Archive: 2025-07-02

Trade Fraud Risks in Uganda and Kenya: What Exporters Must Know

The first time we heard from a client who lost $530,000 in a shipment to Uganda, it sounded unreal. How could an entire shipment be delivered — and then vanish into thin air? But after digging deeper, the picture became clear: trade fraud in East Africa is real, organized, and more common than many exporters think.

If you’re doing business in Uganda, Kenya, or nearby markets, especially if you’re exporting from China, understanding the common fraud tactics and risk controls could save your business.

Why Uganda and Kenya Attract Trade Fraud

Both Uganda and Kenya are strategic trade gateways in East Africa. Kenya’s Port of Mombasa serves as a major entry point for cargo destined for Uganda, Rwanda, South Sudan, and beyond. Uganda itself, though landlocked, is a growing consumer market with expanding demand for industrial materials, chemicals, and consumer goods.

However, exporters must recognize three red flags:

• Complex customs chains across borders
• Emerging legal frameworks and weak enforcement
• Scammers posing as global companies through fake documents

Since 2015, multiple Chinese exporters have reported losses due to fraudulent buyers, fake intermediaries, and forged contracts.

Common Trade Fraud Tactics in Uganda & Kenya

1. Identity Theft of Real Companies

Fraudsters register local shell companies in Uganda using the names of global firms or their “subsidiaries”, complete with fake seals, forged employee IDs, and branded contracts. This tactic builds trust quickly — and costs victims dearly.

2. High-Risk Payment Terms

Scammers push for Open Account (O/A) payment terms — where goods are shipped first and payment is promised later. Once the cargo arrives, the buyer disappears, or denies the transaction outright.

3. Manipulation of Shipping Documents

After shipment, scammers request changes to the consignee or bank account on the bill of lading — a classic red flag. In most confirmed cases, this was the final act before fraud was fully executed.

Real Case Studies: Lessons Learned the Hard Way

Case 1: The $530,000 Sodium Hydroxide Scam

A Chinese company signed a deal with a firm claiming to represent AGCA South Africa, introduced via Ugandan middleman SAT. They agreed to OA-30 payment terms. After arrival at Mombasa Port, payment was never made, and 19 containers were smuggled into Uganda, while 9 were left incurring massive storage fees. AGCA later confirmed: they had no plant in Uganda and no staff by that name.

Insight: SAT had registered over 10 shell companies in Uganda to commit repeat fraud.

Case 2: Bank Account Switch Attempt Thwarted

A Chinese exporter signed a $136,000 deal with Uganda-based UFM through an agent called CAL. Upon arrival, the middleman requested changes to the consignee’s bank account. Suspicious, the exporter contacted the Chinese embassy in Uganda. It was later confirmed that UFM had never signed a contract — another fake identity fraud attempt.

Case 3: Forged Contracts and Phantom Offices

Company C signed a $500,000 saccharin export deal with two Ugandan firms via intermediaries LTC and UCI. Before shipping, they wisely requested the embassy to verify the buyers. Embassy staff visited the listed addresses — both were fake. Calls were redirected, addresses were switched, and the buyers were untraceable. UFM later confirmed the contract was forged.

Case 4 & 5: Fake Company Names & Unauthorized Contacts

In two separate cases, Chinese exporters signed deals with companies falsely claiming to represent MIL and THEL. After shipments or initial communication, it was found:

• Neither company had any record of the deal
• All signatures, seals, and documents were forged
• Scammers used company names to lure victims into “official-looking” agreements

How to Avoid Trade Fraud When Exporting to Uganda and Kenya

1. Use Safer Payment Methods

Avoid O/A and other unsecured terms in high-risk markets. Stick to Letters of Credit (L/C) or at least 50% advance + 50% before release. Remember: buyers pushing hard for O/A likely plan to disappear.

2. Verify Business Identity Thoroughly

• Cross-check the buyer’s business license and registered address
• Call the head office directly, not just the contact person
• Search their company registration on official government portals
• When in doubt, ask GoNest Middle East & Africa desk or your local embassy for help

3. Watch for Document Tampering

If your buyer suddenly asks you to change:

• Consignee name
• Bank account
• Port of destination

Stop and verify immediately.

4. Stay Connected with Official Channels

If you suspect fraud, notify:

• The Chinese Embassy’s Economic and Commercial Office in Uganda or Kenya
• Local law firms with trade dispute expertise
• Your freight forwarder (like GoNest), who may assist with port-level intervention

How GoNest Supports Safe Shipping to Africa

At GoNest, we don’t just move boxes — we help our clients navigate complex markets. For Africa, we offer:

• Customs compliance support (especially across Kenya-Uganda border)
• Port coordination at Mombasa & Dar es Salaam
• Fraud alert services through business ID verification
• Sensitive cargo DDP air/sea freight lines
• Embassy-level risk referrals if red flags arise during shipments

Shipping to Africa can be profitable — but you need a reliable partner and sharp risk awareness.

