KEPROBA Annual Report 2019-2020 by MakeItKenya

ANNUAL R EP O R T 2019- 2 0 2 0

2019- 2020

6.5 % ANNUAL EXPORTS GROWTH

Kenya Export Promotion and Branding Agency is working towards growing kenya’s annual exports by 6.5 % in the next two years Visit

WWW.BRAND.KE 2

For More Brand Kenya | Export Kenyan | Build Kenya

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

ACRONYMS AND ABBREVIATIONS AfCFTA African Continental Free Trade Area Agreement B2B Business to Business CEO Chief Executive Officer COMESA Common Market for Eastern and Southern Africa CRM Customer Relations Management EAC East African Community ERP Enterprise Resource Planning FPC- K Fresh Produce Consortium of Kenya FPEAK Fresh Product Association of Kenya GDP Gross Domestic Product ICT Information and communication Technology ITC International Trade Centre JETRO Japan External Trade Organization KAM Kenya Association Manufacturers KEPHIS Kenya Plant Health Inspectorate Service KEPROBA Kenya Export Promotion Branding Agency KEPSA Kenya Private Sector Alliance KEYA Kenya Exporter of the Year Awards KENTRADE Kenya Trade Network Agency KNBS Kenya National Bureau of Statistics KNCCI Kenya National Chamber of Commerce and Industry Kshs Kenya Shillings MDAs Ministries, Departments and Agencies MOITED Ministry of Industry Trade and Enterprise Development MoU Memorandum of Understanding NBMC Nation Branding Marketing Communication PMDD Product Market Development Directorate SADC Southern African Development Community SDTED State Department of Trade and Enterprise development SGR Standard Gauge Railway TFTA Tripartite Free Trade Area UAE United Arab Emirates UK United Kingdom USA United States of America USD United States Dollar WTO World Trade Organization

TABLE OF CONTENTS CHAPTER 1 � �� 7 Organizational Profile Who We Are ��8 Corporate Mantra ��9 Activities, Brands, Products and Services ��9 Location of Headquarters ��12 Ownership and legal form ��13 Functions ��13 Markets Served ��15 Human Capital ��17 Information on Employee and Other Workers ��17 KEPROBA REGIONAL DIVERSITY ��18

CHAPTER 2 � ��19 Strategy Chairman’s Statement ��20

CHAPTER 3 � ��26 General Performance, Key Achievements, Challenges, Opportunities And Outlook

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ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

Overview Of Brand And Export Performance ��27 Key Operational Achievements ��31 Key Misses In Programme Implementation ��36 Challenges ��37 Opportunities ��38 Keproba’s Outlook ��38

CHAPTER 4 � ��41 Governance Governance Structure ��42 Board Committees ��46 Statement Of Corporate Governance ��52 Corporate Social Responsibility And Sustainability Reporting ��54 Risk Management And Internal Controls ��56

CHAPTER 5 � ��58 Stakeholder Engagement Stakeholder Engagement ��59 Collaboration With Gok Institutions ��60 International Relations: Areas Of Collaboration And Partnerships ��60 The Kenya Exporter Of The Year Awards (Keya) ��60

CHAPTER 6 � ��65 Reporting Practices Unaudited Financial Statement Fy 2019/ 2020 ��66 Statement Of Financial Performance ��67 For The Year Ended 30 June 2020 ��67 Statement Of Financial Position ��68 As At 30 June 2020 ��68 Statement Of Changes In Net Assets ��69

For The Year Ended 30 June 2020 �� 69 Statement Of Cash Flows �� 70 For The Year Ended 30 June 2020 �� 70 Statement Of Comparison Of Budget And Actual Amounts �� 72 For The Year Ended 30 June 2020 �� 72 Notes To The Statement Of Comparison Of Budget And Actual Amounts �� 76 30. Appendices �� 103

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CHAPTER 1 ORGANIZATIONAL PROFILE

Who We Are Kenya Export Promotion and Branding Agency is a State Corporation established under the State Corporations Act Cap 446 through Legal Notice No.110 of August 9th, 2019 after the merger of the Export Promotion Council and Brand Kenya Board. The Agency’s mandate is to implement export promotion and nation branding initiatives and policies to promote Kenya’s exports of goods and services worldwide.

Vision Transform Kenya into a top global brand.

Mission Brand Kenya, Export Kenyan, Build Kenya

Tagline Inspiring Global Trade

Core Values Passionate about the Kenyan brand

Collaborative:-

Building impact driven team

Innovative:-

Creativite and resilience

Customer Centric:-

The willingness to support our existing and emerging exporters.

www.brand.ke

Brand Kenya | Export Kenyan | Build Kenya

Energetic:-

Willingness to work as a team

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

Corporate Mantra As a Marketing Agency with a huge mandate, we cannot achieve our goals if we do not collaborate and integrate our strengths as a team to build a strong corporate brand. Therefore as an institution we derive our capacity to deliver through the REVIDO mantra.

CORPORATE MANTRA

DOMINANCE

RELEVANCE Let us always ask ourselves; “Does this meet the important needs of Kenyans and our export market.”

Let us seek to create such a strong emotional connection with Kenyans and our export market so that they rally behind Kenya and our exports

VISIBILITY

Let us seek to connect, engage, inspire and make meaningful connections with Kenyans and our exporters

Activities, Brands, Products and Services Activities The Agency’s mandate is to implement export promotion and nation branding Initiatives and policies to promote Kenya’s export of goods and services. The Agency’s Core activities include: -

Product, Market Development & Promotion

Nation Branding of the country & exports products

Research, Innovation & Market intelligence

Export Trade Information & E-Commerce

Brands:

MARK OF IDENTITY

Services 6 Export Trade Information Services: The Agency collects, collates, stores, analyses and disseminates trade information to support enterprise competitiveness. In addition to the market research findings, the Agency obtains export market information from credible sources such as the International Trade Centre (ITC), World Trade Organization (WTO), trade promotion organizations including the Japan External Trade Organization (JETRO), Centre for the Promotion of Imports from Developing Countries (CBI), among others. Information is accessible by the public through print and electronic media and business library. Through Resource Centre, the Agency provides business counselling services to potential and existing exporters. CBIK services will be decentralized further to cover more counties. The Agency also promotes the use of ICT platforms to enhance brand exposure and export transactions for Kenyan enterprises in the international markets.

Internal and external trade policy environment review and recommendation of the policy review to enhance export production and competitiveness,

Advocacy and Trade Policy Facilitation

Contribute to trade policy dialogue, The input to government’s macroeconomic, trade and other sectoral policy formulations, Sector-specific surveys on export-related activities, Trade flow analysis using the various market analysis tools to identify export opportunities,

Exporters’ and investors’ Roadmap publication.

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ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

ECONOMIC INTELLIGENCE

Country reports

Market Trends

6 International Market Development and Promotion The Agency undertakes to identify export market opportunities for Kenyan products and formulate appropriate market entry and penetration strategies. This will be realized through informed market research and surveys findings, trade missions, contact promotion programmes, buyer/ seller meetings, trade fairs and exhibitions and inward buying missions. On an annual basis, the Agency develops the Kenya Export Market Development Programme (KEMDP), which lists prioritized promotional events to guide its export market development activities.

Market Research reports

Opportunities for export of services

6 Market Research & Surveys The Agency conducts research and surveys in prioritized markets to identify export opportunities. In response to the market survey findings, supply surveys are carried out to determine the supply capacity in the country for the identified export opportunities. These findings inform the appropriate export promotion strategies to be employed in the target markets. These findings are crucial in providing actionable market intelligence which is disseminated through the Resource Centre.

6 Enterprise and Product Development The Agency enhances competitiveness, expansion and diversification of Kenya’s exports through interventions in product development and adaptation such as product design, value-added processing, packaging, labelling, branding and enhancement of exporting skills at both sectoral and firm levels. In addition, the Agency facilitates the mainstreaming of export-oriented producer groups particularly the youth, women and other marginalized segments of the community into the export process.

Location of Headquarters Head Office Kenya Export Promotion and Branding Agency Anniversary Towers 16th & 1st Floor University Way

P. O. Box 40247 – 00100 Nairobi, Kenya Contacts

Tel: +254-20-2228534-8

Office Mobile: +254-722-205875, +254-734-228534 Fax: +254 -20-2228539/

Email: chiefexe@brand.ke

Brand Kenya | Export Kenyan | Build Kenya

Kenya Export Promotion and Branding Agency NHIF Building 4th Floor.

Ragati Road / Upper Hill

P. O. Box 40247 – 00100 Nairobi, Kenya Contacts

Tel: +254-20-2715236/7

Office Mobile: +254-702-164100 Email: chiefexe@brand.ke

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

Ownership and legal form Kenya Export Promotion and Branding Agency is a State Corporation fully owned by the Government of Kenya under the State Department for Trade and Enterprise Development of the Ministry of Industrialization, Trade and Enterprise Development.

Functions Under Paragraph (4) of the executive order, the functions of the Agency shall be to.

To advocate, coordinate, harmonise and implement export promotion and Nation branding initiatives and policies to promote Kenyan goods and services in export markets;

2 To collect, collate,

disseminate and serve as a repository of trade and Kenya brand information;

3 To provide nation branding

guidelines for stakeholders’ initiatives including Kenya missions abroad;

To advocate, promote and facilitate the development and diversification of Kenya’s export trade;

5 To promote and brand Kenyan exports through knowledgebased support and information to exporters and producers including export procedures and documentation, market entry requirements, and marketing techniques;

6 To encourage and monitor

the observance of international standards and specifications by exporters;

7 To provide cooperation to the

export inspection agencies on quality control and preshipment inspection of export products to ensure observance of international standards and specifications;

8 To promote and brand

Kenya as a supplier of high-quality goods and services;

9 To ensure the harmonized application of the national mark of identity for Kenyan goods and services;

10 To formulate and implement strategies for improved balance of trade, foreign exchange earnings and retention;

To offer advice to Kenyan exporters including in technology upgrading, quality and design improvement, standards and product development, and innovation; To provide export assistance services, such as distribution of trade-related information to exporters, foreign country market research, and counselling to exporters;

15 To provide Kenyans with

positive information about Kenya in order to promote national unity, patriotism and national pride;

16 To establish an integrated

approach within Government and private sector towards international marketing and branding of Kenya;

To co-ordinate Kenya’s participation in trade promotion events including trade fairs and buyer-seller meets;

17 To build national support

To provide market intelligence through research, analysis and monitoring of trends and opportunities in international markets that Kenyan exporters can take advantage of to increase or diversify exports;

18 To provide customized

for the nation brand with other Government Agencies, non-governmental organizations and the private sector; advisory services; and to do any other thing necessary or expedient for the discharge of its functions under this order.

19 Do any other thing

necessary or expedient for the discharge of its functions under this order.

Brand Kenya | Export Kenyan | Build Kenya

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

Markets Served Kenya’s export products access more than 200 Countries of the world. In the strategic plan 2019-2022, the Agency prioritizes on 22 markets that most significantly contribute to the growth of Kenya’s export sector and contribution to the GDP as summarized below:

No.

Market

Pakistan

586.23

Untapped Potential (USD Million)

697.83

104.80

398.50

Uganda

610.81

179.90

United States of America

467.32

431.60

10 11

Tanzania

United Arab Emirates Netherlands

United Kingdom Rwanda China DRC

Ethiopia Egypt

Kazakhstan

Italy

Germany

18 19

20 21 22

Japan

293.70

345.58

92.60

457.69

409.30

176.13

105.60

396.75

109.90

149.82

62.60

Target (USD Million) as at 2023

111.60

Status Exports in 2018 (USD Million)

150.60

53.80

66.70

54.40

790.71

898.92

438.18

866.99

547.35

281.73

163.70

216.52

117.00

198.66

83.70

282.36

39.17

70.60

109.77

110.17

107.40

217.57

22.03

20.10

21.11

50.07

71.10 57.50

107.57

Somalia

148.80

Russia

84.62

134.70

219.32

21.92

35.80

57.72

Nigeria Qatar

Poland Ghana

TOTAL

Brand Kenya | Export Kenyan | Build Kenya

57.90 12.42

4,423.40

47.20

92.21

10.20 7.50

2,406.70

196.00

42.13 68.10 19.92

6,830.10

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

Human Capital Staff is a key resource in any organization. The Agency has employed various initiatives to ensure staff empowerment and motivation. It has in place Employee Welfare & Benefits initiatives which are geared towards enhanced employee motivation, retention and improvement of employees’ health & wellbeing. These include; Car Loan Scheme, Staff Retirement Benefits Scheme and in-house medical scheme for employees and their declared dependents. The Agency established a Human Resource Advisory Committee (HRAC) which oversees staff training, discipline, motivation, recruitment, among others. Kenya Export Promotion and Branding Agency is an equal opportunity employer and selects graduates, interns and attaches in line with the laid down government recruitment procedures.

Information on Employee and Other Workers

TOTAL STAFF 89

MALE

FEMALE

AVERAGE AGE OF ALL STAFF

AVERAGE AGE OF MANAGEMENT (LEVEL 1-4 - 32 STAFF)

AVERAGE AGE OF NON MANAGEMENT (57 STAFF)

STAFF LIVING WITH DISABILITY

CHRISTIAN

MUSLIM

KEPROBA REGIONAL DIVERSITY BORANA 1%

TAITA KURIA 1% 1%

POKOT 1%

EMBU 2%

MIJIKENDA 3%

KISII 7%

MERU 7%

KAMBA 10%

KALENJIN 11%

LUHYA 14%

LUO 10% KIKUYU 27%

MAASAI 5%

KISII

KAMBA

LUHYA

MAASAI

KIKUYU

LUO

KALENJIN

MIJIKENDA

POKOT

BORANA

EMBU

MERU

TAITA

KURIA

KEPROBA staff displaying one of the guiding principal of the Institution's working culture

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ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

CHAPTER 2 STRATEGY 19

CHAIRMAN’S STATEMENT

MR. JASWINDER (JAS) BEDI, EBS, MBS Chairman

Brand Kenya | Export Kenyan | Build Kenya

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

On behalf of the Export Promotion and Branding Agency, (KEPROBA), it is my utmost pleasure to present this report of the Agency for the financial Year 2019-2020. This year marks the first anniversary since the merger of the former Export Promotion Council and Brand Kenya Board, formerly two distinct organizations that were given new impetus and created a stronger entity, that is more committed and better equipped to promote the country and Brand and; ready to meet new challenges in global export markets. The institution is founded on strong grounding, backed by equal commitment by the government to overcome export challenges as well as, setting a common ground for a multisectoral solution to export development and country image upgrade.

