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The Import-Licensing System in Kenya
Published online by Cambridge University Press: 11 November 2008
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During the last decade or so there has been considerable interest in the nature and effects of protection policies on the economic performance of developing countries, and a number of attempts have been made to measure the levels of protection afforded local activities. It is, of course, desirable that such studies should take adequate account of the system of protection in its entirety, and this includes a consideration of direct (i.e. quantitative) as well as indirect (i.e. tariff) restrictions of imports.
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References
page 29 note 1 Reimer, R., ‘Effective Rates of Protection in East Africa’, Staff Paper No. 78, Institute for Development Studies, University of Nairobi, 1970,Google Scholar and M. G. Phelps and B. Wasow, ‘Measuring Protection and Its Effects’, have attempted to measure protection levels in Kenya. The latter study made explicit recognition of the existence of direct restrictions on imports when measuring implicit tariff rates.
page 29 note 2 The 1962 Act gave the Governor the power to appoint a Director of Trade and Supplies who could delegate his powers, duties, and functions to Import Licensing Officers, but it was left to the Minister of Commerce and Industry to decide which commodities were to be affected and in what way, and these powers were non-delegatable. The Director had discretion to grant or refuse a licence to import goods falling within the powers of the Act, and was also given the freedom to vary or cancel the terms of any licence already granted, and to restrict their transfer.
page 30 note 1 Albania, Bulgaria, Czechoslovakia, East Germany, Hungary, North Korea, North Vietnam, Poland, Rumania, the People's Republic of China, and the U.S.S.R. The last-named was deleted in 1964, as well as Iran and Iraq.
page 33 note 1 The lists of items (identified by their 6-digit S.I.T.C. code) that fall within the import-licensing system over this period are available, on request, from the author.
A = the percentage share of total imports; B = the percentage affected by licensing (the estimated component is given in parentheses above, where this amounts to more than one percentage point of the total); and C = the proportion of duty paid by licensed imports.
page 34 note 1 Net home consumption is defined in the Annual Trade Reports for East Africa as commercial goods entered at the time of importation for consumption, or ex-warehoused for consumption, to which have been added, or from which have been deducted, imported commercial goods transferred between the partner states (i.e. Kenya, Uganda, and Tanzania). N.H.C. excludes goods re-exported under ‘drawback’.
page 35 note 1 A more reliable indicator of the importance of import licensing is the extent to which domestic prices for individual commodities are permitted to rise above tariff-inclusive world prices through the operation of quantitative restrictions (i.e. by observing implicit tariff rates). However, such information is rarely available from published sources, and so presents severe problems of measurement.
page 38 note 1 Exchange-Control Circular No. 24 of 1972, and accompanying Legal Notice No. 10 of 1972.
page 38 note 2 The new arrangements did not apply to consignments from Afghanistan, Albania, Bhutan, the People's Republic of China, Guinea, Iraq, Laos, Mongolia, Nepal, North Korea, North Vietnam, the Seychelles, and Southern Yemen, nor to goods imported by parcel post.
page 40 note 1 Employment, Incomes, and Equality: a strategy for increasing productive employment in Kenya (Geneva, 1972), pp. 453–7.Google Scholar
page 41 note 1 In addition to the devices mentioned, the under-invoicing of exports is a further means of evading taxes or exporting foreign exchange.
page 41 note 2 Employment, Incomes, and Equality, pp. 465–8.
page 42 note 1 An attempt has been made by R. L. Friesen to assess the independent effect of the tariff on the behaviour of categories of imports during the period 1954 to 1966. However, this took no account of import licensing, which could have affected several of the imports in the study; see East Africa Economic Review (Nairobi), 12 1975.Google Scholar
page 43 note 1 The I.L.O. Mission found evidence of this in Kenya: ‘The Manager of one new international subsidiary told the Mission that the size of the domestic market would, in seven years, be sufficient to permit an efficient level of operation. Obviously if the firm had waited so long to begin installation of their plant they would probably have found one of their international competitors already producing in a monopoly market’; Employment, Incomes, and Equaliy, p. 183.
page 44 note 1 Controls on the prices of a number of staple commodities at all stages along the chain of distribution had been in force for a number of years before 1971. Price controls were extended to encompass all manufacturers as an accompaniment to the tightening of import restrictions at the end of that year. Legal Notice No. 302 of December 1971 stated that before importers or manufacturers could raise the prices of goods offered for sale above current levels they must first apply to the Price Control Advisory Committee which was established to receive such applications.
page 44 note 2 Until 1972 there was only one Licensing Officer for the whole of Kenya who handled all classes of imports. With the increase in the number of licensed items which the Director of Trade and Supplies was called upon to control, three more Licensing Officers were appointed after January 1972, but this was apparently insufficient. Import licences were only valid for four months from the time of application, and cases were reported of licences having expired before the processing was completed so that importers then had to re-apply.
page 45 note 1 An indication of the degree of tariff escalation may be derived from the ‘End Use Analysis of Imports’ in the Kenya Statistical Abstracts. The weighted average nominal tariff on non-government imports of capital, intermediate, and final-consumption goods were, respectively, 7·2, 18·9, and 31·1 per cent in 1964, and 8·6, 14·6, and 31·7 per cent in 1972. The figures are distorted slightly, due to the inclusion of duty-free inter-territorial imports.