Final Thoughts

Exporting to Uganda and Kenya comes with opportunity — and exposure. The tactics used by scammers are becoming more sophisticated, but so are the tools to protect yourself.

Verify, stay skeptical, and never skip due diligence. And if you ever feel uncertain, GoNest is here to offer not just logistics, but cross-border trade protection you can trust.

How to Insure Ocean Freight and Handle Cargo Claims

If you’re shipping goods by sea — whether as a seller, buyer, or freight forwarder — then one question should never be overlooked: Have you insured your cargo properly? Ocean freight insurance may not prevent disasters, but it ensures you’re protected when they happen.

At GoNest, we’ve seen dozens of cases where clients didn’t know how insurance worked — or how to file a claim — and ended up losing thousands. This guide walks you through how marine cargo insurance works, how to respond to an incident, and how to choose coverage wisely without overspending.

How Is Ocean Freight Insurance Calculated?

Most ocean cargo insurance policies are agreed value (valued policies), meaning the insured value is determined in advance and listed clearly on the policy.

Two common valuation methods are used:

1. Destination Cost (CIF-Based)

Includes the purchase price of the goods plus:

• Freight charges
• Packaging costs
• Port fees
• Insurance premiums
• Taxes or customs charges

This reflects the actual cost of delivering the goods to their destination.

2. Destination Market Value

This includes the sales price at the destination — i.e., the CIF cost plus your intended profit margin. It’s used when the insured wants to cover potential sales loss, not just cargo replacement.

What to Do If a Loss or Damage Occurs

1. Take Immediate Action to Prevent Further Loss

Known as “loss mitigation”, you’re legally obligated to stop the loss from escalating. For example:

• Move the cargo to a dry area
• Secure damaged containers
• Notify the port authority

If you fail to do this, your claim may be denied.

2. Protect the Scene

Do not dispose of damaged goods or change the cargo setup before the insurer or inspector arrives. The insurance company must be able to:

• Inspect the damage
• Verify causes
• Record conditions

Failure to preserve evidence can complicate or invalidate your claim.

3. Report the Incident Promptly

You must notify your insurer immediately, ideally in writing. This allows them to:

• Send a surveyor to inspect
• Take mitigation steps
• Begin documentation

What to include in your initial report:

• Insured party’s name and contact
• Policy number
• Date and location of incident
• Nature and cause of damage
• Estimated loss value

Start with a phone or email report, but follow up with a formal written notification.

4. File the Claim

To initiate the claim process, you must:

• Request compensation based on the insurance policy terms
• Accept inspection by the insurance company or their agents
• Submit required documents, such as:
  • Insurance policy
  • Bill of lading
  • Commercial invoice
  • Packing list
  • Damage report or photos
  • Proof of loss value

Receive the payout, once the claim is approved. Note: If your insurance policy remains active after payout depends on the loss type and claim settlement terms.

How to Choose the Right Marine Insurance (Without Overpaying)

Insurance is not “one-size-fits-all.” Choosing the right coverage requires a risk-based approach. Factors to consider:

• Type and value of cargo (electronics, perishables, chemicals, etc.)
• Packaging quality (bulk vs. palletized vs. boxed)
• Route and port risk profile
• Likelihood of pilferage, water damage, or delay
• Volatility of market price at destination

For example, fragile items or high-value electronics shipped through high-risk routes may justify All-Risk coverage, while low-risk bulk goods may only require Basic Risk.

What Is Underinsurance? Why You Must Avoid It

Underinsurance means insuring your goods for less than their real value. Example:

• Real cargo value: ¥120,000
• Insured value: ¥80,000

If damage occurs, your compensation is calculated proportionally. So if 50% of the cargo is damaged, you won’t receive ¥60,000 — you’ll get only two-thirds of it, based on your underinsured amount.

Lesson: Always insure based on full cargo value, including logistics and taxes.

What About Duplicate Insurance Policies?

Some shippers make the mistake of purchasing insurance from multiple companies for the same cargo. Unfortunately, you won’t get paid twice.

According to Chinese Insurance Law Article 40:
“The total payout from all insurers must not exceed the total cargo value.”

In other words, you’ve paid extra for no added benefit.

Key Questions to Ask Before Buying Marine Insurance

Before you buy a policy, make sure you understand:

• Who is the insurer and are they licensed for marine cargo?
• What’s included in the coverage terms?
• What are the policy limits and deductibles?
• How long is the coverage period (door-to-door or port-to-port)?
• What are the exclusions (e.g., delay, war risk, poor packaging)?
• What documents are needed in case of a claim?

