Kenya slips in WB business report

November 4, 2010
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, NAIROBI, Kenya, Nov 4 – Kenya’s has slid a further four positions on a global ranking on the ease of doing business as the country has yet to implement regulations that make it easier for entrepreneurs to start and operate businesses.

The ‘Doing Business Report of 2011: Making a Difference for Entrepreneurs’ placed Kenya in the 98th position out of the 183 countries surveyed, compared to last year’s ranking at 94.

According to the report, which is the eighth in a series of annual publications by the International Finance Corporation (IFC) and the World Bank, Kenya is still performing poorly among the 10 indicators which include: starting a business, enforcing contracts, registering property and protecting investors.

The requirement by Kenya Revenue Authority (KRA) for businesses to file quarterly returns has cited as cumbersome while bureaucracy was seen to encourage corruption in the country.

The report cited a case of ‘missing’ files saying: “In Kenya in 2010, a raid uncovered thousands of land files locked in the drawers of public officials hoping to collect bribes.” This is the third time that the country’s ranking has been on the decline since 2008 when Kenya was named as one of the top ten performers in the world.

The drop has been attributed to the effects of the post-election unrest, the global financial crisis and subsequent economic recession, which slowed decision-making and brought other priorities to the fore.

However, the findings recognised efforts made in trying to reduce time taken to open a business by making it easier for start-ups to get the memorandum and articles of association stamped, merging the tax and value added tax registration procedures and digitising records at the registrar.

The move by the Kenya Revenue Authority to introduce the electronic cargo tracking system and linking it to its data interchange also received accolades. Strides made to simplify registration formalities and in making cross-border trade through the improvement of port procedures and by use of risk-based inspection were also lauded.

The report came two weeks after Prime Minister Raila Odinga expressed his disappointment with the pace at which the country was implementing business reforms and called for a more active engagement between the public and private sectors.

But while it acknowledges a myriad of challenges that made it difficult to effectively execute the reforms in the past year; the government believes that there have been significant improvements made in the business environment which were not captured in the study that was carried out between June 2009 and May 2010.

The lack of effective communication especially among government agencies is however one of the reasons why this developments have not been conveyed.

“Reforms passed by government or legislature are not always implemented by the relevant civil-servants for lack of knowledge of the new regulations. Secondly, even when implementation has happened, the private sector is not always informed of the changes and when interviewed by the DB team cannot acknowledge the reform,” the reported showed.
 

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