Improved business environment is good news for local investors

Tuesday November 14 2017


Kenya Private Sector Alliance chief executive Carole Kariuki addresses a media briefing on the World Bank's Ease of Doing Business 2018 report on November 1, 2017. The government understands the need to create a conducive environment for the private sector. PHOTO | DIANA NGILA | NATION MEDIA GROUP 

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We have always known this to be true. Kenya represents a bright spot in sub-Saharan Africa as an investment hub for local and foreign investors.

Backed by recent data on global economic activity and global surveys, the government is committed to converting these into gains.

With our ultimate ambition to pursue an inclusive model of growth that will provide more than 1.3 million new jobs annually, the government understands the need to create a conducive environment for the private sector.

It has worked hard over the past 48 months to make Kenya an easy place to do business.

Through a multiinstitutional Business Environment Delivery Unit under the Ministry of Industry, Trade and Cooperatives, government agencies, the Kenya Private Sector Alliance, and the World Bank Group/International Finance Bank (IFC), we’ve undertaken reforms; as a matter of fact, amongst the highest on the continent.

Benchmarking on competitive global best practice, Kenya diagnosed its regulatory business environment and found the need to get rid it of the red-tape that hinders entrepreneurship and creativity among citizens.

The just-released World Bank Group’s Doing Business 2018 Report that places Kenya at position 80 out of 190, from 92 last year, is a vindication of the quest to create proficient and all-encompassing ethos for growth.


Overall, for two consecutive years (2016 & 2017 reports), Kenya emerged as the third most reformed country in the world, and in the 2018 report, as the third best in sub-Saharan Africa.

Out of the 11 indicators of ease of doing business, Kenya made six reforms during the year.

These include ease of starting a business by merging formal procedures that small businesses need to comply with to register; reducing the cost of construction permits by eliminating clearance fees from the National Environment Management Authority (Nema) and the National Construction Authority (NCA); enhancing electricity reliability through investment in distribution infrastructure and establishment of power restoration squads in case of outages.

Others are improving access to credit information; easier payment of taxes through the iTax platform; and reduction of the time for import documentary compliance through a single window system.


We have eliminated the need for the SMEs to have lawyers register their firms, eliminated the need for company secretaries for small businesses as well as the need to hold AGMs, saving them form regulatory compliance and operational costs!

Our ambition is to be among the top 50 nations by 2020 - at 80.

Business reforms are intended to increase efficiency, local and foreign direct investments (FDI) to boost job creation.

FDI levels have risen from $390 million in 2013 to $2 billion last year, making Kenya one of the most preferred investment destinations in Africa.

Economists see a correlation, though not causal, between business regulatory environments and a country’s economic fortune.

They point to an existing parallel between GDP per capita, as measured by its natural logarithm, and the World Bank’s “distance to frontier” (DTF) index - which helps to assess the absolute level of regulatory performance over time of an economy.

The manufacturing base has not produced to its potential, and has been outpaced by the services sector but remains a key employer.

Burdensome regulation has been a big culprit that we have dealt.

With 200 businesses registered daily, we are certainly on the rise.

Eventually, the sequence of expected results is to trigger an increase in the registration of start-ups, ensuring their smooth operation and further investments and direct increase in sales/turnover or net income.

All in all, the results are a true harbinger of change and testimony that the government is keen to create a conducive environment for the private sector to prosper.

Mr Adan Mohamed is the Cabinet Secretary, Ministry of Industry, Trade and Cooperatives