Passionately Kenyan

ii. Innovation iii. Energetic iv. Collaboration v. Customer Centric

Through progress in the implementation of our Strategic Plan 2019-2022 in which we envisage to contribute towards Through progress in the implementation the growth of of our Strategic Plan 2019-2022 in exports by at least which we envisage to contribute 6.5% annually by 2022 towards towards the growth of exports by at attainment of least 6.5% annually by 2022 towards the 25% annual attainment of the 25% annual export export growth, we growth, we remain committed to remain committed to achieve our achieve our strategic objectives to: strategic objectives to:

As a new organization, it has been a remarkable beginning, full of opportunity, while the challenges as expected have also been there. The year therefore was instrumental in laying foundations and infrastructure to aid in Inspiring Global Trade through rejuvenated production and marketing of export products in the international markets while guided by our vision, mission and core values as below:

VISION Transform Kenya into a Top Global Brand. Mission

CORE VALUES

Brand Kenya, Export Kenyan, Build Kenya

Develop, diversify and brand Kenya’s Export products

ii. Develop and diversify Kenya’s Export markets iii. Boost the image and reputation of the Kenya Brand; and iv. Strengthen institutional capacity for the Agency to be able to deliver on its mandate The second half of the year, from Mid-March 2020, was affected by the complexities related to the novel Corona Virus. The economic activities in many global markets were almost at near zero level and this affected Kenya’s exports to these markets. The Kenyan Export

System has been experiencing underlying systemic challenges both in terms of product as well as market constraints. Most of the top ten products that Kenya exported in 2019 (as reported by the KNBS) were also similar the top exports in 2009, indicative that the export basket has not changed much in the last 10 years. We exported the same items in the last decade while under normal circumstances economies are expected to go through structural changes in every 5-years. The top 5 (five) products contributed to 52% of the total products exported in 2019. On the other part, the top 10 export markets accounted for about 64% of all Kenya’s exports in 2019. The need for strengthening our presence in the global markets with products is a renewed preoccupation that the Agency tackled in the reported period. The world trading system is expected to provide renewed impetus to trade, even though currently moving at challenged pace without a clear path for

Brand Kenya | Export Kenyan | Build Kenya

growth. The Kenya Export Promotion will be expected to think innovations which will push trade to the next level and spur economic prosperity. Global economic integration has meanwhile, taken the centre stage for global economic growth, with a promising exportoriented nation poised to leverage performance for their national development. The Kenya Export System is on similar note taking the centre stage for rejuvenated performance of economic development. The African Continental Free Trade Area Agreement (AfCFTA) that has gained acceptance in a record time is coming into force in January 2021. The opportunities arising are expected to give new impetus to Kenya’s export and new opportunities through continental markets. Internally the Kenya Export Promotion and Branding Agency will enhance efforts to draw values from a strong global brand perception through well packaged and unique products that Kenya is globally known for to expand its exports slice of the global markets.

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

Kenya Exported Horticultural products worth KSh 109.5 billion in 2019. That is 18.4% of the total export for that year

CEO’S STATEMENT

DR. WILFRED MARUBE Chief Executive Officer

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ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

I am pleased to forward this Annual and Financial Report for the Financial Year 2019-2020. The Kenya Export Promotion and Branding Agency was formed in August 2019, pursuant to the merger between Kenya Export Promotion Council and Brand Kenya Board to create a one-stop focal point for all export promotion and country branding. The merger has henceforth brought focused engagements with producers, exporters, and the markets to ensure higher market access for Kenya’s export products. In the period since creation, the agency has focused on building export capacities and integrating them into global market system.

The Agency coordinated Kenya’s participation in exhibitions and exposure of Kenya’s products in new markets including in the United Arab Emirates and in the Russian Federations. These are markets that have very good prospects for diversification and future growth; Towards informing on opportunities, the agency collated and disseminated information on various promising markets as well as generated information through trade flows for lead Kenyan products. A Market research was undertaken in the Republic of Rwanda and in Burundi, that were also instrumental in market development and formulating measures that would contribute towards rejuvenation of exports to these markets that have been experiencing constrained performances;

The Agency supported entrepreneurs by providing technical assistance to local exporters both on export products and markets conformity through the client engagement programme.

Through a multi sectored approach and collaborations with the lead trade support associations and corporate bodies, the Agency engaged at contextual levels to create common approaches for market access and higher performance of exports through a forward looking strategic Plan, 2019-2023; which particularly lays an emphasis on alleviating some of the most debilitating and binding constraints on export products and markets export performance. Some of the activities within the period were: The Agency facilitated market engagements in Foreign markets for fresh produce both in the European Union and in the People’s Republic of China; these provided unique opportunity for export of fresh produce to Italy, Germany and Peoples Republic of China;

The Agency supported entrepreneurs by providing technical assistance to local exporters both on export products and markets conformity through the client engagement programme. In view of the many challenges that are confronting nations in international trade, the Agency has remained alive to the emerging challenges with a view to responding accordingly with appropriate policy responses.

The Corona Virus emerged at the beginning of 2020 and from mid-March, affecting nearly all productive sectors of the economy. The Agency engaged with national teams on efforts to manage the pandemic impacts on the economy and particularly, the export sector. The global business environment has also become increasingly competitive, with some elements of adversarial relations cropping among leading exporting Nations. Amidst the regional and global challenges, the Agency is working towards implementing export strategies through an Integrated Marketing Communications approach for a robust and vibrant export performance.

CHAPTER 3 26

GENERAL PERFORMANCE, KEY ACHIEVEMENTS, CHALLENGES, OPPORTUNITIES AND OUTLOOK Brand Kenya | Export Kenyan | Build Kenya

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

OVERVIEW OF BRAND AND EXPORT PERFORMANCE i. Export Performance The 2019 Kenya Export Trade Statistics obtained from the Kenya National Bureau of Statistics and Central Bank of Kenya indicated that the structure of export markets and products largely remained unchanged. Kenya’s exports registered a slight decrease of 2.8% in value from Kshs. 613 billion in 2018 to Kshs. 596 billion in 2019. Similarly, Kenya’s imports decreased by 0.2% to Kshs. 1.756 trillion in 2019 from Kshs. 1.760 trillion in 2018. The balance of trade deficit worsened by Kshs. 13.5 billion to record Kshs. 1.161 trillion in 2019 up from Kshs. 1.147 trillion in 2018. The trend in exports and imports is summarized below for the period 2007-2019.

Source: KNBS, compiled by KEPROBA In the year 2019, the major export products included tea, horticulture, petroleum products, apparels, mineral ores and coffee all contributing for 59% of the merchandise exports while the major import products were petroleum oil products, crude palm oil, industrial machinery, motor vehicles and medicaments. The major imports of capital and industrial goods indicating an expanding economy, through manufacturing for home consumption and export market.

Source: KNBS, compiled by KEPROBA The analysis indicates that the Kenya’s leading (top 10) exports destinations absorbed 61% and 64% of the Kenya’s total exports in 2018 and 2019 respectively. On the other hand, Kenya’s leading (top 10) export products accounted for 70% and 65% of the total exports in 2018 and 2019 respectively. This analysis imply concentration of few Kenya’s export products in few markets hence the need for both product and export market diversification that the Agency is focusing in.

KENYA'S EXPORT DESTINATION BY COUNTRY - 2019 All other Countries 36.5%

Uganda 10.7%

USA 8.7% Netherlands 8.0% Pakistan 7.6%

UAE 6.5%

China 2.5%

Egypt 3.2%

Rwanda 3.9%

Tanzania 5.6%

Source: ITC, 2019 Database

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UK 6.7%

Source: KNBS, compiled by KEPROBA Kenya’s export products with high export potential include tea and mate, flowers, coffee, fruits, ferrous metals, vegetable oils and fats, pharmaceutical products, nuts, mineral oils, pulses, beauty products and perfumes, vegetables and apparel.

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

On the other hand, markets with potential for Kenya’s exports include Netherlands, United States of America, Pakistan, Uganda, United Kingdom, Tanzania, Egypt, United Arab Emirates, Russia, Rwanda, Democratic Republic of Congo, India, Germany, France, South Sudan, Norway, Saudi Arabia, Ethiopia, Afghanistan and Kazakhstan.

ii. Brand Performance Kenya grew two places up and ranked 63rd out of 75 countries in 2019 compared to 65 in 2014.

Top 10 brands in the world Country

Japan

Switzerland

4 5 6 7

8 9

Norway

Sweden Finland

Germany Denmark Canada Austria

Luxembourg

Kenya Table 1 Source FCI Index 2019

FCI ranking

Percentage from 2014

2019

2014

3 4

-1

6 8

5 -

change

-3

-3 -

Top Country Brands in Africa Country 1 2 3 4 5 6 7 8 9

South Africa Ethiopia Egypt Algeria Kenya Sudan Morocco Algeria Angola

FCI ranking 2019

2014

51 52 55 60 63 65 66 68 69

40 54 65 67 75 -

Percentage change from 2014 -11 -1 +2 -1 +7 -

Table 2 Source FCI Index 2019 Kenya is ranked 84th globally and grew one place up to number 12 in the Country Brand-Trade rankings in Africa as shown in the table below.

Top Country Brands in Africa- Trade Country Ranking 2019/2020 South Africa 1 Nigeria 2 Egypt 3 Morocco 4 Ghana 5 Tanzania 6 Ethiopia 7 Mozambique 8 Zambia 9 Algeria 10 Kenya 12 Source Bloom Consulting Country Index 2019/20

Brand Kenya | Export Kenyan | Build Kenya

2018/2019 1 2 4 3 5 9 16 8 6 7 13

Variation

Global Ranking

+1 -1 +3 +9 -3 -3 +1

36 38 46 48 56 72 78 80 81 82 84

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

KEY OPERATIONAL ACHIEVEMENTS Strategic Objective 1: To develop, Diversify and Brand Kenya’s Export Products

Under this strategic objective, the Agency seeks to develop new product lines to widen Kenya’s export basket to increase foreign exchange. The Agency facilitates branding of both the existing and newly developed products with the mark of identity to demonstrate originality of such products and project the Kenya’s image as a source of high quality products. Such knowledge will increase preference of Kenya’s export products by the international buyers. In the period under reporting, the Agency achieved the following:

a) Product researches and supply surveys for Kenyan products

While the Agency appreciates contribution of all export products in the growth of the economy, there was need to maximize on the products in which Kenya has the highest comparative advantage while at the same time focusing on products that registered highest export potential and continual increase in demand. Through a number of criteria including product export performance, supply capacity, Global demand, level of value addition, Prioritization in the Integrated National Export Development and Promotion Strategy and conformity to rules of origin. Nineteen (19) export products were prioritized as summarized below. No.

Code

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

'090240 '060311 '080262 '090111 '240290 '020450 '300490 '620342 '060319 '200559 '080440 '200949 '070999 '721070 '210690 '250100 '200820 '340119 '620463

Product label

Black tea Fresh cut roses and buds Fresh or dried macadamia nuts Coffee Manufactured tobacco and cigarettes Goat meat Medicaments Men clothing Fresh cut flowers and buds Preserved leguminous vegetables Fresh or dried avocados Pineapple juice Fresh or chilled vegetable Iron and steel products Food preparations Salt preserved/canned pineapple soap detergents women clothing Total

% Share of Global Kenya's supply Kenyan exports in demand (USD capacity (USD 2018 million) million) 22.41 3,778.82 1,355.99 7.98 3,346.62 482.67 1.44 539.62 87.16 3.77 19,804.56 227.92 1.38 24,867.56 83.66 0.54 330.45 32.92 1.71 302,913.74 103.49 1.16 24,829.84 70.32 1.33 3,060.46 80.54 0.63 385.57 37.85 1.96 6,036.46 118.30 0.37 318.21 22.42 1.27 2,616.80 76.97 0.78 10,260.33 47.48 0.72 43,784.23 43.59 0.68 4,193.83 40.89 0.63 1,067.09 38.27 0.57 1,617.97 34.72 1.07 26,365.40 64.86 50.41 480,117.55 3,050.00

b) Enhance the Value Proposition for Kenya’s Prioritized Products The Agency leveraged on the Made in Kenya Campaign in which 23 companies adopted the mark of Identity for use on their products, for promotion of the Buy Kenya Build Kenya strategy.

Branded Kenyan product from Osho Chemicals with the Mark of Identity

Strategic Objective 2: To Develop and Diversify Kenya’s Export Markets Under this strategic Objective, the Agency seeks to widen Kenya’s export markets in addition to the traditional ones. This includes access to traditional markets by Kenyan export products that the Country has never exported to such markets before. In the year under review, the Agency achieved the following:

a) Market Research Through a number of criteria including gravity model, export performance, strategic location in accessing neighboring markets, existence of Kenyan Embassies in the market, existence of preferential trade arrangements and prioritization of the market in the Integrated National Export Development and Promotion Strategy, twenty two (22) markets were prioritized as summarized below. No.

Market

Pakistan

Uganda

Tanzania

United States of America

United Arab Emirates

Netherlands

United Kingdom

Rwanda

China

STATUS

Exports in 2018 (USD Million)

Untapped Potential (USD Million)

Target (USD Million) as at 2023

610.81

179.90

790.71

586.23

293.70

467.32

345.58

457.69

396.75

176.13

109.90

Brand Kenya | Export Kenyan | Build Kenya

111.60

104.80

431.60

92.60

409.30

150.60

105.60

53.80

697.83

398.50

898.92

438.18

866.99

547.35

281.73

163.70

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

No.

Market

DRC

Ethiopia

Egypt

Kazakhstan

Italy

Japan

Germany

Somalia

Nigeria

Russia

Qatar

Poland

Ghana

TOTAL

Exports in 2018 (USD Million)

STATUS

Untapped Potential (USD Million)

Target (USD Million) as at 2023

62.60

54.40

117.00

149.82

198.66

21.11

39.17

50.07

110.17

148.80

22.03

84.62

57.90

21.92

12.42

4,423.40

66.70

83.70

71.10

70.60

57.50

107.40

47.20

20.10

134.70

10.20

35.80

7.50

2,406.70

216.52

282.36

92.21

109.77

107.57

217.57

196.00

42.13

219.32

68.10

57.72

19.92

6,830.10

In this period, market researches were conducted in Rwanda and Burundi. The market survey report reveals export opportunities and Kenya’s comparative advantage in exporting to Rwanda and Burundi. The report further highlights challenges that the Kenyan exporters face or are likely to face in exporting to Rwanda and Burundi and provide recommendations and strategies for entry into these markets.

b) Organize, Coordinate, and Participate in Trade Promotion Activities. The Agency developed the Kenya Export Market Development Programme (KEMDP) 2020. This is a calendar of trade promotional events across the world in which Kenyan exporters could be interested in participating. 800 copies of the calendar were printed and disseminated to exporters and other stakeholders. In the period under review, the Agency organized, coordinated and participated in the following trade promotional events: i.

Fruit Logistica 2020 in Germany (31st – 11th February 2020: The trade mission sought to deepen Kenya’s trade relations and enhance market linkages with Germany and the European Union. The event brought together a record number of over 3,300 exhibitors as well as more than 72,000 trade visitors from all over the world. 48 companies were recruited and participated at the Fruit Logistica 2020. Publicity was conducted through a video on Destination Kenya, a press release on Kenya’s participation, Digital Media Support, Media Meet-and-greet and Story Pitching leading to generation of Public Relations (PR) value worth Kshs.1.5 million. In the year 2019 Kenya’s exports to Germany amounted to Kshs. 11.3 billion representing 1.1% growth from Kshs.11.2 billion registered in 2018.

ii.

Trade Mission and Participation at the Russia Africa Economic Forum in Sochi, Russia, (October 23rd – 24th, 2019): Business deals worth USD 26.75 million was secured by the Kenyan exporters of tea, coffee, and horticultural products during the Russia Africa Economic forum in Sochi, Russia. In the year 2019 Kenya’s exports to Russia amounted to Kshs. 6.3 billion representing 26.0% decline from Kshs. 8.6 billion in 2018.

iii.

iv.

