DISPERITY

Kenya's impressive ease of doing business but reality is different

The government has in the past defended improved ranking, saying it reflects actual happenings

In Summary
  • World Bank to release 2020 report next month
  • Kenya's ease of doing business rose to 56 from 61 in 2018
Deputy President William Ruto receives the 2020 Ease of Doing Business report from the World Bank.
Deputy President William Ruto receives the 2020 Ease of Doing Business report from the World Bank.
Image: DPPS

Kenya’s ease of doing business has been improving in the past decade, moving from a ten year low of 129 in 2013 to an all-time high of 56 globally this year.

This has been pegged on among others, automation of systems that have made starting a business in Kenya easy.

While unveiling the annual Ease of Doing Business report in October last year, World Bank praised Kenya’s business environment, saying it was among the top reformists in Africa and the World.

 
 

Even so, business operators in the country are of the view that the improvement only happens on the paper, with those seeking to establish a business forced to navigate the stiff neck bureaucracy on top of coughing tidy sums of cash to get approvals from state agencies.  

Late last month, Faith Mutembei, the proprietor of a now collapsed drinking water firm Mountain Brook, took to social media to recount her struggles to obtain necessary licenses and taxes needed to run a water refill and packing station.

The disgruntled businesswoman listed at least ten taxes, permits and licenses she was asked to obtain, costing her close to Sh600,000.

‘’Happy Sunday people. Many of you have asked about Mountain Brooke drinking water. I must confess that initially I did not have answers or was to depressed to publicly speak about it,’’ a Facebook post on her page that has since gone viral reads.

She went ahead to detail that the firm collapsed due to the punitive cost of doing business in the country.

According to her, anyone intending to open a water refill and packing station in Kenya has to pay County Single Permit License Sh18,500, Public Health testing license Sh13,000, Kenya Bureau of Standard certificate Sh102,000 and KRA Excise license bond and stamp worth Sh4000,000.

Others are the National Environment Management Authority (NEMA) license Sh33,000 and a mandatory independent testing lab fee of at least Sh15,000.

 
 

Her post has attracted heated debate on social media about the practicability of the ease of doing business ranking, even as Kenya hopes for an improved position in the 2021 index slated for next month.

''Our markets are rigged from policymaking points to support capitalist accumulation by dispossession,’’ a Twitter user @Asudi commented.

Peter Mwololo, also on Twitter said the high initial cost and bureaucracy are crafted to only allow the rich to own business and the poor to offer labour.

Speaking to the Star on phone, market research analyst Jackie Akumu said the impressive ease of doing business does not represent actual reality on the ground.

She appealed to the government to rise on the technology waves to rid to automate business registration processes and give offer incentives to investors, especially on license fees.

How can you attract investors with all these processes and costs? It is high the government come up with effective policies especially in business registration,’’ Akumu said.

The government has in the past defended its improved ranking, saying it reflects actual happenings.

The ease of doing business looks at among others; starting a business in a country, registering property, dealing with construction permits, getting electricity, getting credit, paying taxes and protecting minority investors.

Others are trading across borders, resolving insolvency and the level of enforcing contracts.