At GoNest, we help clients assess these questions and choose cost-effective coverage for air, sea, and multi-modal shipments.

Final Thoughts

Ocean freight insurance may seem like a formality — until you need it. When loss strikes, the right insurance policy becomes your lifeline, and knowing how to file a claim can mean the difference between recovery and ruin.

By understanding valuation methods, response protocols, and how to avoid underinsurance, you can ship smarter — and safer. And when you ship with GoNest, we don’t just forward your cargo — we he

Exporting to the UAE: Key Risks and How to Avoid Them

When people think of the United Arab Emirates (UAE), images of skyscrapers, luxury shopping, and oil wealth often come to mind. But for exporters, especially businesses shipping from China, the UAE represents more than just a prosperous destination — it’s a strategic market with massive potential and significant risks.

At GoNest, we work with hundreds of clients shipping goods to the Middle East every month. If you’re planning to export to the UAE, here’s what you must know — from geopolitical risks to market opportunities, and how to navigate them safely.

Understanding the UAE: A Quick Overview

The UAE is a federation of seven emirates: Abu Dhabi, Dubai, Sharjah, Ras Al Khaimah, Fujairah, Umm Al Quwain, and Ajman. With a GDP largely driven by oil, petrochemicals, and finance, the country has become a hub for international trade, logistics, and investment.

While agriculture contributes less than 3% of GDP, the UAE is a massive importer of consumer goods, food, electronics, and industrial equipment — making it an attractive market for Chinese exporters.

Notably, more than 200,000 Chinese nationals live in the UAE, forming the largest Chinese community in the Middle East. Bilateral trade between China and the UAE has grown rapidly, covering sectors such as:

• Energy
• Logistics
• Infrastructure
• E-commerce
• Manufacturing
• Tourism & Education

But even with strong diplomatic and economic ties, exporting to the UAE comes with serious considerations.

Key Economic and Political Risks in the UAE

According to the World Bank’s 2018 Global Economic Outlook, the UAE faces both downside and upside risks that may affect foreign trade.

1. Oil Dependency Risk

The UAE’s fiscal stability still depends heavily on oil exports. If U.S. shale oil production rises, global oil prices may fall, weakening the government’s revenue and investor confidence.

2. Financial System Volatility

A rapid increase in U.S. interest rates or large swings in global financial markets could increase borrowing costs, potentially tightening liquidity in the UAE’s banking sector.

3. Contingent Liability Risk

Large-scale government projects like Expo 2020 carry potential risks. Mismanagement could lead to elevated exposure for banks and state-owned enterprises.

4. Geopolitical Risk

The UAE acts as an offshore hub for trade with Iran. Any sanction-related escalation or diplomatic friction could affect cross-border logistics and customs scrutiny.

Strategic Tips for Chinese Exporters

Despite the risks, the UAE remains a high-potential market for Chinese goods and services. Here’s how experienced exporters reduce their exposure and improve success rates:

1. Follow Policy Trends

The UAE is actively reducing its dependence on oil and investing in renewable energy, aviation, digital infrastructure, finance, and tourism. Chinese exporters should align their offerings with these sectors and avoid outdated commodity-based approaches.

2. Partner Locally

Building joint ventures or strategic alliances with UAE-based businesses or international firms improves resilience. Local partners provide better market access, cultural insights, and operational support in complex environments.

3. Build Brand Visibility

The UAE hosts numerous international expos and trade fairs. Invest in localized marketing, showcase Chinese innovation, and establish your brand in a competitive, reputation-driven marketplace.

4. Vet Your Trade Partners

Conduct thorough due diligence before signing contracts. Verify the credit standing and legal identity of your UAE customers, especially if offering payment terms. Make use of GoNest’s Middle East trade support team for on-the-ground advice.

How GoNest Helps Exporters Ship to the UAE

At GoNest, we’ve built a dedicated logistics service line for China-to-UAE exports, including:

• Customs Clearance Assistance: Tailored for GCC regulations
• Door-to-Door DDP Shipping: All taxes and fees included upfront
• Sensitive Goods Handling: Electronics, fashion, cosmetics, etc.
• Local Expertise: Our Middle East team provides documentation tips, packaging suggestions, and risk alerts

For example, our air freight DDP line to the UAE delivers parcels in 7–15 days with full insurance and brand-shielded packaging — ideal for resellers and e-commerce sellers.

Final Thoughts

Exporting to the UAE is not just about accessing wealth — it’s about understanding the region’s economic structure, regulatory landscape, and strategic direction.

By staying informed and choosing the right logistics partner, Chinese exporters can unlock the full potential of the UAE market while minimizing unnecessary risk.

Whether you’re sending construction materials, electronics, clothing, or high-end consumer goods, GoNest helps you move smarter, safer, and faster — every step of the way.