Cross Border Trade Promotion Bazaar in Moyale: The Kenya Export Promotion and Branding Agency conducted a pre-event planning meeting in Ethiopia in February 2020 with critical stakeholders for a buy in and support from the Ethiopia National Chamber of Commerce. During the meeting, a concept was developed to conduct the first Kenya – Ethiopia Cross border trade Bazaar and Trade facilitation Forum in Moyale. The forum was a strategy to enhance market penetration, deepen and maximize Kenyan goods and services exposure in the Ethiopian market following a study conducted in 2015 where numerous products and services were profiled for the target market. In addition, matchmaking meetings were held with 8 Ethiopian distributors dealing in Pharmaceuticals, Cosmetics, Detergents, Cleaning Materials, Household Chemicals and Products, Stationery, Textiles and Furniture Products with a view of establishing contacts for ease distribution of Kenya products in Ethiopia. The Trade promotion Bazaar could not be conducted due to interruptions occasioned by the emergence of Covid-19 in the Country. In the year 2019 Kenya’s exports to Germany amounted to Kshs. 6.5 billion representing 2.6 % growth from Kshs. 6.3 billion in 2018. 1st China-Africa Economic Forum in Changsha, China: 11 products were showcased during the first China-Africa Economic and Trade Expo in Changsha, China. One trial export order for six (6) 20foot containers of leather worth Kshs. 15 million was secured during the expo. An MOU was signed between KEPROBA and Funfree International Trade Co. Ltd to open a Distribution Centre for Kenyan Flowers in Changsha. Direct flights were launched from Nairobi to Changsha with the inaugural fight touching down at the JKIA on 12th June 2019. An MOU signed Between KEPROBA and the Shanghai GreeChain Information Science and Technology Limited to promote Kenya’s exportable products in China on both online and physical platforms. A Memorandum

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of Understanding between KEPROBA and China-Africa E-Commerce Co. Ltd was signed to establish an Online Country Exhibition Centre that will promote Kenyan goods and services. In the year under review, the Agency successfully participated in Beijing Expo 2019. In the year 2019 Kenya’s exports to China amounted to Kshs. 15.1 billion representing 35.9% growth from Kshs.11.1 billion in 2018. v.

World Expo 2020 Dubai: Kenya expressed intention and secured a pavilion in the upcoming EXPO Dubai 2020. The theme of the Expo is “Connecting Minds, Creating the Future”. Kenya will exhibit under the opportunity district of the Expo. Kenya’s content curation was submitted to the content curation team of the Expo organizing committee. The Expo was launched in the country in a high level breakfast forum on 10th December 2019 to sensitize stakeholders about the Expo and the opportunities in the Tourism, Trade and Investment, Small Medium Enterprise, Education, Agriculture, Trade of Services i.e., Finance, Information technology and communication, for Kenya’s participation. In the year 2019 Kenya’s exports to United Arab Emirates amounted to Kshs. 38.7 billion representing 10.5% growth from Kshs. 35.0 billion registered in 2018.

Strategic Objective 3: To Manage Image and Reputation of the Kenya Brand Under this strategic objective, the Agency seeks to manage image of the Country to the international market. This involve branding of the made in Kenya products with the mark of identity and promotion of the Buy Kenya Build Kenya strategy. In the period under review, the Agency achieved the following;

Harmonize Government Visual Identity Systems (GIS) During the period under review, KEPROBA launched the Government Visual Identity System (GIS) to harmonize the look and feel of all government institutions. Twenty-two (22) GIS manuals were

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

developed and submitted to various ministries and Semi-Autonomous Government Agencies (SAGAs) for implementation.

Strategic Objective 4: To Strengthen the Institutional Capacity of the Agency to deliver on its mandate Under this strategic objective, the Agency seeks to enhance its efficiency in delivering services to the stakeholders.

Strengthen Business Processes In the period under review, the Agency developed strategic plan for the period 2019-2022 aimed at guiding operations of the Agency. Validation of the strategic plan was done with stakeholders in the North Rift and Lake Basin regional economic blocs while validation with stakeholders in other regional economic blocs was interrupted and eventually stopped due to emergence of COVID -19 and the consequent measures to control its spread.

The Kenya Exporter of the Year Awards (KEYA) The Agency organized this event to recognize and encourage outstanding export performance by individual exporting enterprises. Exporting companies that participated in the awards were assessed based on a number of criteria: leadership and corporate governance, marketing and customer focus, financerevenue growth, GDP contribution and foreign exchange earnings, information communication technology an e-commerce adoption, product quality, processes and certification, human resource management, and sustainability. More than 25 companies participated in the 2019 Inaugural Kenya Exporter of the Year Awards (KEYA) as summarized below

KEY MISSES IN PROGRAMME IMPLEMENTATION

ii.

1st China-Africa Economic and Trade Expo in Changsha, Hunan – China: The Agency targeted to secure at least 10 business deals. Only one trial export order for six (6) 20-foot containers of leather worth Ksh 15 million was secured. More deals could not be secured since the Trade, Investment, Tourism and B2B forum that was to be hosted by Kenya at the Kenya pavilion, which would create a platform for trade negotiations did not happen.

iii.

Preparation for Kenya’s participation at the World Expo Dubai 2020: The Agency targeted to brand the Kenya pavilion at the World Expo 2020 Dubai. This could not be conducted due to interruption by the emergence of COVID-19 that led to restriction of inter-country movement. The event was postponed to start in 1st October 2021 to 31st March 2022. Consequently, the Agency postponed the activity to the next financial year.

iv.

Sector Specific Trade Fair for coffee in Portland Oregon, USA: The Agency sought to participate in this event with a view to promote Kenya and Kenyan made products to enhance visibility. The Agency looked forward to leverage on this event to establish distributorship contacts with Key distributors in USA to ensure wider reach of Kenyan products in the USA market and its environs. However, the event was cancelled due to the emergence of COVID-19.

Strategic Objective 1: To Develop, Diversify and Brand Kenya’s Export Products Enhance the Value Proposition for Kenya’s Prioritized Products The Agency planned to brand 500 products with the mark of identity. A total of 23 companies adopted the mark making the Agency fall short of branding 477 products. This was largely attributable to the emergence of Covid-19 whose containment measures in the Country disrupted and halted engagements between the Agency and stakeholders.

Strategic Objective 2: To Develop and Diversify Kenya’s Export Markets a) Market Survey in Egypt: The Agency sought to conduct market survey in Egypt to generate market intelligence with regard to opportunities in exporting to Egypt, challenges that could be faced by Kenyan exporters in exporting to Egypt and recommend strategies to be adopted by Kenya and Kenyan exporters in enhancing access to the Egyptian market. This could not be conducted due to unavailability of funds. b) Trade Promotional Events i. Cross Border Trade Promotion Bazaar in Moyale and Solo exhibition in Ethiopia: The Agency targeted to organize Kenya’s participation at the Cross-Border Bazaar in Moyale and Official opening of the One-stop Border post. The Agency targeted to facilitate 20 exporters to exhibit and promote their products at the event. The activity was not conducted due to emergence of COVID -19 and consequently no exporters were facilitated to exhibit at the event.

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c) Develop a database of key distributors in the target market: The Agency sought to engage Kenyan Diaspora in promoting export products in target markets. This was

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

to be conducted in the sidelines of trade promotional events such as trade fairs, expos and trade missions. Emergence of COVID -19 lead to the halt of several trade promotional events and consequently this activity could not be conducted. d) Establishing warehousing facility in target markets - Moyale Kenya and Lubumbashi in Democratic Republic of Congo: The Agency sought to undertake feasibility study to inform establishment of the distribution infrastructure in Moyale and Lubumbashi. The activity was disrupted by the emergence of Covid-19 which delayed grant of high-level clearance to undertake it. e) Establishment of a technical funds to support exporters: Technical funds to support exporters is yet to be rolled out. The Agency continues to engage the National Treasury to ensure rolling out and implementation of the technical funds to support exporters.

II.

Inadequate Staff: The Agency has minimal staff capacity against the establishment, affecting efficiency in implementing programmes and activities. There is need for hiring for staff with specialized skills.

III.

Lack of Framework for adoption of Rebranding the Public Service: Rebranding of the Public Service faced slow restructuring and reforms in government and led to delayed adoption due to lack of an adoption framework. It was observed with satisfaction that Public Service rebranding is possible and acceptable. There is also need for enhanced adoption and implementation to achieve the desired rebranding i.e. mainstreaming it through the performance contracting system.

IV.

Pain Areas hindering Development and Growth of Exports: the following pain areas were identified and needed maximum attention; High Cost Business Environment; Local Restrictions and Regulatory Requirements; Value Chain Weaknesses and raw materials inadequacy; Infrastructure Challenges; Market Competition and Terms of Trade; Inadequate market Information and Promotion; Stringent standards in the International Markets; and Slow adoption of Technology.

Emergence of pandemics such as Ebola and COVID-19 that hindered operations of the institutions: Trade promotion events that were organized to be conducted in the global markets restricting measures put in place to curb the spread of the disease. As a result, export performances to these markets were negatively impacted.

Strategic Objective 3: To Manage Image and Reputation of the Kenya Brand. Harmonize Government visual Identity Systems: Despite the Agency’s effort in developing the Government Identity System (GIS) manuals for the twenty-two MDAs, this is yet to be implemented. This is attributed to lack of facilitation and directive to encourage adoption of the brand manual. The Agency is looking forward to work with the head of Public Service through the parent ministry of Industrialization, Trade and Enterprise Development to ensure implementation of the manuals by the MDAs.

CHALLENGES I.

Inadequate Funding: The two organizations have for the past years received inadequate funding to aid them in realization of their mandates.

OPPORTUNITIES

KEPROBA’S OUTLOOK

Credible and Reliable Partners e.g. International Trade Centre, Ministries Departments and Agencies

II.

Existing Networks for collaboration and implementation of the Agency’s programs e.g. Agriculture and Food Authority, Academia among others.

III.

Unexploited/Untapped transport and logistics infrastructure e.g. SGR/airports Potential

IV.

Use of ICT in E-Trade

Political goodwill created from the government through development programs e.g. Big 4 Agendamanufacturing pillar that promotes value addition.

VI.

Devolution- expanding the supply of exportable products through county engagements

VII.

Available opportunities for partnership in nation branding.

VIII.

Branding of export products

IX.

Enhance the image and reputation of the country brand

Kenya’s Strategic location economic hub in the region

XI.

Maximizing on Kenya heroes and heroines that are globally and locally recognized.

XII.

Kenya’s Diaspora and Forging Professional Alliances and Networks it is observed that Kenya’s Diaspora is eager, enthusiastic, and presents a major untapped potential. There is need to form alliances and network with existing diaspora professional associations.

Kenya Export Promotion and Branding Agency has mapped out future activities that will be carried out under each strategic objective in order to make Kenyan commodities more competitive in the global market.

Strategic Objective 1: To develop, Diversify and Brand Kenya’s Export Products Product diversification: The Kenya Export Promotion and Branding Agency seeks to facilitate Kenyan exporters (both active and prospective) to develop new product lines to widen Kenya’s export basket. Under this output, the Agency seek to train the Kenyan exporters (both active and prospective) to improve their skills on exporting thereby enhancing their competitiveness. Eventually, the programme ensures new product lines and new exporters are introduced to the export arena to increase foreign exchange and reduce balance of trade. The Agency also look forward to advocate for registration of Kenya’s products under the Geographical Indication to enable Kenyan export products earn premium prices based on privileges dictated by the geographical indications in which the products originate, thus further increasing the foreign exchange. The Agency will work to improve the business environment by addressing the pain areas of its stakeholders. The Agency looks forward to promote value proposition of Kenyan products by holding annual Made In Kenya festivals. This will translate to increased uptake and appreciation of the made in Kenya goods. KEPROBA commits to continuously undertake product researches to inform continuous improvements of the Kenyan products for sustenance in the competitive markets.

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ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

Strategic Objective 2: To develop and diversify Kenya’s Export Markets Market diversification: The enterprises that successfully develop new products through the product development programme are taken for test marketing in relevant and opportune markets as in formed by market researches. Under this output, the Agency will attend trade promotional events in prioritized markets to promote products relevant to such markets as enshrined in the institution’s strategic plan. Considering the unprecedented moments occasioned by the emergence of corona virus and measures to contain its spread, the Agency seeks to leverage on technology to develop platforms to support virtual exhibitions whose adoption and relevance is likely to extend to post-Covid-19 period. Technology shall be utilized to increase market access, distribution, and promotion of products. Specifically, KEPROBA shall subscribe and register to E-markets such as Alibaba, JD.com, Jumia, Ebay, Amazon and develop and utilize E-portal to enhance market access and generate revenue. The Agency continues to collaboratively increase market access by negotiating to remove trade barriers. The Agency looks forward to undertaking market researches to continuously provide advisories to exporters and other stakeholders in the export sector to create awareness on market requirements, opportunities therein and strategies for entry into such markets. Countries earmarked for market surveys include Pakistan, Egypt, Zambia, Germany, Poland, Russia, UAE, South Africa, Israel and China. KEPROBA intends to partner with relevant agencies to establish distribution systems regionally and internationally by establishing warehouses in Moyale, Lubumbashi and Kinshasa. This will enable consolidation and increase market access of Kenyan products.

Strategic Objective 3: To Manage Image and Reputation of the Kenya Brand Nation branding: The Kenyan brand is an important part of nation building because it builds a sense of pride and belonging. The Agency will develop and implement the Integrated Marketing and Communication Strategy (IMC) on positioning of Kenya’s products in prioritized markets through undertaking of destination market researches on buyers’ behaviour and promote Kenyan made products in line with the Buy Kenya build Kenya policy. The Agency further seek to harmonize the look and feel of the MDA’s of the Government of Kenya, to bring about uniformity and identity through implementation of the Government Visual Identity System. This will include branding of Kenyan Embassies abroad. In order to foster National pride and patriotism, the Agency will develop and promote content geared towards inspiring high levels of patriotism from the citizens. Moreover, National heroes shall be recognized and celebrated to foster pride and patriotism in the Citizens. In order to increase the visibility of the Kenya brand, a global campaign will be launched, touch points shall be branded, and marketing and branding collaterals shall be developed.

Strategic Objective 4: To strengthen institutional capacity for the KEPROBA to deliver on its mandate. This objective shall be achieved in four main ways. First, the institution’s corporate image shall be enhanced by participating in Corporate Social Responsibility activities and distributing branded collateral. Secondly, human capacity shall be improved by training existing staff and recruiting new ones. Efforts shall also be made to retain staff so that the Agency benefits from their training and experience.

The Agency shall strengthen its business processes by; I. Developing and implementing a performance management system.

II.

Monitoring and evaluation shall also be prioritized to track performance.

III.

A risk management register will be established and ISO certifications shall be acquired and retained.

IV.

Financial management will focus on adherence to budget and utilization of resources.

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Supply Chain management shall focus on timely delivery of quality goods and services to the institution.

VI.

Leveraging on technology to develop and implement an ERP system, a CRM system, and an E- Board system.

Lastly, stakeholder management shall be enhanced by updating the stakeholder database and seeking new points of engagement.

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

CHAPTER 4 GOVERNANCE 41

Governance Structure BOARD OF DIRECTORS CEO

Finance, Human Resource $ Administration Committee

Strategy, Marketing, Communication & Quality Assurance committee

Audit, Risk and Governance committee

CORPORATION SECRETARY & LEGAL SERVICES DEPARTMENT

PRODUCT, MARKET DEVELOPMENT DIRECTORATE

RESEARCH AND INNOVATION DIRECTORATE INTERNAL AUDIT DEPARTMENT RESOURCE CENTRE DIRECTORATE SUPPLY CHAIN MANAGEMENT DEPARTMENT

CORPORATE SERVICES DIRECTORATE

RESOURCE MOBILIZATION & STAKEHOLDER MANAGEMENT DIRECTORATE

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NATION BRAND DEVELOPMENT, MARKETING AND COMMUNICATION DIRECTORATE

CORPORATE STRATEGY, PLANNING RISK AND QUALITY ASSURANCE DIRECTORATE

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

THE BOARD OF DIRECTORS PROFILES Mr. Jas Bedi is a seasoned leader whose business acumen has been recognized by various Governments worldwide and presidents of the Republic of Kenya. He is a Textile Graduate and has attended numerous executive business courses at the Harvard Business School, IMD and IIM.

