Kenya pulls its weight on ease of doing business scale

In Leadership

Kenya is among 5 countries in the world that have registered the highest improvement in the ease of doing business, meaning that people starting or running businesses have an easier time doing so than before, the World Bank 2017 report says.

The report ranked countries based on 9 criteria namely starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

“The economies showing the most notable improvement in performance on the Doing Business indicators in 2015/16 were Brunei Darussalam, Kazakhstan, Kenya, Belarus and Indonesia,” notes the World Bank report.

Kenya however did not improve in all the above mentioned areas, the boxes that it ticked right are getting electricity, starting a business, registering property, protecting minority investors and resolving insolvency. The ease of getting credit dropped as banks tightened scrutiny following implementation of interest rates cap.

“Kenya and Uganda significantly reduced the time needed by entrepreneurs to start a business”.

The report says Kenya made starting a business easier by removing the stamp duty fees required for the nominal capital, memorandum and articles of association. Kenya also eliminated requirements to sign the declaration of compliance before a commissioner of oaths. However, Kenya also made starting a business more expensive by introducing a flat fee for company incorporation.

Foreign multinationals approve this by setting up Africa offices in Nairobi and Johannesburg, most recently the world’s largest aerospace company Boeing.

RELATED: Kenya to produce 7,500 new Millionaires

Kenya streamlined the process of getting electricity by introducing the use of a geographic
information system that allows the utility to provide price quotes to customers without conducting a site visit, according to the World Bank, but off course Kenyan consumers have a better version of how long it takes to be connected to the grid.

This however does not mean that Kenya is among the top countries where it is easy to do business but rather that it has made effort in correcting a more situation. Kenya is ranked 92 out of 144 countries mapped.

Kenya also adopted a new Insolvency Act which closely follows the insolvency framework of the United Kingdom. The new law introduced the mechanism of administration—a form of reorganization that allows insolvent companies to continue operating while negotiating a settlement with creditors.

The ease of doing business ranking for these economies ranges from 144 in Pakistan to 16 in Georgia; on average it is 62. Compared to previous years there is a lower number of top improvers from Sub-Saharan Africa even though this region accounts for over a quarter of all reforms globally.

Doing Business is widely used by policy makers in Sub-Saharan Africa to advance their reform agendas. Some of these economies have established units dedicated to specific reform action plan stargeting the Doing Business indicators.

Deputy President

In Kenya, for example, the Ease of Doing Business Delivery Unit operates under the leadership of the Ministry of Industrialization and the Deputy President, meeting on average every two weeks to discuss progress on an established action plan.

RELATED: Kenya lauded for strong social entreprise scene

The meeting is chaired by either the Deputy President or the Minister of Industrialization, while several stakeholder agencies are responsible
for implementing.

Also read: Kenya fares badly in global entrepreneurship ranking

 

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