NAIROBI, Kenya, Jun 13 – The recent decision by the government to waive levies demanded by National Environment Management Authority (NEMA) and National Construction Authority are bound to improve Kenya’s ease of doing business, confirms a research analyst.
National Treasury Cabinet Secretary Henry Rotich last week, while presenting the 2016/2017 budget, stated that the government was removing all levies charged by NEMA and the National Construction Authority in order to reduce the cost of doing business.
Erick Musau, a research analyst from Standard Investment Bank applauds the move.
He says that the levies were a major hindrance in establishing new businesses and largely contributed to Kenya’s low ranking on the index of ease of doing business.
“This is definitely a good move by the government as the costs were putting investors off the critical sector that is real estate and construction,” Musau said.
Since 2013, investors going into the construction sector were required to submit a minimum assessment fee that amounted to Sh10,000 or 0.1 percent of the project cost. Those whose projects exceed Sh5 million are required to pay 0.5 percent of the value of the contract before starting a project.
Phyllis Wakiaga, the CEO of the Kenya Association of Manufacturers was of the same thoughts as Musau saying in a published opinion post; “This is a key development at a time when the harmonisation of fees and levies has been an acute challenge for all business country-wide. We hope that the county governments take their cues from this and begin to urgently create legal frameworks to curtail multiple levies and charges.”
The new changes will however not mean that NEMA and National Construction Authority will have to close shop. For starters, Rotich did promise that the government would sort out funding for these organisations. “They are not for-profit organizations in the first place so they will not be made irrelevant,” Musau adds.
The organisations’ overall mandate is also a major factor as to why they cannot become irrelevant. NEMA, for instance, is assigned to examine land use patterns to determine their impact on the quality and quantity of natural resources, take stock of the natural resources in the country and their utilization and conservation among other functions.
A response from NEMA regarding the matter was however unavailable by press time.
The move was not the government’s first attempt to improve trade in Kenya.
The past 12 months have especially seen the government strive to improve the environment of conducting business in the country through calculated efforts.
Such include the passing of the Companies Act that reduced steps taken to register a new business from the initial eleven to just three and the launch of the iTax portal which allows for online filing of taxes to ensure convenience and speed.
“We strive to see Kenya on position fifty on World Bank’s ease of doing business index by 2020 through these and several measures,” Industrialization Cabinet Secretary Adan Mohamed said last month.