Mr. Jaswinder Bedi, EBS, MBS Chairman

He has been tirelessly involved in developing export market opportunities in trading blocs such as EAC, COMESA, SADC, TFTA, AfCFTA, USA and the European Union.

Mr. Konje holds a Bachelor of CommerceMarketing and Master of Science Entrepreneurship degrees. He is an Deputy Director External Trade at the State Department for Trade. He has formerly served as a Senior Lecturer at

He is the managing director, Bedi Investments Limited and the executive director, Fine Spinners Uganda Limited. He has previously served in other boards as chairman or director including Kenya Association of Manufacturers, Export Promotion Council, Export Processing Zones Authority, Federation of Kenya Employers, Kenya Private Sector Alliance, African Cotton & Textile Industries Federation, International Textile Manufacturers Federation among others.

the Kenya Institute of Business Training and as a Commercial Attaché in Germany. (Appointed Alternate Director on 1st November 2019)

Mr. Oliver Konje Alt. to PS, State Department for Trade

She is the current Director Public Private Partnerships (PPP) of the National Treasury.

Mrs. Veronica Okoth Alt. to PS, The National Treasury

Holds a bachelor’s degree in economics from Moi university, Master’s degree in Economic policy and management from Makerere University, Uganda, Post Graduate Diploma in Rural Development and devolved systems from the National institute of rural development, India. Has vast experience in the managing high impact

Leah is the Deputy Chief State Counsel, Office of the Attorney General and Department of Justice. She holds a Bachelor of Laws, Master of International Relations and Master of International Trade and Commercial Law.

Ms. Leah Aywah Baraza Alt. to the Attorney General

She is an International Trade Law Expert and has represented Kenya in the COMESA-EAC-

Ms. Kihanya is the Managing Director of Sundales International, founder and CEO of XQUE Communications Ltd. She holds a Bachelor of Business Administration, Marketing Major from the University of Texas, USA and an MBA from United States International University.

Ms. Kathleen Kihanya Independent Director

She is a marketing consultant and brand strategist, a corporate

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public sector projects in both National and County levels of Government for over 15 years having started my career as District Development Officer, as a County Executive Committee for Economic planning, Commerce and Industry in Transnzoia County and as a Director Economic Pillar Vision 2030 delivery secretariat. (Appointed Alternate Director on 17th July 2020)

SADC, Free Trade Area negotiations as well as the Africa Continental Free Trade Area negotiations. She has over 20 years post admission experience. (Appointed Alternate Director on 25th September 2019)

culture and personal branding trainer and a guest lecturer at the United States International University. (Appointed director August 2019)

9th

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

Mr. Bichachi is a communication strategist. He holds a Bachelor of Science in Instrumentation and Control Engineering. He is the founder and Managing Director of Dia Group of

Companies, Dia Consult Limited and a Director of Clouds Digital, Tanzania. Appointed director on 9th August 2019)

Mr. Mark Bichachi Independent Director

Ms. Muga holds a Bachelor of Arts Degree in Economics & Sociology and a Master of Business Administration – Finance. She also has post graduate qualifications in strategic leadership and corporate governance.

Ms. Jacqueline Muga

Consultants. She formerly worked for Cooperative Bank of Kenya. (Appointed director on 9th August 2019)

She is the General Manager at Eliud & Associates Management

Independent Director Dr. Wilfred Marube holds a PhD in Communications Studies, Master of Arts (Linguistics) and Bachelor of Education (English and Literature). He also holds an Executive Diploma in Marketing and a Diploma in Public Relations Management.

Dr. Wilfred Marube Chief Executive Officer

He has previously served as Head of Public Relations and Communications at the Office of the Auditor-General from 2013 to 2020. Prior to that he was the Chief Public Relations Officer at the City Council of Nairobi from 2007 to 2013 and at the Teachers Service Commission from 1997 to 2007.

He is currently the president of the Public Relations Society of Kenya and served as the vice president from 2017 to 2019. He is a Board Member of Global Alliance for Public Relations and Communication Management. (Appointed Chief Executive Officer of Kenya Export Promotion and Branding Agency in May 2020).

Board Committees The Board has formed three (3) principal committees which meet under well-defined terms of reference set by the Board members. These committees comprise of the following members: Board Committee

Finance, Human Resource and Administration Committee

Membership

i) Jacqueline Muga Chairperson ii) Kathleen Kihanya

Functions

a. KEPROBA Financial oversight b. Budget approvals

iii) Oliver Konje

c. Human Resource development.

iv) Leah Baraza

d. Work environment policies

v) Veronica Okoth

e. Internal and external stakeholder engagements. f. Resource mobilization policy development and implementation.

Strategy, Marketing, Communications and Quality Assurance Committee

i) Kathleen Kihanya Chairperson ii) Jacqueline Muga iii) Mark Bichachi iv) Oliver Konje v) Leah Baraza

Audit, Risk and Governance Committee

i) Mark Bichachi - Chairperson

a. Strategic Plan development and implementation oversight b. Performance management and appraisals c. ISO certification d. Performance Contracts (PC) development and Implementation e. Export promotion and Nation Brand Programmes a. Internal controls

ii) Kathleen Kihanya

b. Governance

iii) Oliver Konje

c. Organizational Risks and compliance

iv) Leah Baraza v) Veronica Okoth

g. Organizational Culture and change management

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ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

KEPROBA MANAGEMENT TEAM Floice holds an Executive MBA from Jomo Kenyatta University of Agriculture and Technology and Bachelor of Law from the University of Nairobi.

Ms. Floice Mukabana Director, Resource Mobilization and Stakeholder Management

Floice is a member of the Institute of Certified Financial Analysts (ICFA), Institute of Certified Public Accountants of Kenya (ICPAK), Institute of Certified Public Secretaries of

Christine holds a Master of Business Administration in Finance. She is currently pursuing her PhD.

Ms. Christine Mwaka

She is a Certified Public Accountant of Kenya (CPA(K) and a full member of the Institute of Certified Public Accountants of Kenya, a member of the Kenya

Kenya (ICPSK) and the Law Society Kenya (LSK). She has vast experience in financial management attained in both the Public and private sectors where she has Director, Resource Mobilization and Stakeholder Management worked in various capacities.

Institute of Management and the Institute of Directors. She has over 20 years’ experience in Financial Management and Accounting attained in the Public Sector, Private Sector and NonProfit Sector in senior positions.

Director, Corporate Services

Mr. Macheso holds a Master’s Degree in International Business Management MIM (International Marketing), from Pondicherry University, a Bachelor’s Degree in Economics, Sociology & History from Agra University among other professional trainings.

He is a qualified Product Development and Export Promotion expert with over 15 years’ experience in Export Market Development and Promotion. He is a member of the Marketing Society of Kenya

Maureen is a Strategic Communications and Media Relations expert with over 13 years of experience in the industry. She holds a Masters Degree in Development Communication and a Bachelor of Arts Degree in Communication from Daystar University (Kenya).

local outlets. She has supported clients from the private and public sector in various sectors including: Agriculture, Extractives, Infrastructure, Health, Banking, Oil and Gas among others. Prior to joining Brand Kenya, Maureen worked for Africa practice EA Ltd, a Pan-African strategy and communications consultancy and the Kenya Broadcasting Corporation.

Mr. Austin Macheso Ag. Director, Product and Market Development

Ms. Maureen Mambo Ag. Director, Nation Brand Development, Marketing and Communication

Ms. Frida Mbugua Corporation Secretary and Manager Legal Services

She has managed client communications and engaged with high level media across international, Pan African and

Frida is an Advocate of the High Court of Kenya. She holds a Master of Arts Degree in International Studies from the University of Nairobi, a Bachelor of Laws from the University of Nairobi, a Post Graduate Diploma in Law from the Kenya School of Law and a Higher Diploma in Human Resource Management from the Institute of Human Resource Management. She is a Certified

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Public Secretary and a member of the Institute of Certified Public Secretaries of Kenya, a trained Arbitrator, Governance and Public Policy Expert She has a wealth of experience having worked in the manufacturing sector at the Kenya Association of Manufacturers (KAM) and in the agricultural sector while she worked at the Kenya Plant Health Inspectorate Service (KEPHIS).

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

Mr. Ochieng holds a Master of Economics and Business from the University of Zagreb and a post Graduate Diploma in International Relations from the University of Nairobi. He also has certificates in Trade Promotion Policy, Tourism Management and Negotiations.

He has professional experience spanning over twenty-five years in Tourism Management, Trade Development and Promotion and in Diplomacy where he has served Kenya as a commercial Attaché.

Mr. Peter Ochieng Ag. Director, Research, and Innovation

Mr. Wanjala holds a master’s degree in Information System and a Bachelor of Commerce (Management Science) both from the University of Nairobi and a National Diploma in Computer Studies. He also holds several certifications in leadership, Microsoft systems and virtualization.

He has close to 20 years’ experience in the ICT industry having worked in both private and public sectors. He is a member of the Computer Society of Kenya and Information Society of Kenya.

Celestine holds a Master of Business Administration (Strategic management) and a Bachelor of Business Administration (Accounting). She is a Certified Public Accountant of Kenya (CPA(K), a Certified Monitoring and Evaluation Professional and a Certified Secretary of Kenya (CS)(K).

Accountants (ICPAK), Institute of Certified Secretaries (ICSK) and Kenya Institute of Management (KIM), all in good standing.

Mr. Reuben Wanjala Ag. Director, Resource Centre

Ms. Celestine Rono Ag. Director, Strategy, Planning & Quality Assurance

She has previously worked with the Anti-Counterfeit Agency, Kenya Women Finance Trust and Eastern Produce Kenya Limited.

She is a full member of the Institute of Certified Public

Domnick holds a Master of Science Degree in Procurement and Logistics, a Bachelor of Purchasing and supplies Management Degree from Jomo Kenyatta University of Agriculture and Technology and a diploma in supplies management from Nairobi Technical Training Institute.

He is a licenced supplies practitioner and a registered member of the Kenya Institute of Supplies management. He has over 12 years’ experience in public procurement.

Mr. Odindo holds a Master of Commerce (Forensic Accounting) and a Bachelor of Commerce (Finance). He is a certified Public Accountant of Kenya (CPA (K) and a member of the Institute of Certified Public Accountants of Kenya (ICPAK).

He is also a Certified Information Systems Auditor (CISA).

Mr. Domnick Ariro Manager, Supply Chain Management

He has over 13 years’ experience in audit, risk, and quality assurance.

Mr. Victor Odindo Manager, Internal Audit

KEPROBA staff undergoing "Change management Training" in Naivasha. This was during the 2020 annual staff retreat. Brand Kenya | Export Kenyan | Build Kenya

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

Quality inspector checking the quality of PPEs (Personal Protective Equipments) during production at Shona Industries, EPZA in Athi River

STATEMENT OF CORPORATE GOVERNANCE Corporate governance is the exercise of ethical and effective leadership by the governing body towards the achievement of governance outcomes, good performance and effective control. The responsibility of governing the institution lies with the board of directors. KEPROBA has put in places systems to ensure high standards of corporate governance. The board of directors adheres to the requirements of Mwongozo Code of Governance for state corporations, Constitution of Kenya 2010, Public Finance Management Act 2012 and Board Charter to ensure effective and efficient use of public resources to achieve our vision and mission.

Board Charter

The roles and responsibilities of the Board of Directors are stipulated in the Board Charter. It also sets out the powers of the various board committees, the separation of roles between the board and the management as well as policies and practices of the organization in respect to corporate governance.

Board Size, Composition and Appointments

The Board of Directors of the agency consists of a nonexecutive Chairperson appointed by the President, the Principal Secretary in the Parent Ministry responsible for matters relating to export promotion and branding, the Attorney-General or his representative, the Principal Secretary for the National Treasury and three persons from the private sector who shall be appointed by the Cabinet Secretary. The tenure of the members of the Board and the Chief Executive Officer shall each be for a period not exceeding three years which may be renewed only once for a period not exceeding three years. The appointments shall be through notice in the Kenya Gazette.

Roles of the Board

The functions of the Board shall be to provide strategic advice and direction to the Agency, approve policies

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that facilitate the development of the Agency, recruit and appoint the Chief Executive Officer on such terms and conditions as the Board shall determine with the advice of the Salaries and Remuneration Commission, receive, on behalf of the Agency, grantsin-aid, gifts, donations, fees, subscriptions or monies, administer the property and funds of the Agency in such a manner and for such purpose as shall promote the functions of the Agency and perform such other functions as may be incidental to the foregoing.

Induction and Capacity- Building for the Board

In order to adhere to best practices, KEPROBA developed an induction program for new board members which enables them to gain knowledge of the institution’s operations and performance. During the year under review, newly appointed directors were inducted and also attended training programs to enhance their knowledge in various facets thus strengthening their role in the board.

Board Meetings

The board and committee meetings are held as per Board Calendar, while special board meetings are called when it is deemed necessary to do so. During the 2019/2020 financial year, the Board and its Committees held a total of 52 meetings during the year which included: 9 Six Full Board meetings.

9 Six Special Full Board Meetings.

9 Thirteen Finance, Human Resource and Administration Committee meetings (including special meetings).

9 Twelve Strategy, Marketing, Communications and Quality Assurance Committee meetings (including special meetings). 9 Nine Audit, Risk and Governance Committee meetings; and

9 Eleven Ad Hoc Committee meetings (for the recruitment of the position of the Chief Executive Officer

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

Procurement Policies

Procurement policies have been put in place to ensure fair competition taking into consideration economy, efficiency, transparency and accountability in accordance with legal and statutory requirements consistent with the governing laws.

Going Concern

The Agency confirms that financial statements are prepared on a going concern basis. However, the recommendations of the Presidential Taskforce Report on State Corporations Reforms are to merge the former Brand Kenya Board and Export Promotion Council, Kenya Investment Authority, Kenya Tourism Board and Kenya Yearbook Editorial Board. The process of merging these institutions began in September 2020.

Recycling of waste bottles and plastics to create home decor

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY REPORTING Corporate Socially Responsibility is increasingly becoming an integral part of business today as it influences the long-term success of any organization. The Kenya Export Promotion and Branding Agency (KEPROBA) has embraced the true spirit of Corporate Social Responsibility in its strategic plan of activities. The Agency is committed towards participating in community-based projects that give back to the society.

Covid-19- Tujilinde Tulinde Kenya Campaign In line with the Agency’s mandate of sharing positive news with Kenyans, the Agency embarked on a campaign dubbed #Tujilinde tulinde Kenya. The objective of the campaign was to amplify government messaging to Kenyans on the preventive measures to be undertaken in order to curb the spread of the COVID-19 disease, showcase the resilience of Kenyans during the pandemic and to highlight positive news about the Nation Brand. The campaign ran on social media; Facebook and Twitter and achieved over 2 million and 4 million impressions on Facebook and Twitter, respectively

Our social, economic, and environmental responsibilities to our stakeholders are integral to the Agency’s focus areas.

