Kenya urged to reform business environment

April 29, 2010
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, NAIROBI, Kenya, Apr 29 – The government has been urged to accelerate reforms aimed at improving the business environment in Kenya, if it hopes to be among the top reformers in the world.

Coordinator of the Investment Climate Advisory Services of the World Bank Group Fred Zake said on Thursday that the country needs to urgently make significant changes that would ensure a conducive and attractive investment climate.

“Different countries in the world are reforming very fast. They want to make it easier for their private sector to grow. If you take a year to execute a reform and another country does it in one month, they will automatically overtake you,” he said.

In the Doing Business 2010 report, Kenya last year slipped eleven places to rank 95th out of 183 economies, which pointed to the fact that the country was losing favour as a good investment destination to countries such as Rwanda.

This is despite the ongoing reforms in many government agencies and departments which saw Kenya ranked among the top ten business reformers in 2007 after the introduction of an aggressive and ambitious licensing reform program that saw it eliminate 110 business licenses and simplifying many others.

It has been a downhill trend since then due to what has largely been attributed to the various shocks such as effects of the post poll violence, drought and the global financial crisis that the country has had to endure as well as issues such as constitution making where focus has shifted towards.

David Bridgman an advisor with the Investment Climate Advisory Services of the World Bank Group said Kenya could learn a lot of Rwanda which in the same report was ranked as world’s top reformer moving from 143rd position in the previous period to the 67th place.

Mr Bridgman said Rwanda initially identified the strategy for driving their sustained progress for a good investment climate by conducting a review of their competitiveness based on the 10 parameters used in the Doing Business Report and also prioritised the reforms to be undertaken within a particular period.

“They then put up an inter-ministerial taskforce, put in a technical committee and then every month they report back to cabinet on the progress they are making,” he said of the East African country.

Although Kenya has good labour legislations and relatively easier access to credit, corruption and high tax rates still hamper efforts to ease the burdens of doing business.

Mr Bridgman was however optimistic that the country is gaining momentum which will hopefully push the reform agenda forward and reverse its rankings. He also reckoned that there’s a need to make the initiatives known to the public and the private sector so that they can participate in the process.

Kenya Private Sector Alliance (KEPSA) Chief Executive Officer Carole Kariuki concurred adding that while the business community lauds government’s efforts towards this ends, a lot more needs to be done to facilitate an environment for the private sector to thrive.

The implementation of the 24-hoursport operations, gazettement of the single business permit are some of the initiatives that are making a difference but still need to be improved, she pointed out.

On its part, the government through the Financial Secretary Mutual Kilaka reiterated its commitment towards continually undertaking measures in all ministries and agencies to make it easier for the private sector to do business in the country and attract more Foreign Direct Investments.

In the 2009/2010 financial year, a lot has been done including the establishment of a banking hall at the Lands Ministry in a bid to create a one stop shop for all service rendered at the headquarters and the launch of the electronic registry to provide information on business licenses, fees and regulations they need to comply with when setting up their operations in the country.

Digitisation of records at the Companies Registry and the transformation of the City Planning Department are also part of the measures that are being executed to deepen the reforms and step up investments in the country.

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