NAIROBI, Kenya, Aug 27-Globally, the growth of investments and private capital has been critical to stimulating economic growth and job creation.
The Ministry of EAC and Regional Development notes that many governments have prioritized boosting their standing incredible international investment reports to help attract investments.
One such important tool is the World Bank’s Global Ease of Doing Business report, which measures the competitiveness of 190 global economies according to set parameters.
Given its robust methodology, wide acceptance, and practical approach to addressing the business climate issues facing small and medium businesses (SMEs), investors refer to this report to guide investment decisions.
In 2014, Kenya was at the bottom quarter globally as an investment destination, primarily because of its difficult business environment: Kenya was ranked 136th on the ease of doing business, while foreign direct investment (FDI) for some of our neighboring countries was triple that of Kenya then at US$ 300 million.
The Ministry notes that investors complained of a lack of clear information on investment procedures, even from key government agencies. To address the situation, the Government of Kenya under the Leadership of President Uhuru Kenyatta set an ambitious target to be among the top 50 countries globally by 2022.
Kenya has since risen 80 places, ranking 56th globally in 2019, and achieved several important milestones through ten reforms areas to date – including starting a business; dealing with construction permits, getting electricity, registering property, getting credit; protecting investors; paying taxes, trading across borders, enforcing contracts, resolving insolvency and procurement, with remarkable benefits that have accrued to the private sector, especially to small and medium businesses, and to the Government through realizing new efficiencies.
The CS for Ministry of EAC and Regional Development Adan Mohamed, who has been in charge of the reforms since 2014, is keen to articulate how the legal and regulatory reforms have impacted the registration, growth, and sustainability of small businesses and Foreign Domestic Investment(FDI) in Kenya, under President Uhuru Kenyatta’s tenure.
What is the Ease of Doing Business Index, what does it measure, and for whom is it intended?
Ease of doing business is a term that is universally used in accessing the health of a business climate in over 190 countries around the globe. It is an exercise that is undertaken by the world bank group annually in measuring some specific indicators in totality provides a very good impression of how a country’s business environment is.
It measures approximately 10 or so specific issues covering things like how easy is to register a business, how easy is it to pay taxes. It is also targeted at measuring how easy it is for Small and Medium enterprises.
If doing business is becoming easier, how can we explain why so few of the informal players, a key component of the economy, appear to be content?
Business climate assessment globally is a relative measure between different countries and it is really an important tool because many investors especially foreign investors who do not have any information about a foreign country and they want to invest in that specific country their first port of core is to get credible world bank independently generated assessment indicator to look at how this country is like in doing business. It measures countries against one another therefore it provides good information.
The SME’s who are likely to be the biggest beneficiaries of this Ease of Doing Business is people who every year give feedback on their own experience in doing business in this country. We used to have a lot of costs and expenses that people used to pay at different levels making it complicated facilitating under the table deals issues around.
There are a lot of issues, of course, people complain about but the progress we have made through the implementation of itax and so the environment and the process of improving such is something that the government has really been committed to and President Uhuru Kenyatta has been the key driver of this initiative.
Since 2014, Kenya has risen significantly in the World Bank’s Doing Business rankings; how much influence do these rankings have on governance and policy?
Yes, there has been a significant number of changes, that we had over the years implemented that has contributed to the improvement of the business environment.
For example, if we think about the judiciary, one of the other indicators that we measure is to enforce contracts in this country, that is one thing that the private sector is really looking out for, a specific indicator that is measured across the countries is enforcement of contracts management systems.
Despite the accomplishments of legal and regulatory reforms, what is the precise impact on the economy?
As more businesses grow, more transactions happen and if more transactions happen then you will be able to see the economy thrive and grow so there are a significant number of correlations that we have seen in terms of attracting investments both domestic and foreign.
We have seen government revenues shoot up in cases like starting a business in cases where now companies have shifted from 30 registration per day to 200 per day, that is additional revenue to the government.
How would you rate Kenya’s attractiveness to international investors today versus in 2014
When President Uhuru Kenyatta’s term started, we were approximately at 350 million US dollars investment and we were one of the lowest in the East Africa region even though other investments coming into EAC countries are largely through minerals, natural oils, and natural resources that Kenya quite benefit from.
We are happy that Kenya has moved up in this ranking and we have a program that will be going on and on into successive administrations.