Social Sustainability

Health We seek to support projects aimed at improving health standards in the country which is in line with the health pillar under the Government’s Big Four Agenda. The Agency participated in the 5th Edition of the Beyond Zero campaign. Thirty-five employees took part in the ten (10) Kilometre corporate race held on 8th March 2020. The Beyond Zero Campaign is an initiative launched by Kenya’s First Lady, Margaret Kenyatta. Its goals are to improve maternal and child health in Kenya.

Advocacy campaigns to create awareness on the COVID-19 pandemic in Kenya. Sports

KEPROBA staff during the Beyond zero marathon on 8th March 2020

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We understand the important role that sports plays in the development especially of the youth in our country. Sports are not only a means of recreation but can also be a source of livelihood, and involvement in sports also has health benefits. The Kenya Export Promotion and Branding Agency partners with various local and international organizations to promote the development of sports and the great athletes of this country. The agency participated in the preparation of the world Athletics under 20 championship that was to be held in Nairobi between 7th July and 12th July 2020. This was postponed due to Covid 19 pandemic. The agency supported in the creation of the event Ident.

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

institutions that have projects aligned to our mandate with an objective of addressing social issues as well as improving the livelihoods of the communities.

CS Amb. Amina Mohammed with KEPROBA Staff, Samuel Njaaga who designed the World Athletics Championship U-20 Nairobi logo (below).

Supporting the Buy Kenya Build Kenya Campaign The Agency supports the Buy Kenya - Build Kenya Initiative. The initiative seeks to enhance competitiveness and consumption of locally produced goods and services. The Agency promotes this through adoption of the mark of identity and profiling these products on its social media platforms. A successful campaign of purchasing made in Kenya goods and services builds confidence and creates wealth for the Kenyan citizens.

Approved World Athletics Championship U-20 Nairobi logo

Economic Sustainability

Reserved Tender Opportunities The Agency reserves 30% of its procurement opportunities to the special groups which, as per the Public Procurement & Assets and Disposal Act 2015, includes women, youth and People Living with Disabilities (PWDs). These procurement opportunities have created diverse financial benefits for the special groups as well as enhancing the Agency’s corporate image and reputation. The Agency shall undertake procurement sensitization to these special groups so that they successfully participate in the tendering process. Medium-Sized Enterprises Empowerment The Agency seeks to make positive contributions to the communities around us through offering enterprises product development capacity building skills that enhance their products and position them for market access in the international markets. We partner with organizations, Small Medium Enterprises (SME’s) or

Environmental Sustainability The value we have for the environment stems from the realization that the environment provides the platform on which all mankind depends for life. Hence, we seek to support projects that are geared towards conservation of the environment that is key to enhancing export crops production. As part of taking care of the Environment, the Agency undertook a tree planting exercise on 20th July 2019 in Sabor, Kaptagat in partnership with State Department for Trade.

RISK MANAGEMENT AND INTERNAL CONTROLS Risk is a potential event that may prevent the organization from achieving its stated goals and must cover compliance, operational functional and strategic issues. Risk management needs to be on the Board agenda in order to eliminate surprises and increase the likelihood of meeting objectives. Risk management must be part of strategic discussions and must be viewed holistically. To address risk, the Agency established a Risk, Audit and Governance Committee of the Board that regularly reviews the effectiveness of the internal control system, governance and organizational risk and compliance. The Board established a Risk Management function and a Risk Management Plan was developed and implemented.

KEPROBA Team during a Tree Planting activity in Sabor, Kaptagat in Elgeyo Marakwet County on 20th July 2019.

The different ways we can enjoy our Kenyan tea. Brand Kenya | Export Kenyan | Build Kenya

In the process of implementing the Agency’s Strategic Plan, there are potential risks that must be mitigated if the Agency is to achieve its strategic objectives. The Board and Management pay close attention to all material risks that the organization faces. One of the key strategic risks is the Covid-19 pandemic which has affected the entire globe hence impacting on local and International Trade. In addition, constraints affecting exporters such as poor infrastructure, ease of doing business, value chain weaknesses, factors affecting the image and reputation of the Kenya brand are also considered as another category of risks affecting the achievement of the Strategic Plan.

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

Locally manufactured beauty products.

CHAPTER 5 STAKEHOLDER ENGAGEMENT

Brand Kenya | Export Kenyan | Build Kenya

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

STAKEHOLDER ENGAGEMENT

; MoU still pending/in process

; Instructive training for product development planned

Stakeholder Identification

KEPROBA Strategic plan 2019-2022 analyzed stakeholders and we have thus reached out to over 14 stakeholders in various sectors, in collaboration with the Agency’s Technical Departments. The Agency work plan activities entailed development of the stakeholder engagement plan which outlines areas of collaboration, agreed interventions, expected output and a summary of analyzed issues. The Stakeholders identified are in the following category; Public Sector, Private Sector, BMO, Development Partners, Media, Exporters, County Governments, Academia, Foreign Embassies.

Stakeholder Engagement Tactics

The identified stakeholders have been engaged through various platforms which include; 1.

Panel or Round table

Facilitated events.

2. 4. 5. 6. 7. 8. 9.

10.

Advisory committee or group Collaborative events or projects Exhibitions Forums

Meetings

Focus Groups Surveys

Networking

Status of Engagements

Below is the status of the Memorandum of Understanding (MoUs): 1.

KEPSA-MoU reviewed and finalized and requested to wait for KEPSA’s feedback

KENTRADE-MoU signed

KNBS- MoU signed

Kenya Flower Council-MoU signed

Nyandarua County

; Branding audit done by KEPROBA ; Workplan developed and shared

; Documentary shooting for tourism and investment sights, value added products, horticulture and flowers

Analysis of Stakeholder issues Issues

Stakeholder

Priority

Sharing trade information and market research

Dubai Chamber, KNCCI, KFC, KEPSA, FPCK, AFA, KAM

High

Dubai Chamber, KEPSA, FPEAK

High

Market access and capacity building

Trade missions and IMC programmes Investment opportunities in export market value chains

Dubai Chamber, FPEAK, KEPSA, FPCK, KAM, Vision 2030, FPCK, Sunripe, Nyandarua County, KNCCI

Dubai Chamber, KNCCI, FPEAK, KFC, KEPSA, FPCK, AFA, KAM

High

Jointly implement government bilateral and trade agreements and chamber trade MOU

KNCCI, KAM, Dubai High Chamber of Commerce

FPEAK, AFA, KFC, KEPSA

High

Export product competitiveness and value addition

FPCK, AFA, KAM

High

Export product and market diversification

COLLABORATION WITH GOK INSTITUTIONS To enhance visibility and relevance of the KEPROBA mandate, involvement and collaboration with other government institutions is key. The Agency has thus far engaged with: ; Vision 2030 key leadership team on various areas of collaborations and synergies.

; The ICT Authority have been supporting the Agency to implement and synchronize the ERP implementation process that will integrate the former institutions (Brand Kenya Board and Export Promotion Council) systems to enhance efficiency and usability by all the directorates.

INTERNATIONAL RELATIONS: Areas Of Collaboration And Partnerships The Kenya Exporter of the Year Awards (KEYA) The event was organized by the Agency to recognize and encourage outstanding export performance by individual exporting enterprises. The excellencebased award was built on seven key determinants in the assessment tool that participating companies are evaluated on. This included; leadership and corporate governance, marketing and customer focus, financerevenue growth, GDP contribution and foreign exchange earnings, information communication technology an e-commerce adoption, product quality, processes and certification, human resource management, and sustainability. More than 25 companies participated in the 2019 Inaugural Kenya Exporter of the Year Awards (KEYA).

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Media Engagement

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

The Kenya Export Promotion and branding Agency was featured in both print media and digital media in the period ended 30th June 2020. The articles revolved around the inception of the agency, leadership appointments to the organization, stakeholder engagements, research support and trade reports between Kenya and other countries.

Press Releases and Planned Interviews: The Agency shared press releases with mainstream media houses on topical issues in the exports sector. Planned interviews were conducted for the Chief Executive Officer on selected topics geared towards enhancing the visibility of the Agency and its mandate. REPORTED ISSUES

26/09/2019 Business Today

When you walk into Brand Kenya offices on NHIF building, you can literally smell the air of change. The reception is a Headline: After Merger, Export lot busier and, inside, everyone appears to be doing things and Branding Agency CEO Gets with urgency – from typing away on computers to moving Down to Work files or just talking in a meeting. https://businesstoday.co.ke/ It’s clear this is no longer Brand Kenya, the immediate after-merger-keproba-ceo-peter- tenant of the office, which was merged with the Export biwott-gets-down-to-work/ Promotion Council in August.

12/10/2019 The East African

Headline: Kenya to step up exports to Rwanda, Burundi, DRC

10/11/2019

https://www.theeastafrican. co.ke/tea/business/kenya-tostep-up-exports-to-rwandaburundi-drc-1429302

Kenya has announced plans to set up warehouses in Rwanda, Burundi and the Democratic Republic of Congo in an elaborate strategy to tighten its grip on the regional export market. Nairobi’s exports to DRC stood at Ksh15 billion ($130 million) in 2018, down from Ksh18.8 billion ($162.7 million) in 2017, as per data by the Kenya Export Promotion and Branding Agency (KEPROBA).

Business Insider

Logistical challenges continue to remain a bottleneck.

Headline: Kenya now moves to set up product warehouses in Rwanda, Burundi, and Congo as it tries to seal a $11.4 billion trade deficit

Each household in Rwanda spends an average of 24,000 shillings ($240) monthly mostly on clothing and shoes.

https://www.pulselive.co.ke/bi/ finance/kenya-now-banks-onsetting-up-warehouses-in-3countries-and-counter-chinaindia-and/73t276f

The Kenya Export Promotion and Branding Agency is also carrying out research in Mozambique and Tanzania to establish potential markets. Kenya is in the process of setting up warehouses in Kigali, Bujumbura and Lubumbashi and ease access of Kenyan products in the three countries.

24/03/2020 Business Daily Headline: Kenya hopeful of Tanzania trade fair participation in July https://www.businessdailyafrica. com/bd/economy/kenyahopeful-of-tanzania-trade-fairparticipation-in-july-2284992

2020

Trademark East Africa Headline: Kenya’s exports to South Sudan triples in first quarter, KEPROBA https://www.trademarkea.com/ news/kenyas-exports-to-southsudan-triples-in-first-quarterkeproba/

Kenya is hopeful the contagious Coronavirus will be contained before July ahead of a major annual trade fair in neighbouring Tanzania which it plans to use to market her products to traders on the continent. The Kenya Export Promotion and Branding Agency (KEPROBA) said it has invested in the Dar es Salaam International Trade fair slated for June 28 to July 13. The exhibition, also known as Saba Saba, because its climax is on July 7, attracts traders from Eastern and Southern Africa — where Tanzania is the current chair of the 16-member Southern African Development Community trading bloc. Kenya’s exports to South Sudan in the first quarter of the year have grown three folds to stand at Kshs 9.07 billion compared to the same period last year, data from Kenya Exports Promotion and Branding Agency shows.

According to Top 25 Export Markets Trends report by KEPROBA, the East African Community member state imports from Kenya surged by 198.9 percent as compared to Kshs 3.03 billion registered between January and March last year. “The increase was in the exports of edible food preparations, vegetables, processed cereals, flour, and cooking oils and printed matter and motor vehicles.” KEPROBA said.

3rd June 2020

Friday, June 5th, 2020

KEPROBA appoints Dr. Wilfred Marube as Chief Executive Officer by Val Lukhanyu https://techmoran. com/2020/06/03/brand-keappoints-dr-wilfred-marube-aschief-executive-officer/

Kenya Export Promotion and Branding Agency (KEPROBA) board has appointed Wilfred Marube as Chief Executive Officer for three years. https://www.pd.co.ke/business/ economy-and-policy/wilfredmarube-appointed-brand-kechief-executive-officer-39347/

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The rise in exports to South Sudan was only second to the United Arab Emirates whose exports rose by 24.1 percent to stand at Kshs 14.74 billion driven by tea, meat products, vegetables, and petroleum oil products. The meeting also focused on existing partnerships, and how to continue working together to increase the country’s market share locally, regionally and internationally.

Speaking during the inauguration at the agency’s offices yesterday, the board chairman Jas Bedi congratulated him on the appointment

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

19thJune-2020

KAM meets KEPROBA CEO KAM hosted newly appointed Kenya Export Promotion and Branding Agency CEO, Dr Wilfred Marube to discuss areas of partnership on export promotion for local manufacturers https://kam. co.ke/the-weekly-pulse-19thjune-2020/

The meeting focused on existing partnerships, and how to continue working together to increase the country’s market share locally, regionally and internationally.

Members of public turn up to support Kenyan Marathoners in Eldoret, during the London Marathon activation.

Some of the Key Products Kenya Exports to the UK.

SOCIAL MEDIA ENGAGEMENTS During this financial year, The Agency remained active on social media platforms as summarized below Content shared on the platforms was focused on exports products, positive narratives about Kenya, ongoing events and courtesy calls made to different stakeholders. Transition of social media followers and corporate branding of the accounts from previous accounts @BrandKenya and @ExportsKenya was conducted during this period.

SOCIAL MEDIA ENGAGEMENTS

Brand Kenya | Export Kenyan | Build Kenya

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

CHAPTER 6 REPORTING PRACTICES 65

UNAUDITED FINANCIAL STATEMENT FY 2019/ 2020 STATEMENT OF DIRECTORS RESPONSIBILITIES Section 83 of the Public Finance Management Act, 2012 requires accounting officer for a national government entity to prepare a report for each quarter of the financial year in respect of the entity. In preparing a quarterly report for a national government entity, the accounting officer shall ensure that the report. (a) Contains information on the financial and nonfinancial performance of the entity; and (b) Is in a form that complies with the standards prescribed and published by the Accounting Standards Board from time to time. Not later than fifteen days after the end of each quarter, the accounting officer shall submit the quarterly report to the Cabinet Secretary responsible for the entity and the National Treasury. (4) The Cabinet Secretary responsible for an entity shall forward a copy of the report to the Cabinet Secretary and Controller of Budget In the case of an entity that is a state corporation, the accounting officer for the corporation shall submit the quarterly report to the Cabinet Secretary responsible for the corporation who shall, upon approving it, forward a copy to the Cabinet Secretary The Directors accept responsibility for the Agency’s financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in conformity with International Public-Sector Accounting Standards (IPSAS), and in the manner required by the PFM Act and the State Corporations Act. The Directors are of the opinion that the Agency’s financial statements

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give a true and fair view of the state of Agency’s transactions during the period July – September 2019 (Quarter One and two) for the financial year 2019/20. The Directors further confirm the completeness of the accounting records maintained for the Agency, which have been relied upon in the preparation of the Agency’s financial statements as well as the adequacy of the systems of internal financial control. Nothing has come to the attention of the Directors to indicate that the Agency will not remain a going concern for at least the next twelve months from the date of this statement. Approval of the financial statements The entity’s quarterly financial statements have been prepared in accordance with Section 83 of the PFM Act and were signed on its behalf by:

Mr. Jaswinder Bedi, MBS, EGH CHAIRMAN

Dr. Wilfred Marube CHIEF EXECUTIVE OFFICE

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2020 2018/2019

KShs

Revenue from Non-Exchange Transactions Transfer from Government Institutions – Recurrent Grants Other Recurrent Grants

2019/2020

KShs

Notes

KShs

472,800,000

459,777,200

32,075,234

5,500,000

92,000,000

Deferred Income Revenue from Exchange Transactions Other Income

12,252,200

14,619,108

Total Revenue

517,127,434

571,896,308

253,871,200

361,903,914

Employee Costs

221,529,399

187,393,619

Board Expenses

11,956,789

13,511,763

Depreciation & Amortization Expenses

18,953,050

18,106,905

Repairs and Maintenance

1,838,470

4,362,743

Total Expenses

508,148,907

585,278,944

Surplus/(Deficit) for the Year

8,978,527

(13,382,636)

Expenses Use of Goods and Services

The notes set out on pages 8 to 38 form an integral part of these Financial Statements.

