It is easier to start a business in Uasin Gishu (Eldoret), register a property in Nairobi, obtain a construction permit in Kisumu, and enforce a contract in Busia (Malaba), reveals a World Bank survey on doing business in Kenya.
The survey that measures 11 counties considered four areas relevant to the life of a small to medium-sized company, including starting a business, dealing with construction permits, registering property and enforcing contracts.
No county does equally well in all four areas in the third report of the Doing Business series in Kenya. Except for Narok and Kakamega, all counties rank in the top half and bottom half on at least one indicator.
The mixed bag of results where a county’s regulatory environment may be more business-friendly in some areas than others present opportunities for reform in the different counties.
Nairobi, for example, is the easiest place to register a property but the county brings up the rear in the time it takes and cost of obtaining construction permits. Busia tops for enforcing contracts, but it places seventh in ease of starting a business. Uasin Gishu is the easiest place to start a business but ranks sixth on acquiring construction permits. Kisumu ranks first for ease of getting construction permits but is placed seventh for starting a business and enforcing contracts.
When combined the score for the four indicators the gap between the top and bottom county was small. Busia topped with 65 points. It was followed by Kisumu, Nyeri, Mombasa and Uasin Gishu, which tied in second place with 64 points, while Machakos and Narok each scored one percentage point less.
Kiambu, Nairobi and Isiolo also tied with 63 points while Kakamega languished at the bottom with one point less.
The World Bank selected these indicators because they relate to regulatory areas where counties have the administrative power to reform the regulation or make changes in the way it is implemented.
The mixed bag of results where a county’s regulatory environment may be more business-friendly in some areas than others present opportunities for reform in the different counties. The situation could motivate reform-minded governors and policymakers in counties to look for areas where local improvements are possible and learn from the best practices in other counties, even without legislative changes at the national level.
For instance, on average, starting a company requires seven procedures, takes 25 days and costs 26.3 per cent of Kenya’s income per capita. But at the county level, the time varies from 20 days in Uasin Gishu (Eldoret) and Mombasa to 27 days in Narok and Nyeri. Start-up costs range from 18 per cent of income per capita in Nyeri to 27 per cent in Mombasa.
The process to obtain a business permit takes two days in Kiambu (Thika) and Uasin Gishu (Eldoret) and as a result, these are the two counties where it is easiest to start a business, according to the assessment done in 2016.
Studies show that formal firms are more productive and therefore business start-up and other investment climate reforms foster productivity and employment growth throughout Kenya.
The survey found that the ease of starting a business is associated with greater willingness among informal firms to register. The informal sector constitute 83 per cent of employment, according to the 2017 Economic Survey.
Kenya’s low level of productivity, particularly in its informal sector, continues to hinder companies’ ability to grow and generate more employment