Kenya - Country Commercial Guide
Trade Financing
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For in-depth review of methods of payment or other trade finance options, please read the Trade Finance Guide.

Methods of Payment

The most common methods of payment within the Kenyan market are typically cash-based, mobile payments such as M-Pesa including through business tills for utility payments, or by credit cards such as Visa and Mastercard. Prior to exporting, U.S. firms are strongly advised to discuss best practices and transaction details with an experienced international bank familiar with Kenya. U.S. firms are also strongly advised to determine the range of financing offered by competitors.

There are several basic methods of receiving payment for products sold in Kenya, the selection of which is usually determined by the degree of trust in the buyer’s ability to pay. Payment alternatives that U.S. exporters might consider, in order of the most secure to the least secure include:

  1. Cash in advance (confirmed wire transfer or check after depositing and clearing)
  2. Confirmed irrevocable letter of credit (if concerned about the importer and international standing of his/her bank)
  3. Irrevocable letter of credit (if concerned only about the reliability of the importer)
  4. Documentary drafts for collection (checks drawn on the importer’s bank)
  5. Open account; and
  6. Consignment sales

U.S. exporters selling to Kenya for the first time are advised to transact business only based on cash-in-advance or an irrevocable letter of credit confirmed by a recognized international bank. Any other form of payment carries a high level of risk. The establishment of the African Trade Insurance Agency (ATI) in 2001 strengthened and increased foreign trade by providing cover against non-commercial risks such as war, trade embargoes, expropriation, and seizure of goods. ATI has support from the International Development Association (an arm of World Bank), and offers insurance at lower costs than most private, commercial insurers. Since 2003 ATI has supported over $ 13 bn worth of trade and investments across the continent, secured an investment grade rating of ‘A’ from Standard & Poor’s, and expanded membership to more than a dozen African countries. With Standard & Poor’s “A/Stable” credit rating, U.S. exporters can take cover from ATI for their sales to Kenyan and other African countries.

The U.S. Commercial Service in Kenya can provide background and credit-risk information on Kenyan individual or firm. The section can also recommend local companies that provide U.S. exporters with credit information and the bona fides of potential Kenyan importers on a commercial basis.

In order increase competitiveness, U.S. companies are encouraged to explore financing options provided by the U.S. Export-Import Bank. Often by ensuring the sale, U.S. companies can provide better payment terms to their Kenyan partners while mitigating risk.

Banking Systems

The Central Bank of Kenya (CBK) is the primary regulator of the banking industry. The primary classification of banks in Kenya is by ownership. Some banks belong to local individuals or companies while others belong to foreign individuals or organizations. Another general classification of banks is by nature, that is, microfinance banks and commercial banks. The CBK which governs banks further classifies commercial banks based on their assets. Tier 1 banks are large banks that have hundreds of billions in assets and are not likely to collapse financially. They are the top banks in Kenya. Tier 2 banks are medium-sized banks while Tier 3 consists of small banks.

Currently there are 28 domestic and 14 foreign commercial banks with branches, agencies, and other outlets throughout the country; one mortgage finance company; eight representative offices of foreign banks; eleven licensed deposit taking microfinance institutions; 49 insurance companies; the Post Office Savings Bank with a large network of branches around the country; 79 foreign exchange (forex) bureaus; three licensed credit reference bureaus, 18 money remittance providers and 174 deposit-taking licensed savings and credit cooperative organizations (SACCOs) with a membership of about 4.73 million persons ( However, the banking sector is essentially dominated by seven Tier 1 commercial banks, namely Equity Bank, Kenya Commercial Bank, ABSA Bank Kenya (formerly Barclays), Diamond Trust Bank, Cooperative Bank, NCBA Bank and Standard Chartered. In addition, smaller banks have emerged and experienced tremendous growth in recent years.

Several Kenyan banks, including Kenya Commercial Bank, NCBA Bank and Equity Bank, have subsidiaries operating in the East Africa Community and South Sudan. Increasing access to finance has been abridged with the use of innovation such as agent banking, which allows commercial banks and Deposit-Taking Microfinance (DTM) institutions to engage the services of third-party outlets to deliver specified financial services on their behalf.

