Personal Finance

New window of opportunity opens for international trade

namanga

Trucks await clearance to enter Tanzania at the Namanga border. It is important to know who the regulators are before you venture into the import business. PHOTO | FILE

Kenya and Africa have been the recipients of a lot of favourable bi-lateral trade agreements, with many countries like China and the US beginning to show a lot of interest in the region as an investment destination.

While these changes may seem like they will not affect your business in any way, it is important to take advantage of the benefits in the bi-lateral agreements and streamline your business for more profitability.

It is time to engage in international trade as the environment is friendly. A few years ago, the conditions were not the same due to a number of factors. Africa was not regarded then as an emerging economy and more focus was given to Asia and the Middle East. The political environment was not what it is today.

No matter what line of trade you may be in, it would pay to read through Kenya’s trade policies and bi-lateral agreements to see how they best benefit your business. In the services industry, for example, the proposed EAC regulations could make expansion easier.

A few years ago I was in Arusha attending a conference hosted by the regional law society and the main theme was on how East African lawyers could take advantage of the changing regulations in the region. Every business will be affected by the change in environment.

A lot of material on Kenya’s trade policies and bi-lateral agreements can be accessed through the relevant ministries. From these documents you will learn the government’s area of emphasis and also get to see the trade incentives available to your business. A trade incentive is a policy made by the government to favour a certain type of business so as to stimulate economic growth.

Businesses that take advantage of trade incentives when they are offered, grow. Bi-lateral trade agreements show you which country is best to import from. This is more relevant for businesses involved in international trade.

For example if you have been importing clothes from Turkey but find that China has a more favourable bi-lateral agreement with Kenya for the same imports, then aligning to that change causes your business to grow.

For the novices in international trade, a few tips will help you get started.

Before you can import anything you need to have a trade and import licence. You also need some knowledge on what import are allowed and restricted one. Some imports are banned while for others like plants, cars and medicine, a special licence is required.

Before starting this business, it is good to do a local survey to determine the market for your goods. Thereafter you begin to source for a good supplier.

International trade contracts are different from domestic ones as a lot of international law goes into them. Some of the terms to look into include the mode of transportation (air/sea), insurance, currency and dispute resolution, among others.

It would be good to know the currency in which your payments are to be made. On dispute-resolution, it is for the parties to agree on which country’s laws apply and the seat of jurisdiction. It is always wise to include an arbitration clause to avoid subjecting yourself to foreign court litigation which is quite expensive.

It is good to know who your likely regulators will be if you are in import business. These include the Kenya Revenue Authority, Kenya Plant Health Inspectorate Service (for plant or agricultural imports) and Kenya Bureau of Standards (to ascertain the standard of goods imported), among others.

Ms Mputhia has a law firm.
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