WORLD BANK: Kenya among the best business hub for investment

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By Gerald Akhonya.
Stable political and economic reforms in the country have seen rapid business growth and investment as well as ease of registering and doing business in Kenya.

This is according to the World Bank’s report which revealed that the establishment of one-stop shops for multiple government services; the Huduma Centers which offer a myriad of services, some of which facilitate local company registration and property transfers, has streamlined business start up requirements and increased transparency in property registration.

huduma_kenyaSimilarly, it also showed that the rolling out of the Huduma Centers to the county level has presented a mixed picture of performance for entrepreneurs, who face an array of obstacles depending on where they do business.

‘’With Kenya hosting 3 major international conventions of TICAD, UNCTAD and AGRA proves that Kenya has now become a target for international entrepreneurs,’’ says Augusto Lopez Claros, the World Bank Group director.

The World Banks’ 3rd study of doing business in Kenya has in it that the success of reforms in Kenya has hinged on better implementation, coordination across tiers of government and sustained capacity building to empower counties to make it easier to do business.

However, though Kenya is well placed, the little mistake done can shift the intending investors to Tanzania.

The governments’ national-level reforms that have paved way for doing business as noted in the report include legislation of the Companies Act which eliminated the requirement to have registration documents notarized before the Commissioner of Oaths, thus reducing the procedural complexity and time for starting a business.
The report examined business regulations affecting domestic firms across 4 indicators; starting a business; dealing with construction permits; registering property; and enforcing contracts. And in each of the four areas, the report highlighted good practices that can be leveraged to empower entrepreneurs and firms to do business.

In 2016 a major improvement was with the abolition of the stamp duty on the memorandum and articles of association and the statement of nominal capital.
The Ministry of Land, Housing and Urban Development by making its service charter available online increased transparency in registering property and giving clients access to critical information about the transactions they undertake at the Lands Offices.

These reforms have been matched at the county level. For instance, the opening of a Lands Office branch in Isiolo to facilitate property registration, and the establishment of an electronic construction permit platform in Kisumu to speed up the process of obtaining a construction permit were praised to be one of the major attractions of investors.

Furthermore, the statement found that no county does equally well in all four areas. For example it showed that It is easier to start a business in Uasin Gishu, to deal with construction permits in Kisumu, register a property in Nairobi and easier to enforce a contract in Busia. Thanks to the new reforms and political will.
Nairobi, the country’s capital and most populous county, ranks first on the registering property indicator but last on dealing with construction permits.

Mombasa on the other hand, the other urban county, is doing well on registering property and enforcing contracts, but like Nairobi ranks in the bottom quarter on dealing with construction permits.

Meanwhile, the much smaller Busia ranks first on enforcing contracts, but 7th on starting a business.

uhuru-franceMore the less the report also showed that not all changes made life easier for entrepreneurs; with seven counties introducing regulations or practices that have increased either the cost, time or complexity to do business, Busia, Isiolo and Kakamega on the other hand significantly increased business permit fees for starting a business; construction permits became more difficult in Busia, Kiambu, Mombasa, Nairobi and Uasin Gishu.

According to Augusto, countries are competing for investors while investors are targeting regions of profitability, ease of doing business, political, economical and security stability before they bank to invest in the region or a country. Luckily, most of African countries; especially in East Africa meets this qualification.

Target countries in North Africa include Algeria, Morocco, and Egypt; in West Africa Nigeria is best placed; in South Africa, South Africa is leading though faced with governance issues. Ethiopia, Kenya and Tanzania are the main investor’s target.

The study covered 11 sampled counties of Uasin Gishu, Kisumu, Busia, Narok, Kakamega ,Kiambu, Mombasa, Nairobi Nyeri, Machakos and Isiolo.

The choice of the sampled counties depended on the demographic factors, economic activities carried out, interest of the county among other facts. By this establishment of a comparison of how entrepreneurs view the viability of doing business was analyzed.

Doing Business in Kenya research was carried out by the World Bank Group at the request of the Kenyan government, through its Ministry of Industry, Trade and Cooperatives and the Kenya Private Sector Alliance and funded by the Dutch and UK governments.

The 2016 report is the third, with previous editions published in 2012 and 2010.

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