Licensing a Warehouse Operator Under Kenya’s Warehouse Receipt System Act

A cooperative or agribusiness that wants to store maize, coffee, or other produce and issue receipts farmers can borrow against cannot simply open a store and start issuing paper. Kenya’s Warehouse Receipt System Act, 2019 sets up a two-gate licensing process, a national Certificate of Conformity followed by a county-level operating licence, before a warehouse can lawfully issue a receipt that functions as a document of title. This article covers who licenses a warehouse operator, what each gate requires, and what happens if a licence is suspended or revoked.

The Legal Basis: The Warehouse Receipt System Act, 2019

The Act, now Chapter 350 of the Laws of Kenya, was assented to on 12 June 2019 and commenced on 2 July 2019. Its long title describes it as providing a legal framework for the development and regulation of a warehouse receipt system for agricultural commodities and establishing the Warehouse Receipt System Council. The Warehouse Receipt System Regulations, 2021, made under the Act, fill in the licensing procedure and forms the Act itself leaves to subsidiary legislation.

The Council’s Role: National Oversight, Not the Licensing Authority

Section 3 establishes the Warehouse Receipt System Council as a body corporate, chaired by a person appointed by the President and including the Principal Secretaries responsible for agriculture and finance among its members. Section 4 gives the Council a national oversight role: it facilitates and oversees the warehouse receipt system, maintains the Central Registry for warehouse receipt transactions, promotes a national network of licensed warehouses, and prescribes the duties of warehouse operators, inspectors, graders, weighers, and collateral managers. What the Council does not do is issue the operator’s licence itself, that function sits with county government.

Gate One: The Council’s Certificate of Conformity

Before a person can even apply for a county operating licence, regulation 4 of the 2021 Regulations requires them to apply to the Council for a Certificate of Conformity. The Council will issue this certificate only if the applicant is a limited liability company or other legal entity registered in Kenya, has submitted a viable business plan, demonstrates the ability to raise capital for both initial infrastructure and three years of operating expenses, demonstrates the ability to provide a performance bond, has or engages qualified warehousing personnel, and has paid the prescribed fee. Where these requirements are met, the Council must issue the certificate within fourteen days of receiving the application.

Gate Two: The County Operator’s Licence

Section 17 of the Act places the actual licensing decision with the county executive committee member responsible for agriculture in the relevant county, not the Council. Regulation 5 requires the licence application to be accompanied by the Certificate of Conformity issued under regulation 4, meaning an applicant must clear the national gate before the county gate even opens. The county executive committee member may decline to issue a licence if the warehouse is unsuitable for proper storage, the operator is incompetent to operate under the Act, or sufficient reason otherwise exists. A licence, once granted, is valid for twelve months and may be renewed subject to compliance with any conditions set. Operating a warehouse under the receipt system without a licence is itself an offence. Each county must notify the Council of every licence it issues within seven days, and the Council is required to publish the names of all licensed warehouses annually in the Gazette and in at least one newspaper of nationwide circulation, which gives lenders and depositors a way to check a warehouse’s current status.

Performance Bond and Insurance

Section 18 requires a licence applicant to provide a performance bond, in a form the Cabinet Secretary may prescribe, to serve as financial assurance for the operator’s obligations under the Act, including costs of rescue, recovery, fines, penalties, or compensation. Section 19 separately requires an insurance policy covering the warehouse and the stored goods against fire, flood, theft, burglary, earthquake, explosion, and any other risk the Cabinet Secretary prescribes, as a precondition of the licence itself rather than an optional protection layer.

Appeal, Suspension, and Revocation

A person aggrieved by a county executive committee member’s licensing decision may appeal to the Council within thirty days under section 20. Section 21 allows the county executive committee member to suspend or revoke a licence where the operator transfers control over the licence, the licensed warehouse begins dissolution or is dissolved, or the operator violates or fails to comply with the Act, but requires the operator to be informed before a licence is suspended or revoked rather than allowing a unilateral cut-off. The 2021 Regulations also provide for an independent warehouse manager, a Council-certified collateral manager appointed by the county executive committee member to keep a warehouse’s operations running when a licence is suspended or revoked, which matters to depositors and lenders whose goods or security remain in the warehouse during that transition.

Practical Steps for Prospective Warehouse Operators

An agribusiness, cooperative, or commodity aggregator planning to enter this business should budget for two separate compliance tracks running in sequence rather than in parallel: the Council’s Certificate of Conformity process, which turns on demonstrated capital, a credible business plan, and qualified personnel, and only then the county licensing process, which turns on the physical suitability of the warehouse and the operator’s competence. Both the performance bond and the insurance policy need to be arranged before either application can succeed, so operators should engage a surety or insurer early rather than treating these as a late-stage formality. An operator should also keep its licence renewal date and the county’s compliance expectations current, since section 17 offences apply to operating without a valid licence, not only to never having held one.