EASE OF BUSINESS

Kepsa raises concern over trade hurdles

They re-affirmed the urgent need to undertake policy, legislative and process reforms to ensure competitiveness.

In Summary

•Businesses in the sectors that reported higher corruption risk had a higher frequency of transactions including purchase of goods and services.

•Last year, Kenya scored lowest in the corruption perceptions index by Transparency international. It was ranked position 124 globally with a score of 31 per cent.

Kenya Private Sector Alliance (KEPSA) CEO Carole Kariuki/HANDOUT
Kenya Private Sector Alliance (KEPSA) CEO Carole Kariuki/HANDOUT

The Kenya Private Sector Alliance is concerned that corruption among other drawbacks has continued to push up the cost of doing business.

It estimates that corruption both in the public and private sectors drains Kenya's economy an average of Sh700 billion annually.

This, they said coupled with an unfavourable tax regime and delayed payments is hurting businesses.

The concerns are contained in a communique issued after the annual Senate Speakers's Round table with the Kepsa held in Naivasha.

It is signed by Senate Speaker Kenneth Lusaka and Kepsa chief executive Carole Kariuki.

The two called for urgent policy, legislative and process reforms to ensure competitiveness in all aspects of our economy, especially on measures geared towards reduction of cost of doing business and attracting investments.

A corruption risk mapping  study done by the Centre for International Private Enterprise (CIPE) shows that corruption is rampant within both public and private sectors, hurting the country’s business competitiveness.

For instance, 85 per cent of respondents in the survey reported that there was corruption in various forms in private sector business operations across Kenya.

The risk was highest among small businesses compared to medium-sized and large businesses with the prevalent forms of corruption being bribery, fraud, tax evasion, embezzlement, extortion, abuse of office, favouritism and procurement related misconducts.

According to the study, corruption was mostly reported in businesses in professional services at 80 per cent, 79 per cent in finance and insurance, hospitality management at 73 per cent and a similar rate in education, health and social works.

Businesses in the sectors that reported higher corruption risk had a higher frequency of transactions including purchase of goods and services.

Last year, Kenya scored lowest in the corruption perceptions index by Transparency international. It was ranked position 124 globally with a score of 31 per cent.

The Senate promised to undertake VAT reforms and streamline taxation systems to simplify the taxation scheme through formulation of a national tax policy. 

Kepsa said it would petition county assemblies to address the issue of delayed payments in order to  strengthen devolution and enhance private sector investment.

The lobby also raised concern that counties were charging for services that are provided by the National Government like charging toll on roads under the management of the national government.

It said The Senate should fast-track key Bills that will revitalise trade and investment and cushion businesses from the unexpected harassment by county officials.