How easy is it to do business in Kenya?

By October 29, 2020 Evolve Insights

As it appeared in the Daily Nation on October 27th 2020
Dr Lucy Kiruthu

It does not take an economist to recognize the link between businesses and the economy. Businesses are the main economic engine of any country. All the different sizes of businesses are a source of livelihoods for many. Not only do employees earn from a business but also, many on the value chain benefit from ongoing economic activities. To steer economic development, businesses need a supportive regulatory environment. How easy is it to do business in Kenya? What has already been done? What still requires improvement?

Since 2005, The World Bank has been ranking economies on their ease of doing business. The ranking assesses how conducive the business regulatory environment is by focusing on several areas of business regulation. Some of the areas are – starting a business, dealing with construction permits, getting electricity, registering property, getting credit and paying taxes. According to the World Bank ranking, Kenya has shown some improvements. In 2020, the country was ranked 56 out of 190 economies globally and third in Sub-Saharan Africa behind Mauritius and Rwanda that came in first and second respectively. The ease of doing business score improved from 71 in 2019 to 73.2 in 2020. The score is on a scale from 0 to 100, with 0 representing the worst and 100 representing the very best performance.

As I looked through the World Bank rankings, I wondered if it is a true reflection of where we are as a country. Is registering a new business easy? Is getting construction permits easy? How easy is it to get electricity connected? Is registering property easy? What about getting credit? Is paying taxes easier? In the past two decades, major improvements have been made in making it easy to do business in Kenya. Some of the notable improvements have been in business registration services, availability of online services and digital payments system. The establishment of the Business Registration Service (BRS), the introduction of the e-Citizen platform, iTax and Huduma Centers remain core to making it easy to do business in Kenya.

I believe that every Kenyan has a right to get information and receive the very best services from regulators with ease. Kenya’s target was to improve The World Bank ranking to 50 by the year 2020. The fact that this was not achieved shows that there is room for improvement. Over the past year as I have interacted with entrepreneurs and small business owners, the main struggles seem to revolve around lack of information and difficulties in resolving issues. Most first time entrepreneurs seem unaware of the permits and licenses that are required by the various regulators and by the county governments plus the charges.

As a priority, the national government, the county governments and all regulatory bodies and service providers involved in supporting businesses need to make all their requirements easily understood. Further, all the services that businesses need should be easily accessible and painless to receive. By making it easy for businesses, many especially the small ones that form the majority, will be assured of a higher survival rate.

Dr Lucy Kiruthu is a Management Consultant and Trainer. Connect via Twitter @KiruthuLucy

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