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This could partly be due to ignorance of the way the export business works, its requirements and where to get information. Until recently, it was very costly to acquire the commercial intelligence needed to play in the global market place.
However, currently, armed with the internet we can access valuable information and find foreign buyers and local suppliers anytime.
Export Promotion Council, charged with the responsibility of encouraging Kenyan exports worldwide, offers export market information and international trade counselling to exporters, through its Centre for Business Information division.
At its offices located at Anniversary Towers, Nairobi, the centre has a library, open to the public. Here, visitors can look at samples of exportable products and access free internet provided for those who wish to do online research on potential markets and products.
The council has country-specific information and trains exporters on how to develop a business plan, says Ms Rahab Ng’ang’a of Export Promotion Council (EPC) business.
“We also keep information on market trends from which we are able to tell you, as a potential exporter, who your buyers will be as well as your competitors,” she told Money.
“We use this information to guide exporters on where there is an opportunity or where they have no chance of success.”
The EPC library contains various information in hard copy and electronic media. These include directories, market reports and surveys, trade magazines and journals, government publications including development plans, statistical reports and finance bills.
Know your buyer
Unlike in local markets where a seller delivers his goods with the assurance a buyer will come, you have to know your buyer first in international trade. This is because the international market is governed by certain requirements.
For example, if you want to export avocados, different countries require different sizes.
“So you need to understand the requirements of that particular market then look at the products that you have and see whether they meet those requirements,” EPC corporate affairs and communication manager Ernest Chitechi says.
You do not have to be a big company to participate in the export business.
“Whether you are a small or not you can go into export,” he says. “Even small businesses go into export by joining into cooperative societies.”
The council also helps individual exporters and one can export at whatever capacity, so long as they have a good product, which is in demand.
Steps to becoming an exporter:
First, identify which product you need to export and whether it will meet the demand and expectation of the person on the other end.
After identifying the product or products, form a company because people in international trade deal with organisations that are formal.
“If you are informal some people will be very reluctant because often, international trade is done with documents that addressed to formal organisations,” Mr Chitechi says.
After identifying a product and forming a company, acquire the necessary documents. A number of products require special permits from the relevant agencies before they can be exported. These include fish, horticulture and mineral based products.
Exporters of fish are required to obtain a number of documents from the Fisheries department. The fish movement permit includes processing licence, approval number, certificate of compliance with the Kenya Standards for fish handling and processing, export permit and health certificate.
Horticulture exporters require an export permit from Horticulture Crops Development Authority (HCDA), phytosanitary certificate from Kenya Plant Health Inspectorate Services (Kephis) and compliance to traceability of products, hygiene, maximum residue level among other things.
For mineral-based products, exporters require a permit from the Commissioner of Mines and Geology. Certificates of origin are vital export documents issued by the Customs department.
They indicate the origin of exports, so that they can enjoy preferential duty entry into the export market, depending on the prevailing trade arrangement between Kenya and that importing country.
Payments for products are normally through letters of credit, bank drafts and telegraphic transfers through the banking system. However, to minimise risks associated with payment defaults, an exporter should ensure that confirmed irrevocable letter of credit and free on board clauses are included in the sale agreement.
Free on board (FOB) means that the seller fulfils his obligation of delivery when goods have been loaded on to the vessel at the specified port of shipment, in our case Mombasa and our international airports.
The seller bears all the resultant costs and risks up to this point only. This means that the buyer has to bear all the costs and risks of loss or damage to the goods from that point.
Terms used in international trade are vital to exporters. They should to refrain from dealing in trade terms that will hold the exporter responsible for the import customs clearance.
Quite often, the charges and expenses at the importing country may cost more to the exporter than anticipated. To overcome losses, the use of reliable customs freight forwarders in the importing country to handle the import routines is necessary.
Having a corporate website is also a “must” in international trade. Some experts say that nine out of 10 of your potential buyers will try to learn about your company and products through the internet prior to approaching you, and if they cannot find your website, they may choose your competitors.
EPC is helping small businesses create their websites to enable them sell abroad.
What is the rate of success to those who enter into export business?
It depends on how well you are prepared to enter into that market, Mr Chitechi says.
“If you are entering into it thinking you will make a quick kill it will not work,” he adds.
“Like any business, you need to nurture it, nurture those relationships and understand your market and customers’ preferences.”
One needs to be patient, because international business as any other is tricky and takes a while before fruits can be seen.
PARASTATAL heads who signed the Mombasa port community charter risk being sacked if their agencies do not deliver on the contents of the new entity. The charter signed between the government and the private sector aims at improving the movement of cargo from the port into hinterland