The Report, which is the second in a series analyzing business regulations from the perspective of SME’s in 13 Kenyan cities, revealed that the country slipped three positions to 109 in ease of doing business out of 183 economies.
Speaking during the launch of the report on Tuesday, Prime Minister Raila Odinga expressed concern over Kenya’s declining performance in Doing Business, down considerably from 72 in 2008.
“We are ranked at number 166 in paying taxes, 141 in trading across the borders, 133 in registering property and 132 in starting business. This is a very poor performance and it is a negative trend replicated in the global competitiveness index 2010-11, where Kenya is ranked number 106 among 139 countries,” he highlighted.
He added that there is need for a one stop shop in licensing businesses in Kenya, where an investor can obtain all the licenses they require in starting the business in one place.
The Registrar of Companies has only one office in the entire country, requiring entrepreneurs from out-of-town to travel to Nairobi to register their companies.
The report looked at four indicators including starting a business, construction permits, registering property and enforcing contracts.
According to the report, it is easiest to start a business in Thika, to deal with construction permits in Malaba, to register property in Mombasa and to enforce a contract in Garissa.
On the other hand, it is most difficult to start a business in Kisumu, where it costs 48.4 percent of income per capita and hardest to deal with construction permits in Nakuru, where it takes 13 procedures, 140 days and 208.8 percent (Sh126,545)of income per capita.
While it is toughest to register property in Isiolo, where its local transfer tax is five percent of property value and most difficult to enforce a contract in Nairobi, where it takes 40 days to file and service a claim.
Among the 13 Kenyan cities studied, starting a business takes on average 10 procedures, 45 days and costs 43.4 percent of income per capita.
Licensing costs account for approximately 1.1 per cent of Kenya’s Gross Domestic Product.
However, in last two years reform efforts by national and local governments have reduced the average time to start a business by 22 days and average cost by five percent.
Despite this, starting a business in Kenya is still a relatively burdensome process compared to Rwanda, where it takes two procedures, three days and 4.7 percent of per capita.
In Mauritius and Senegal opening a business can be accomplished in six and five days respectively.
World Bank Country Director Johannes Zutt said improving Kenya’s doing business ranking should extend to addressing issues in the broader investment climate.
“Topics such as licensing reform, inspection and enforcement reform, ICT applications making services more easily available to businesses, supporting Public Private dialogue, improving the trade regime and regional integration are important for doing business,” he said.
The East African Community is the second fastest growing business community in the world after East Asia and the Pacific.