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020

Notes 2019/2020 2018/2019 KShs KShs

Assets

Current Assets

Cash and Cash Equivalents

Receivables from Non-Exchange Transactions

Receivables from Exchange Transactions

Non-Current Assets

Property, Plant and Equipment

Intangible Assets

Total Assets

669,142,043

600,434,095

26,667,299

28,223,449

728,542,007

653,219,166

25,765,923

41,728,181

29,833,934

47,799,731

758,375,941

701,018,897

32,732,665

4,068,011

Liabilities

Current Liabilities

24,561,622

6,071,550

Trade Payables from Exchange Transactions

24,157,001

61,299,223

Payables from Non-Exchange Transactions

187,464,838

100,080,408

225,285,965

176,614,744

533,089,976

524,404,153

22(iv)

533,089,976

524,404,153

Current Provisions

Total Liabilities Net Assets Reserves

13,664,125

15,235,113

The Financial Statements set out on pages 1 to 38 were signed on behalf of the Board of Directors by:

…………………………… …………………

…………………………..

CPA Albanus Mumo

Mr. Jaswinder Bedi, EBS, MBS

Dr. Wilfred Marube

Manager Finance

Chief Executive Officer

Chairman

ICPAK Member No. 7968 Date................................

Date.............................. Date.......................................

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ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 30 JUNE 2020 Reserves

General Reserve

KShs

Revaluation Reserve

Total

KShs

Deficit for the Year

528,096,585

(13,382,636)

9,397,500

537,494,085

Balance as at June 30, 2019

514,713,949

9,397,500

Balance as at July 1, 2018

Surplus for the Year

Balance as at June 30, 2020

8,978,527

523,692,476

9,397,500.00

(13,382,636) 524,111,449

8,978,527

533,089,976

The total reserves include capital replacement reserve (Sinking Fund) which was KShs. 30,620,777 at the end of the financial year. Revaluation reserve represents an increase in carrying value after revaluation of motor vehicles done on 10th August 2016.

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2020 JUNE 2020

JUNE 2019

8,978,527

(13,382,636)

16,949,511

16,176,794

2,003,539

1,930,113

Operating surplus before working capital changes

27,931,577

4,724,271

Accounts Receivable

(6,614,893)

(6,255,149)

Accounts payable

48,378,519

(100,300,556)

Net Cash flows utilized in operating activities

69,695,203

(101,831,433)

Purchase of Property, Plant and Equipment

(987,255)

(26,084,056)

Net cash flows utilized in investing activities

(987,255)

(26,084,056)

68,707,948

(127,915,489)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR

600,434,095

728,349,584

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

669,142,043

600,434,095

Surplus/ (Deficit) for the year Adjustments for: Depreciation of Property Plant and Equipment Amortisation

CASH FLOWS FROM INVESTING ACTIVITIES

NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS

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Scientist at Kenya Plant Health Inspectorate Services (KEPHIS) analysis soil samples collected from farmers. This ensures the quality of soil is suitable for agricultural purposes, guarantees the Kenya's food security as well as ensuring exported agricultural products are free of pests and diseases

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STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS FOR THE YEAR ENDED 30 JUNE 2020 STATEMENT

OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS Income/ Expenditure Jul 19-June 20

Revised Annual Budget July 19June 20

Budget Adjustments

KSHS.

INCOME

Recurrent Grants Received -GOK

453,840,000

(40,000)

453,800,000

Supplementary One Budget 100 Million

100,000,000

Other Donors; COMESA RIIP

10,000,000

Other Donors; The International Association of Horticultural Producers-Financial Grant Assistance-China Government

21,000,000

22,075,234

1,075,234

Cost Recoveries

15,019,108

12,252,200

-2,766,908

Sinking Fund

(21,900,000)

Deferred Funds

Recurrent Vote-Deferred Funds from (2019/20) B/F

325,807,484

Recurrent Vote-Deferred Funds to (2020/21) C/F

(374,849,019)

TOTAL INCOME

825,666,592

78,060,000

-374,849,019

550,777,573

549,085,899

-1,691,674

EXPENSES

DESCRIPTION

Deferred Funds to FY 2020/2021 Due to Covid-19 Pandemic

Performance difference

Original Annual Budget July 19 - June 20

Notes

STATEMENT

OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS Income/ Expenditure Jul 19-June 20

Revised Annual Budget July 19June 20

Budget Adjustments

KSHS.

249,406,265

19,382,168

268,788,433

251,179,321

17,609,112

Administration expenses

30,490,763

15,754,903

(7,562,993)

38,682,673

38,932,635

-249,962

Directors’ Expenses

18,010,000

11,956,789

6,053,211

Contracted Services

71,847,377

(1,800,000)

70,047,377

62,769,611

7,277,766

Legal Services

1,800,000

6,700,000

(6,800,000)

1,700,000

1,620,532

79,468

Internal Audit

5,140,360

(5,140,360)

109,040

-109,040

Procurement

1,500,000

140,294

1,359,706

Asset Acquisition & Capitalization (10 Laptops and One Phone)

987,255

Prepayments

23,055,700

Depreciation & Amortization

12,316,313

18,953,050

-6,636,737

Sinking Fund

(9,600,000)

Programme Costs and other Operating Expenses

DESCRIPTION

Staff Costs

Deferred Funds to FY 2020/2021 Due to Covid-19 Pandemic

Performance difference

Original Annual Budget July 19 - June 20

Notes

STATEMENT

OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS Income/ Expenditure Jul 19-June 20

Revised Annual Budget July 19June 20

Budget Adjustments

KSHS.

Product Market Development

118,900,000

33,367,832

(89,872,949)

62,629,302

64,175,961

-1,546,659

Nation Brand Development, Marketing & Communication

200,896,175

(9,633,003)

(174,512,932)

16,750,240

22,003,287

-5,253,047

Resource Centre

17,812,745

(17,812,745)

(0)

Stakeholders Management & Resources Mobilization

35,700,000

(29,211,091)

8,398,187

8,397,185

1,002

Research and Innovation

28,300,000

(15,363,879)

21,473,438

21,472,892

546

Strategy, Planning, Risk Coordination Management & Quality Assurance

16,144,000

7,647,740

(18,972,070)

6,438,655

6,438,310

345

TOTAL EXPENDITURE

825,666,593

78,060,000

-374,849,019

550,777,573

532,191,863

28,185,711

Surplus/(Deficit)

16,894,036

16,894,037

DESCRIPTION

Deferred Funds to FY 2020/2021 Due to Covid-19 Pandemic

Performance difference

Original Annual Budget July 19 - June 20

Notes

Kenya not only exports products and services, it has a rich culture that if exploited well, it has a great potential for growth

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS The Annual Budgets are prepared on Accrual Basis accounting. Actual GOK grants received in the year ended 30th June ,2020 is KShs. 553.8M, COMESA RIIP Program 10M, Other Donors KShs.22.0M (International Association of Horticultural ProducersFinancial Grant Assistance-China Government), Deferred Fund KShs. 325.8M and Cost Recoveries of KShs. 12.2M.

Staff Costs

Staff Costs variance of KShs (17.8M) is due to staff natural attrition in the year.

Directors Expenses

The variance of KShs. 6M is attributed to the Covid-19 pandemic which led to postponement of board planned activities as from March 2020.

Contracted Services

The variance of KShs. 7M is attributed to expected service charge relating to the Financial year 2019/2020 and other contracted services.

Depreciation and Amortization

Depreciation and Amortization variance of KShs. (6.6M) is due to reduction of budgetary support in the financial year from The National Treasury.

1. GENERAL INFORMATION The Kenya Export Promotion and Branding Agency (KEPROBA) is a state corporation under the State Department for Trade in the Ministry of Industrialization, Trade and Enterprise Development which was established under the State Corporations Act Cap 446 by the Kenya Export Promotion and Branding Agency Order, 2019 Legal Notice No. 110 of 9th August 2019 after the merger of the former Export Promotion Council and Brand Kenya Board. The Agency’s principal activities are implementing export development and promotion activities through providing export assistance to promote Kenyan goods and services globally, distributing trade related and international export standards information and carrying out foreign country market research. The Agency is also mandated to manage the Kenya Brand image through coordinating Nation Branding initiatives and Trade fairs, providing branding guidelines for Kenya Missions abroad, marketing and providing positive information about Kenya and its products. 2. STATEMENT OF COMPLIANCE BASIS OF PREPARATION

AND

The Agency’s financial statements have been prepared on a historical cost basis except for the measurement at revalued amounts of certain items of property, plant and equipment, marketable securities and financial instruments at fair value, impaired assets at their estimated recoverable amounts and actuarially determined liabilities at their present value. The preparation of financial statements in conformity with International Public Sector Accounting Standards (IPSAS) allows the use of estimates and assumptions. It also requires management to exercise judgement in the process of applying the Agency’s accounting policies. The areas involving a higher degree of judgement or complexity, or where assumptions and

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) estimates are significant to the financial statements, are disclosed in note 4. The financial statements have been prepared and presented in Kenya shillings, which is the functional and reporting currency of the Agency. The financial statements have been prepared in accordance with the PFM Act, the State Corporations Act, Brand Kenya Board Order No. 38 of 2008 and International Public Sector Accounting Standards. The accounting policies adopted have been consistently applied to all the years presented.

3. ADOPTION OF NEW AND REVISED STANDARDS i.

Standard IPSAS 40: Public Sector Combinations.

Impact Applicable: 1st January 2019 The standard covers public sector combinations arising from exchange transactions in which case they are treated similarly with IFRS 3 (applicable to acquisitions only). Business combinations and combinations arising from non-exchange transactions which are covered purely under Public Sector Combinations as amalgamations.

Relevant new standards and amendments to published standards effective for the year ended 30 June 2020.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) New and amended standards and interpretations in issue but not yet effective in the year ended 30 June 2020.

Standard

Effective Date and Impact

IPSAS 41:

Applicable: 1st January 2022

Financial Instruments

The objective of IPSAS 41 is to establish principles for the financial reporting of financial assets and liabilities that will present relevant and useful information to users of financial statements for their assessment of amounts, timing and uncertainty of an entity’s future cash flow. IPSAS 41 provides users of financial statements with more useful information than IPSAS 29 by: ; Applying a single classification and measurement model for financial assets that considers the characteristics of the asset’s cash flows and the objective for which the asset is held; ; Applying a single forward-looking expected credit loss model that is applicable to all financial instruments subject to impairment testing; and ; Applying an improved hedge accounting model that broadens the hedging arrangements in scope of the guidance. The model develops a strong link between an entity’s risk management strategies and the accounting treatment for the instruments held as part of the risk management strategy.

IPSAS 42:

Social Benefits.

Applicable: 1st January 2022 The objective of this standard is to improve the relevance, faithful representativeness and comparability of the information that a reporting entity provides in its financial statements about social benefits. The information provided should help users of financial statements and general purpose financial reports assess: a) The nature of such social benefits provided by the entity; b) The key features of the operation of those social benefit schemes; and c) The impact of such social benefits provided on the entity’s financial performance, financial position and cash flows.

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ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Amendments to other IPSAS resulting from IPSAS 41, Financial Instruments

Applicable: 1st January 2022

Other improvements to IPSAS

Applicable: 1st January 2021

a) Amendments to IPSAS 5, to update the guidance related to the components of borrowing costs which were inadvertently omitted when IPSAS 41 was issued. b) Amendments to IPSAS 30, regarding illustrative examples on hedging and credit risk which were inadvertently omitted when IPSAS 41 was issued. c) Amendments to IPSAS 30, to update the guidance for accounting for financial guarantee contracts which were inadvertently omitted when IPSAS 41 was issued. d) Amendments to IPSAS 33, to update the guidance on classifying financial instruments on initial adoption of accrual basis IPSAS which were inadvertently omitted when IPSAS 41 was issued.

a) Amendments to IPSAS 13, to include the appropriate references to IPSAS on impairment, in place of the current references to other international and/or national accounting frameworks. b) IPSAS 13, Leases and IPSAS 17, Property, Plant and Equipment. Amendments to remove transitional provisions which should have been deleted when IPSAS 33, First Time Adoption of Accrual Basis International Public Sector Accounting Standards (IPSASs) was approved. c) IPSAS 21, Impairment of Non-Cash-Generating Assets and IPSAS 26, Impairment of Cash Generating Assets. Amendments to ensure consistency of impairment guidance to account for revalued assets in the scope of IPSAS 17, Property, Plant and Equipment and IPSAS 31, Intangible Assets. d) IPSAS 33, First-time Adoption of Accrual Basis International Public Sector Accounting Standards (IPSASs). Amendments to the implementation guidance on deemed cost in IPSAS 33 to make it consistent with the core principles in the standard.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) ii.

Early Adoption of Standards

The Agency did not early-adopt any new or amended standards in year 2020. 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Revenue Recognition i) Revenue from Non-Exchange Transactions

Transfers from Other Government Entities

Revenues from non-exchange transactions with other government entities are measured at fair value and recognized on obtaining control of the asset (cash, goods, services and property) if the transfer is free from conditions and it is probable that the economic benefits or service potential related to the asset will flow to the Board and can be measured reliably. Recurrent grants are recognized in the statement of comprehensive income. Development/capital grants are recognized in the statement of financial position and realized in the statement of comprehensive income over the useful life of the assets that has been acquired using such funds. Other non-exchange revenues are recognized when it is probable that the future economic benefits or service potential associated with the asset will flow to the Board and the fair value of the asset can be measured reliably. ii) Revenue from Exchange Transactions

Rendering of Services The Board recognizes revenue from rendering of services by reference to the stage of completion when the outcome of the transaction can be estimated reliably. The stage of completion is measured by reference to labour hours incurred to date as a percentage of total estimated labour hours.

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Where the contract outcome cannot be measured reliably, revenue is recognized only to the extent that the expenses incurred are recoverable.

Sale of Goods

Revenue from the sale of goods is recognized when the significant risks and rewards of ownership have been transferred to the buyer, usually on delivery of the goods and when the amount of revenue can be measured reliably and it is probable that the economic benefits or service potential associated with the transaction will flow to the entity.

Interest Income

Interest income is accrued using the effective yield method. The effective yield discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. The method applies this yield to the principal outstanding to determine interest income each period.

b) Budget Information The original budget for FY 2019/2020 was approved by the National assembly in April 2019. Subsequent revisions or additional appropriations were made to the approved budget in accordance with specific approvals from the appropriate authorities. The additional appropriations are added to the original budget upon receiving the respective approvals in order to conclude the final budget. Accordingly, the Agency recorded additional appropriations of KShs.274,889,019 on the 2019/2020 budget following the board’s approval. The Agency’s budget is prepared on a different basis to the actual income and expenditure disclosed in the financial statements. The financial statements are prepared on accrual basis using a classification based on the nature of expenses in the statement

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

of financial performance, whereas the budget is prepared on a cash basis. The amounts in the financial statements were recast from the accrual basis to the cash basis and reclassified by presentation to be on the same basis as the approved budget. A comparison of budget and actual amounts, prepared on a comparable basis to the approved budget, is then presented in the statement of comparison of budget and actual amounts.

impairment losses. Any accumulated depreciation will be eliminated against the gross carrying amount of the asset and the net amount restated to the revalued amount of the asset. Decreases that offset previous increases of same assets will be charged against the revaluation reserve. Increase in carrying amount on

In addition to the Basis difference, adjustments to amounts in the financial statements are also made for differences in the formats and classification schemes adopted for the presentation of the financial statements and the approved budget. A statement to reconcile the actual amounts on a comparable basis included in the statement of comparison of budget and actual amounts and the actuals as per the statement of financial performance has been presented under section xv of these financial statements.