With the advent of mobile money and integration with the formal banking systems, the number of Kenyans with access to electronic financial services has grown rapidly. Customers have also increased the use of bank platforms through a wide array of services. Mobile money platforms (most notably M-Pesa) have been used to offer medical insurance, microloans, transfer money to a pre-paid credit card, and even to pay parking, electricity, and water bills. Short term loans are also provided on mobile money platforms with a minimum repayment period of thirty days.

Kenya’s capital markets have also continued to expand. While treasury bills and bonds dominate the market for short-term securities there is only light trading in commercial paper. However, the sector has seen increased activity via issuances of corporate bonds and the establishment of collective investment schemes (unit trust, investment clubs, mutual funds and employer share ownership plans), asset-backed securities and venture capital funds.

U.S. investors, who consider extending short term financing to Kenyan businesses, should exercise caution in evaluating repayment risk. Possession of an audited financial statement and an attractive credit rating does not necessarily mean that debt will be repaid.

Foreign Exchange Controls

Kenya repealed all exchange control laws in 1993 and has moved to a fully market-determined exchange rate system. There are no restrictions on converting or transferring funds associated with investment. For more information, see Investment Climate Statement.

The Central Bank of Kenya (CBK) licenses foreign exchange bureaus, which were introduced in 1995 to enhance efficiency in the forex market. However, the following capital transactions have foreign exchange restriction:

  1. Investment by foreigners in shares (set in July 2002 at not more than 75 % for both companies and individuals on shares traded on the NSE); and
  2. Investments by Kenya residents outside Kenya exceeding $500,000 must be approved by the Central Bank through the facilitating bank.

 Residents and non-residents are permitted to buy or sell foreign exchange, without restriction, to and from authorized dealers up to the equivalent of $10,000. Amounts exceeding this limit require documentation to show the purpose for the transaction. This is, however, primarily only for administrative recording by the CBK. In December 2009, the GOK assented to the Anti-Money Laundering (AML) Bill, which came into effect in June 2010. The enactment of this AML law has been lauded as a positive move by Kenya’s bankers and financial representatives, who see it as a major step in the fight against money laundering in the country and region given Kenya’s unfortunate position as a base or transit point for money laundering activities.

Exporters may retain all their export proceeds in foreign currency accounts with local banks or sell such proceeds to obtain local currency. 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, relevant agreements and renewals are subject to approval.

In relation to currency movement, according to the Legal Notice of 1998 issued under the CBK Act (Cap 491), persons leaving or entering Kenya are permitted to take out or bring into the country currency up to five hundred thousand Kenya Shillings (Kes 500,000) or the equivalent of five thousand United States Dollars (US$ 5,000) in foreign currency. Any amounts beyond these limits may be taken out or brought into this country provided they are declared at the point of entry or exit (CBK Foreign Exchange Guidelines).

The foreign exchange market has remained stable even as the global markets were volatile due to narrowing current account deficit with improved exports, strong diaspora remittances, and a lower oil import bill.

U.S. Banks and Local Correspondent Banks

 Almost all major commercial banks in Kenya have either direct or indirect correspondent offices in London and the U.S. They include the following:

  • ABSA Bank Kenya Plc (Formerly Barclays Bank of Kenya)
  • Bank of Africa
  • Bank of Baroda
  • Bank of India
  • Citibank
  • Dubai Bank
  • Ecobank
  • Equity Bank
  • Family Bank
  • Guaranty Trust (GT) Bank (formerly Fina Bank) 
  • Habib Bank A.G. Zurich
  • Kenya Commercial Bank
  • National Bank of Kenya
  • NCBA
  • Stanbic Bank
  • Standard Chartered Bank
  • United Bank of Africa (UBA) Kenya

Additional information can be found on the CBK website.

To access Kenya’s ICS section on financing, visit the U.S. Department of State Investment Climate Statement website.