, and leadership. Sectors of focus include: (1) manufacturing and energy; (2) retail and trade; (3) services; (4) agriculture; and (5) technology and innovation.
Kenya Private Sector Alliance (KEPSA) - KEPSA is the private sector apex and umbrella body set up in 2003 to bring together business community in a single voice to engage and influence public policy for an enabling business environment. KEPSA is a key player in championing the interests of the Kenyan business community in trade, investment and industrial relations. - KEPSA is the private sector apex and umbrella body set up in 2003, to bring together business community in a single voice to engage and influence public policy for an enabling business environment. KEPSA is a key player in championing the interests of the Kenyan business community in trade, investment and industrial relations.
ASIS Kenya Chapter (ASIS) - ASIS’ Kenya Chapter is comprised of security professionals specializing in the private and public sectors in security, law enforcement, security-safety related disciplines from the emergency response services. Limitations on Selling U.S. Products and Services.
Business Council of International Understanding (BCIU) - The Business Council for International Understanding facilitates mutually beneficial, person-to-person relationships between business and government leaders worldwide.
Limitations on Selling U.S. Products and Services
There are few restrictions for U.S. companies to operate in Kenya. According to TripleOKLaw Advocates in Kenya, the following sectors have some limitations:
Architecture: For architects to practice as limited liability companies, they must be registered in Kenya and have met certain requirements including having had a minimum of one year of professional experience in Kenya to the satisfaction of the Board of Registration of Architects and Quantity Surveyors or have satisfied the Board that they have otherwise acquired an adequate knowledge of Kenya building contract procedures.
Aviation Sector: 51% of the voting rights of a body corporate or partnership must be held by the state or a citizen of Kenya or both.
Engineering: A foreign firm may only be registered as an engineering consulting firm if the firm is incorporated in Kenya and a minimum of 51% of its shares are held by Kenyan citizens. Individuals may only be registered as professional engineers if they are resident in Kenya and hold a valid working permit.
Financial institutions: Only banks, financial institutions, the Government of Kenya, foreign governments, state corporations, foreign companies licensed to operate as financial institutions, and non-operating holding companies approved by the Central Bank, may hold more than 25% of the share capital of a financial institution.
Insurance Sector: For insurers, the Insurance Act provides that a minimum of one third of the paid-up capital of an insurer should be owned by Kenyan citizens, or partnerships whose partners are all citizens of Kenya, or wholly owned by citizens of Kenya or wholly owned by the Government.
Land Titles: According to the Land Control Act, any transaction to sell, transfer, mortgage or dispose of agricultural land, or deal with any shares of a private company which for the time being owns such land, can only be conducted by Kenyan citizens or a private company, all of whose members are citizens of, it is worth noting that there are currently no restrictions on the ownership of non-agricultural properties by foreign citizens or entities, except that foreigners can only have a maximum of 99 years of leasehold in such land.
Mining: The new Kenya Mining Act 2016 provides for the Cabinet Secretary to prescribe limits on local equity participation.
Telecommunications Sector: To be licensed in Kenya in this sector, a company is required to issue at least 30% of its shares to Kenyans on or before the expiry of three years after issuance of a license.
(Source: TripleOKLawAdvocates)