Depreciation is calculated on the straight line basis at annual rates to write off the cost of assets over their estimated useful lives by equal annual instalments at the following rates;

c) Property, Plant and Equipment

All property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items. When significant parts of property, plant and equipment are required to be replaced at intervals, the entity recognizes such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major replacement is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in surplus or deficit as incurred. Where an asset is acquired in a non-exchange transaction for nil or nominal consideration the asset is initially measured at its fair value. Revaluation will be done every five years and assets stated at valuation less accumulated depreciation and

revaluation will be credited to a revaluation reserve in the accumulated fund. The carrying amount of replaced asset will be derecognized.

(a) Motor Vehicles 25% (b) Office Equipment 12.5% (c) Furniture & Fittings 12.5% (d) Computers 33.33%

d) Intangible Assets

Intangible assets acquired separately are initially recognized at cost. The cost of intangible assets acquired in a non-exchange transaction is their fair value at the date of the exchange. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in surplus or deficit in the period in which the expenditure is incurred. The useful life of the intangible assets is assessed as either finite or indefinite. Amortization is calculated on a straight line basis at 33.33% per annum.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) e) Leases Operating leases are leases that do not transfer substantially all the risks and benefits incidental to ownership of the leased item to the Entity. Operating lease payments are recognized as an operating expense in surplus or deficit on a straight-line basis over the lease term. f) Financial Instruments

Financial Assets

Initial Recognition and Measurement Financial assets within the scope of IPSAS 29 Financial Instruments: Recognition and Measurement are classified as financial assets at fair value through surplus or deficit, loans and receivables, held-tomaturity investments or available-for-sale financial assets, as appropriate. The Board determines the classification of its financial assets at initial recognition. Loans and Receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. Losses arising from impairment are recognized in the surplus or deficit.

Held-to-Maturity Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held to maturity when the Board has the positive intention and ability to hold it to maturity. After initial measurement, held-to-maturity investments are measured at amortized cost using the effective interest method, less impairment. Amortized cost is

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calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The losses arising from impairment are recognized in surplus or deficit. Impairment of Financial Assets The Board assesses at each reporting date whether there is objective evidence that a financial asset or a part of financial assets is impaired. A financial asset or a part of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the entity of financial assets that can be reliably estimated. Evidence of impairment may include the following indicators: •

The debtors or a part of debtors are experiencing significant financial difficulty;

•

Default or delinquency in interest or principal payments;

•

The probability that debtors will enter bankruptcy or other financial reorganization; and

•

Observable data indicates a measurable decrease in estimated future cash flows (e.g. changes in arrears or economic conditions that correlate with defaults).

Financial Liabilities

Initial Recognition and Measurement Financial liabilities within the scope of IPSAS 29 are classified as financial liabilities at fair value through surplus or deficit or loans and borrowings, as appropriate. The Board determines the classification of its financial liabilities at initial recognition.

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings, plus directly attributable transaction costs. Loans and Borrowing After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest method. Gains and losses are recognized in surplus or deficit when the liabilities are derecognized as well as through the effective interest method amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate.

g) Provisions Provisions are recognized when the Board has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Board expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of financial performance net of any reimbursement. Contingent Liabilities The Board does not recognize a contingent liability but discloses details of any contingencies in the notes to the financial statements, unless the possibility of an outflow of resources embodying economic benefits or service potential is remote.

Contingent Assets The Board does not recognize a contingent asset but discloses details of a possible asset whose existence is contingent on the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Board in the notes to the financial statements. Contingent assets are assessed continually to ensure that developments are appropriately reflected in the financial statements. If it has become virtually certain that an inflow of economic benefits or service potential will arise and the asset’s value can be measured reliably, the asset and the related revenue are recognized in the financial statements of the period in which the change occurs.

h) Nature and Purpose of Reserves The Agency creates and maintains reserves in terms of specific requirements.

Retained Earnings This is the portion of net income of the Board that is retained by the corporation. If the Board incurs a loss, then that loss reduces the corporation’s retained earnings balance. Revaluation Reserve This represents surplus on revaluation of property, plant and equipment. Three motor vehicles that had been fully depreciated were revalued in a previous financial year to reflect their current market value. Capital Reserve (Sinking Fund) The Agency makes provision for the renewal of depreciating assets by maintaining a sinking fund with balances sufficient to replace the assets on a need basis.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) i) Changes in Accounting Policies and Estimates The Agency recognizes the effects of changes in accounting policy retrospectively. The effects of changes in accounting policy are applied prospectively if retrospective application is impractical.

from the reporting of creditors at rates different from those at which they were initially recorded during the period, are recognized as income or expenses in the period in which they arise.

k) Employee Benefits Retirement Benefit Plans The Agency provides retirement benefits for its employees. Defined contribution plans are postemployment benefit plans under which an entity pays fixed contributions into a separate entity (a fund), and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. The contributions to fund obligations for the payment of retirement benefits are charged against income in the year in which they become payable.

m) Related Parties The Agency regards a related party as a person or an entity with the ability to exert control individually or jointly, or to exercise significant influence over the Agency, or vice versa. Members of key management are regarded as related parties and comprise the directors, CEO and senior managers.

The Agency currently contributes to a defined contribution pension scheme at the rate of 15% of basic pay and to the National Social Security Fund (NSSF) as provided in the relevant statute.

Employee Entitlements The estimated monetary liability for accrued employee annual leave entitlement at the statement of financial position reporting date is recognized as an expense in the statement of financial performance and accrued in the statement of financial position. Employee’s entitlement to gratuity are recognized when they accrue and a provision for the liability is made in the statement of financial position. l) Foreign Currency Transactions Transactions in foreign currencies are initially accounted for at the ruling rate of exchange on the date of the transaction. Trade creditors or debtors denominated in foreign currency are reported at the statement of financial position reporting date by applying the exchange rate on that date. Exchange differences arising from the settlement of creditors, or

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n) Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand and cash at bank, short-term deposits on call and highly liquid investments with an original maturity of three months or less, which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. Bank account balances include amounts held at the Kenya Commercial Bank and Housing Finance Limited at the end of the financial year.

o) Comparative Figures Where necessary comparative figures for the previous financial year have been amended or reconfigured to conform to the required changes in presentation.

p) Subsequent Events There have been no events subsequent to the financial year end with a significant impact on the financial statements for the year ended June 30, 2020.

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 5. SIGNIFICANT JUDGMENTS AND SOURCES OF ESTIMATION

•

The condition of the asset based on the assessment of experts employed by the Agency;

•

The nature of the asset, its susceptibility and adaptability to changes in technology and processes;

•

The nature of the processes in which the asset is deployed;

•

Availability of funding to replace the asset;

UNCERTAINTY The preparation of the Agency’s financial statements in conformity with IPSAS requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods. Estimates and Assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Agency based its assumptions and estimates on parameters available when the financial statements were prepared. However, existing circumstances and assumptions about future developments may change due to market changes or circumstances arising beyond the control of the Agency. Such changes are reflected in the assumptions when they occur (IPSAS 1.140).

and •

Changes in the market in relation to the asset.

Provisions Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions is included in Note 21. Provisions are measured at the management’s best estimate of the expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material.

Useful Lives and Residual Values The useful lives and residual values of assets are assessed using the following indicators to inform potential future use and value from disposal:

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 6. REVENUE Transfer from Ministries, Departments and Agencies Name of Entity Sending the Grant

State Department for Tourism State Department for Trade

Total

Amount recognized to the Statement of Comprehensive Income

Amount deferred under deferred Income

Amount recognized in capital fund

Total grant income during the FY 2019/2020

FY 2018/2019

KShs

140,000,000

332,800,000

322,440,000

472,800,000

459,777,200

Garissa Solar Power Project Image Courtesy: Presidential Delivery Unit

137,337,200

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ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

DETAILS

Other Recurrent Grants - Donors

Deferred Income 8

OTHER INCOME Sundry income

Participation Fees from Trade Fairs Gain on Disposal of Assets/Tenders Interest Income from Bank Deposits Revenue from Provision of Service

USE OF GOODS AND SERVICES

Administrative (a) Expenses

Office Rent and Service Charge Travelling expenses

Medical Insurance Expenses Recruitment and Training Telephone

Printing and Stationery

Motor Vehicle Expenses

2019/2020

CONSOLIDATED

2019/2020

BKB

KShs

CONSOLIDATED

EPC

KShs

32,075,234

2018/2019

KShs

2018/2019

BKB

KShs

EPC

KShs

32,075,234

5,500,000

KShs

5,500,000

92,000,000

100

2,320,297

600,000

11,667,200

11,618,711

585,000

80,000

12,252,200

11,667,200

585,000

14,619,108

11,698,811

2,920,297

42,648,237

3,318,110

39,330,127

43,313,298

13,272,440

30,040,858

10,677,876

5,144,846

5,533,030

7,071,027

4,912,565

2,158,462

29,649,923

36,942,422

(7,292,499)

30,150,069

9,163,644

20,986,425

11,790,972

692,196

11,098,776

9,123,053

4,838,245

4,284,808

1,099,871

26,731

1,073,140

3,956,587

122,763

3,833,824

2,502,183

41,765

2,460,418

4,558,279

1,154,529

3,403,750

4,044,185

354,959

3,689,226

5,537,170

2,147,526

3,389,644

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

DETAILS

2019/2020

CONSOLIDATED

BKB

KShs

General Insurance

2018/2019

CONSOLIDATED

EPC

KShs

2018/2019

BKB

KShs

EPC

KShs

2,532,217

794,653

1,737,564

1,940,608

1,033,573

907,035

5,105,693

351,430

4,754,263

3,919,707

1,491,498

2,428,209

1,620,532

6,392,900

6,330,000

62,900

113,055

123,753

105,753

18,000

251,382

28,602

222,780

357,260

116,500

240,760

170,000

815,500

348,000

467,500

4,244,785

500,535

3,744,250

966,456

Catering Expenses

297,471

8,457

289,014

462,684

32,760

429,924

2,878,481

114,339

2,764,142

3,815,449

1,951,660

1,863,789

Cleaning Services

1,758,145

2,688,408

654,240

2,034,168

Internal Audit

109,040

262,001

Advertising

Staff Induction and Merger

140,294

1,342,916

9,124,371

22,287,534

7,662,235

14,625,299

Bank charges

624,853

46,682

578,171

444,583

115,884

328,699

131,383,565

48,615,061

82,768,504 149,529,242

56,796,731

92,732,511

40,183,619

18,961,424

20,998,319

77,000,653

21,472,892

42,548,547

Postal and Internet Expenses Legal and Professional Fees

Professional Membership Subscriptions

Newspapers and Magazines

External Auditors’ Fees Club Subscriptions

Entertainment Expenses

Other Operating (b) Expenses Expo expenses Fairs and exhibitions

Trade promotion, Export Research and publicity

2019/2020

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ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

DETAILS

Kenya Trade Week & KEYA Awards and Advertising

Nation Brand Development, Marketing and Communication

ISO Certification Performance Contracting Expenses CBIK Expenses Strategic Plan Development, Evaluation & Review Provision for doubtful Debt

TOTAL USE OF GOODS AND SERVICES 10

STAFF COSTS Basic Pay

Other Remunerative Allowances

Other Personnel Costs Leave Allowance

Staff Welfare Costs

2019/2020

CONSOLIDATED

2019/2020

BKB

KShs

2018/2019

CONSOLIDATED

EPC

KShs

2018/2019

BKB

KShs

EPC

KShs

8,397,185

10,436,389

17,454,417

1,166,248

16,288,169

55,376,120

58,000

1,457,162

329,570

686,885

2,994,023

5,427,787

6,050,740

479,704

4,548,870

122,487,635

5,715,118

116,772,517 212,374,672

56,063,005

156,311,667

253,871,200

54,330,179

199,541,021 361,903,913

112,859,736

249,044,177

111,237,235

43,053,666

68,183,569 104,741,577

39,595,479

65,146,098

57,795,326

15,354,000

42,441,326

54,114,293

13,291,400

40,822,893

6,725,230

2,155,212

2,215,512

1,135,937

1,079,575

564,000

2,856,273

1,356,847

31,908

1,324,939

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

DETAILS

Casual, Internship & Industrial Attachment Costs

CONSOLIDATED

2019/2020

BKB

KShs

2018/2019

CONSOLIDATED

EPC

KShs

2018/2019

KShs

2018/2019

BKB

KShs

EPC

KShs

46,200

2,458,866

1,574,650

106,750

1,467,900

Pension Costs

21,350,261

5,160,670

16,189,591

12,823,377

5,050,043

7,773,334

Gratuity Costs

12,003,909

7,774,247

4,747,317

697,500

4,049,817

2,209,881

1,615,900

593,981

(1,372,606)

(1,952,277)

579,672

(84,864)

1,262,674

203,200

164,400

221,529,399

63,495,696

158,033,703 187,393,619

60,170,616

127,223,003

Provision for Accrued Leave Group Life Insurance

Social Security Costs

BOARD EXPENSES

Chairman’s Honoraria and Telephone Allowance Board Sitting Allowances

Travel, Accommodation and Other Expenses Training

CEO’s Emoluments and Gratuity

2019/2020

2,505,066

Staff Telephone Allowance

2019/2020

912,194

102,452

809,742

1,711,516

1,007,200

704,316

7,621,100

280,000

7,341,100

6,672,866

2,052,000

4,620,866

3,423,495

42,196

3,381,299

2,008,795

468,020

1,540,775

300,000

2,818,587

11,956,789

424,648

11,532,141

13,511,763

6,645,807

6,865,956

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ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

DETAILS

2019/2020

CONSOLIDATED

DEPRECIATION AND 12 AMORTIZATION Depreciation of Property, Plant and Equipment

Amortisation of Intagible Assets

Repairs and Maintenance - Furniture & Fittings

Repairs and Maintenance Computers Repairs and Maintenance Software

BKB

KShs

2018/2019

CONSOLIDATED

EPC

KShs

2018/2019

BKB

KShs

EPC

KShs

16,949,511

5,898,962

11,050,549

16,176,793

6,247,944

9,928,849

2,003,539

1,930,113

18,953,050

5,898,962

13,054,088

18,106,905

6,247,944

11,858,961

763,120

942,777

275,734

1,353,278

157,495

1,195,783

799,616

1,774,450

237,294

1,537,156

292,238

1,838,470

4,362,743

687,027

3,675,716

REPAIRS AND 13 MAINTENANCE

Repairs and Maintenance Office Equipment

2019/2020

14. Cash and Cash Equivalents Description Travel Advances Staff Receivables Total

2019/2020 KShs

2018/2019 KShs

24,297,196 26,667,299

24,099,803 28,223,449

2,370,103

4,123,646

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 14 (a) Detailed Analysis of the Cash and Cash Equivalents 2019/2020 Financial Institution

Account Number

KShs

a. Kenya Commercial Bank (Brand Kenya Board)

1110627041

485,777,486.70

434,405,254

b. Kenya Commercial Bank (Main)

1104822008

177,515,946.04

138,458,418.84

c. Kenya Commercial Bank (CBIK)

1104823411

121,375.25

625,591.25

d. Kenya Commercial Bank (Participation)

1104715384

754,070.27

14,332,022.62

e. Kenya Commercial Bank (DANIDA)

1104823934

3,990,503.96

2,566,089.96

f. Kenya Commercial Bank (Dollar)

1129327957

18,472.63

215,217.52

g. Kenya Commercial Bank (Euro)

1129328007

21,025.70

3,791,908.22

SD 200-0001013

797,891.01

5,861,460.00

145,271.44

178,132.44

h. Housing Finance- Call Deposit Acc i.

Cash in Hand (Petty Cash)

Total

15.

669,142,043

600,434,095

Receivables from Non-Exchange Transactions

Description Rent Deposit (NHIF) State Department of Trade Prepayments Total

2018/2019

Brand Kenya | Export Kenyan | Build Kenya

2019/2020 KShs

2018/2019 KShs

4,548,870

26,439,945 32,732,665

18,268,902 24,561,622

1,743,850

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

16.

Property, Plant & Equipment

Equipment

Computers

Furniture &

Motor

Total

Vehicles KShs 72,595,842 7,082,000

KShs 208,628,343 18,103,219

Cost/Valuation As at 1 July 2018 Additions

KShs 33,391,999 1,109,900

KShs 55,237,765 8,600,744

Fittings KShs 47,402,738 1,310,575

Disposals At 30 June 2019 Additions At 30 June 2019 Depreciation

34,501,899 30,000 34,531,899

63,838,509 957,255 64,795,764

48,713,313 48,713,313

79,677,842 79,677,842

226,731,562 987,255 227,718,817

26,011,633 1,496,550 27,508,183 1,708,795 29,216,977

45,687,367 4,879,154 50,566,521 5,442,402 56,008,923

38,877,428 2,359,870 41,237,298 1,607,416 42,844,714

58,250,160 7,441,220 65,691,380 8,190,901 73,882,281

168,826,589 16,176,793 185,003,381 16,949,513 201,952,894

At 30 June 2020

5,314,921

8,786,841

5,868,599

5,795,561

25,765,923

At 30 June 2019

6,993,716

13,271,988

7,476,015

13,986,462

41,728,181

At 1 July 2018 Depreciation Disposals At 30 June 2019 Depreciation At 30 June 2020

Net Book Values

The Board has software that cost KShs.5,932,821.00 which is fully amortized but still in use.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) Intangible Assets - Software

Description

2019/2020 KShs

2018/2019 KShs

At Beginning of the Year Additions At the End of the Year

22,995,015 22,995,015

15,014,178 7,980,837 22,995,015

16,923,465 2,003,539 18,927,004

14,993,352 1,930,113 16,923,465

4,068,011

6,071,550

Cost

Amortization

At Beginning of the Year Additions At the End of the Year NBV 17.

Trade and Other Payables from Exchange Transactions

Description Trade Payables

2019/2020 KShs

2018/2019 KShs

23,053,629

60,727,111

1,103,372

572,112

24,157,001

61,299,223

Tax Liabilities Total

The tax liabilities comprise of withholding VAT and withholding tax outstanding as at 30th June 2020 .

Brand Kenya | Export Kenyan | Build Kenya

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

18.

Payables from Non-Exchange Transactions

Description

2019/2020 KShs

2018/2019 KShs

Payroll Liabilities Deferred Income Staff Welfare Fund

5,763,994 81,000,000 100,700,844

274,201 100,080,408

Total

187,464,838

100,373,113

2019/2020 KShs

2018/2019 KShs

13,664,125

15,931,113

Staff Imprests

19.

Current Provisions

Description Current Provisions (Leave) Provision for Staff Gratuity Audit Fees Provisions Provision for Doubtful Debt

4,477,756 4,637,499 4,548,870

Total 20.

5,850,362 9,384,751 696,000

Reserves

Description

General Fund

Balance Brought Forward 1 July 2018 Surplus/(Deficit) for the year 2018/19 st

Balance as at 30th June 2019 Surplus/(Deficit) for the year 2019/20 Total

18,504

Revaluation Reserve KShs

Total Reserves

9,397,500 -

537,494,085 (13,382,636)

514,713,949 8,978,527

9,397,500

524,111,449

523,692,476

9,397,500

533,089,976

KShs

528,096,585 (13,382,636) -

KShs

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

1. Financial Risk Management The Agency’s activities expose it to a variety of financial risks including credit and liquidity risks and effects of changes in foreign currency. The Agency’s overall risk management programme focuses on unpredictability of changes in the business environment and seeks to minimize the potential adverse effects of such risks on its performance by setting acceptable levels of risk. The Agency does not hedge any risks and has in place policies to ensure that credit is only extended to customers with an established credit history. The Agency’s financial risk management objectives and policies are detailed below; i)

Credit Risk

The Agency has exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. Credit risk arises from cash and cash equivalents, and deposits with banks, as well as trade and other receivables and available-for-sale financial investments. Management assesses the credit quality of each customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal and external assessment in accordance with limits set by the directors. The amounts presented in the statement of financial position are net allowances for doubtful receivables, estimated by the Agency’s management based on prior experience and their assessment of the current economic environment. The carrying amount of financial assets recorded in the financial statements representing the Agency’s maximum exposure to credit risk without taking account of the value of any collateral obtained is made up as follows; Total Amount At 30 June 2020 Receivables from Exchange Transactions

KShs 32,732,665

Receivables from Non-Exchange Transactions

26,667,299

Bank Balances Total

669,142,043 728,542,007

At 30 June 2019

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Fully Performing

KShs 32,732,665 26,667,299 669,142,043 728,542,007

Past Due

Impaired

KShs

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Receivables from Exchange Transactions Receivables from Non-Exchange Transactions Bank Balances Total ii)

24,561,622

28223449

600,434,095 653,219,166

Liquidity Risk Management

Ultimate responsibility for liquidity risk management rests with the Agency’s directors who have built an appropriate liquidity risk management framework for the management of the Agency’s short, medium and long-term funding and liquidity management requirements. The Agency manages liquidity risk through continuous monitoring of forecasts and actual cash flows.

The table below represents cash flows payable by the Agency under non-derivative financial liabilities by their remaining contractual maturities at the reporting date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

At 30 June 2020 Trade Payables Employee Benefit Obligations Total At 30 June 2019

Trade Payables Employee Benefit Obligations Total iii)

Less than 1 Between 1 – 3 Over 3 Month Months Months KShs KShs KShs 24,157,001 9,115,255 33,272,256 61,299,223 15,931,113 76,534,336

- -

Total

KShs 24,157,001 9,115,255 33,272,256 61,299,223 15,931,113 76,534,336

Market Risk

The Agency has put in place an internal audit function to assist it in assessing the risk faced by the entity on an ongoing basis, evaluate and test the design and effectiveness of its internal accounting and operational controls.

Market risk is the risk arising from changes in market prices, such as interest rate, equity prices and foreign exchange rates which will affect the Board’s income or the value of its holding of financial instruments. The objective of market risk management is to manage and control market risk exposures

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

within acceptable parameters, while optimizing the return. Overall responsibility for managing market risk rest with the Audit and risk Management Committee. The Board’s Finance department is responsible for the development of detailed risk management policies (subject to review and approval by Audit and Risk Management Committee) and for the day to day implementation of those policies. There has been no change to the Board’s exposure to market risks or the manner in which it manages and measures risk. a) Foreign Currency Risk The Board does not have transactional currency exposures. b) Interest Rate Risk Interest rate risk is the risk that the Agency’s financial condition may be adversely affected as a result of changes in interest rate levels. The Agency’s interest rate risk arises from the bank deposits. This exposes the Agency to cash flow interest rate risk. The interest rate risk exposure arises mainly from interest rate movements on the company’s deposits. Fair Value of Financial Assets and Liabilities

Financial Instruments Measured at fair value

IFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources; unobservable inputs reflect the Agency’s market assumptions. The Board does not hold any financial instruments hence no disclosure of fair values of financial instruments not measured at fair value has been made.

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ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

iv)

Capital Risk Management

The objective of the Agency’s capital risk management is to safeguard the Agency’s ability to continue as a going concern. The Agency’s capital structure comprises of general fund and revaluation reserve as follows; Description General Fund Revaluation Reserve Total Funds Total Borrowings Less: Cash and Bank Balances Net Debt (Excess Cash and Cash Equivalents) Gearing

2019/2020 KShs

523,692,476 9,397,500 533,089,976 669,142,043 669,142,043 -

2018/2019 KShs

514,713,950 9,397,500 524,111,450 600,434,095 600,434,095 -

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 24. Events after the Reporting Period There were no material adjusting events after the reporting period. Further to the recommendations of the Presidential Taskforce Report on State Corporations Reforms to merge former Brand Kenya Board, Export Promotion Council, Kenya Investment Authority, Kenya Tourist Board and Kenya Yearbook Editorial Board, the process of merging these institutions began in September 2020.

Ultimate and Holding Entity The Agency is a state corporation under the Ministry of Industry, Trade and Enterprise Development. Its ultimate parent is the Government of Kenya.

25. Currency The financial statements are presented in Kenya Shillings (KShs).

26. Contingent Liabilities The Agency has three ongoing litigations by former employees and SportPicha Agencies. One case is by a former Brand Kenya Board employee (Industrial case no. 1441 of 2014) for work injury and other claims for a total of KShs. 7,455,496. The other case is by former Brand Kenya Board Chief Executive Officer for alleged wrongful dismissal and for Sportpicha Agencies it has alleged breach of copyrights. The outcome of the cases cannot be accurately determined as at the end of the financial year.

27. Capital Commitments The Agency did not have any capital commitments at the end of the financial year.

28. In-Kind Support The International Horticultural Exhibition in Beijing China- In-Kind Support The International Association of Horticultural Producers (AIPH), organized the international exhibition, aimed at uniting horticultural producers globally, thereby awakening the mutually important bond with nature in the production of horticulture and supporting the work of grower associations all over the globe and championing a prosperous industry, growing plants that enhance lives, advance societies and sustain the planet, for the present and future generations. The Export Promotion Council (now referred as Kenya Export Promotion and Branding Agency) in collaboration with key Government Ministries and State Corporations was the

100

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ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) implementing agency for Kenya’s participation in the International Horticultural Exhibition in Beijing China. The Exhibition was running for six months as from 29th April 2019 to 7th October 2019. The China Government through the EXPO organizer (The International Association of Horticultural Producers) of International Horticultural Exhibition 2019 Beijing China supported the Republic of Kenya In kind through the Export Promotion Council (now referred as Kenya Export Promotion and Branding Agency) to undertake the International Horticultural Exhibition 2019 Beijing at cost amounting to RMB 1,500,000 equivalent to KShs. 21 Million (In-kind Support) towards Kenya Pavilion Design and Construction, Outdoor exhibition expenses related to design, build up and demolition of the entire exhibition grounds occupied by Kenya Pavilion during this event.

Fruit Logistica In Berlin Germany 31st January – 11th February 2020 The trade fair was to deepen Kenya’s trade relations and enhance market linkages with Germany and the European Union. Fruit Logistica presented a great platform to enhance the country’s visibility and create more awareness on Kenya’s export products through exports promotion, branding, media and publicity activities. The support was amounting to KShs.184,900 towards travel, Upkeep for one officer and one booth for the Agency.

29. Taxation The Agency is established under the State Corporations Act and is fully funded by the exchequer.

30. Related Party Balances Nature of Related Party Relations Entities and other parties related to the entity include those parties who have ability to exercise control or exercise significant influence over its operating and financial decisions. Related parties include management personnel, their associates and close family members.

101

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) Government of Kenya The Agency is a state corporation fully owned by the Government of Kenya under the Ministry of Industry, Trade and Enterprise Development. The Agency received recurrent grants of Kshs.553,800,000 from the National Treasury through the State Department of Tourism and the State Department of Trade.

Transactions with related parties (a) Grants from the Government

Grants from National Government

(b) Key Management Compensation

Total

102

Directors Emoluments & Other Expenses Compensation to Key Management

Brand Kenya | Export Kenyan | Build Kenya

2019/2020

2018/2019

553,800,000

459,777,200

11,956,789 77,965,266 89,922,055

13,511,763 84,965,164 98,476,927

KShs

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 30. APPENDICES APPENDIX 1: PROGRESS ON FOLLOW-UP OF AUDITOR RECOMMENDATIONS

Ref. No. on Issue/ Observations Management Focal Point Status External Au- from Auditor Comments Person to Redit Report solve the Issue.

Timeframe

_______________________ ____________________________ Dr. WILFRED MARUBE MR. JASWINDER BEDI, EBS, MBS CHIEF EXECUTIVE OFFICER CHAIRMAN, BOARD OF DIRECTORS DATE: ........................................... DATE: ...................................................

103

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) APPENDIX 2: PROJECTS IMPLEMENTED BY THE BOARD There were no projects implemented by the Board which were funded by development Partners.

APPENDIX 3: INTER-ENTITY TRANSFERS

Kenya Export Promotion and Branding Agency Break Down of Transfers from the State Department for Tourism FY 2019/2020 (a) Recurrent Grants

FY to which

Bank Statement Date 08/08/2019 30/10/2019 24/02/2020 15/05/2020 08/06/2020 30/06/2020 Sub-Total

Amount (KShs) 35,000,000

Amounts Relate

35,000,000 35,000,000 11,666,667 11,666,667 11,666,666

140,000,000

2019/2020 2019/2020 2019/2020 2019/2020 2019/2020 2019/2020

Break Down of Transfers from the State Department for Trade FY 2019/2020

08/11/2019

78,450,000

27/02/2020

231,541,600

2019/2020

03/06/2020

78,450,000

2019/2020

Sub-Total

413,800,000

Total

553,800,000

23/04/2020

08/06/2020

358,400

25,000,000

The above amounts have been communicated to and reconciled with the parent ministries.

104

2019/2020

Brand Kenya | Export Kenyan | Build Kenya

2019/2020 2019/2020

ANNUAL REPORT & FINANCIAL STATEMENTS FINANCIAL YEAR ENDING JUNE 30, 2020

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) APPENDIX 4: RECORDING OF TRANSFERS FROM OTHER GOVERNMENT ENTITIES

Name of MDA / Date ReDonor Transfer- ceived as ring the Funds per Bank Statement

Nature: Re- T o t a l current / De- A m o u n t velopment / (KShs) Others

N/A

NIL

Where Recorded Statement of Financial Performance N/A

Total Transfers During the Year

NIL

There were no transfers from other government entities in the FY 2019/2020.

105

1st & 16th Floors, Anniversary Towers, University Way P. O. Box 40247 – 00100 Nairobi, Kenya. Tel. + 254 20 222 85 34-8 Fax: + 254 20 222 85 39, 221 80 13 Cellphone: +254 722 205 875, +254 734 228 534 4th Floor, NHIF Building, Ragati Road, Upper Hill. P.O. Box 40500-00100, Nairobi. Tel. +254 20 271 523 6/7 Email: chiefexe@brand.ke | Website: www.brand.ke

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KEPROBA Annual Report 2019-2020

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Diversification of Kenya's Export Markets

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