According to the report, Kenya maintained its strong business reform agenda, carrying out five key reforms in the past year to improve the business climate for small and medium-sized businesses, says the World Bank Group’s Doing Business 2019: Training for Reform report.
“The reforms earned the country a spot among the global top improvers, a distinction it has earned four times in the past 11 years. Kenya advances this year to 61st place in the global ease of doing business ranking, from a rank of 80 last year.” A statement from WB reads in part.
According to the World Bank Kenya, Country Director Felipe Jaramillo, in recent years, Kenya has embraced a strong reform agenda aimed at boosting investment and creating jobs. During this past year, Kenya has once again showcased itself as one of the global leaders in adopting international best practices in business regulation.
“While this is a great accomplishment which we must celebrate, I also encourage the government to persist in its efforts to address the remaining hurdles that affect the establishment and growth of SMEs in the country, a segment that is critical to the creation of more jobs and opportunities for Kenyan youth,” said Felipe.
The reforms of the past year included making Registering Property easier by introducing an online system to pay fees and obtain digital certificates. As a result, the time for a business to register a property transfer has now been reduced to 49 days, from 61 days.
The second highest ranking economies in the region are Rwanda (29) and Kenya (61). South Sudan is at 185 then Eritrea at 189, and Somalia 190 are the lowest ranked economies in the region.
The report ranked other large economies in the region including Congo (184), Ethiopia (159), Nigeria (146), Tanzania (144), Sudan (162), and Uganda (127). The region’s economies perform best in the area of Starting a Business (122).
“Rwanda ranks among the best globally in the Doing Business areas of Registering Property (with a rank of 2) and Getting Credit (3). In registering property, Rwanda has an efficient land registry where it takes 7 days to transfer property and costs only 0.1% of the property value, the same as in New Zealand.” The report reads in part.
However the report noted that the region underperforms in the areas of Getting Electricity (145),
Trading across Borders (139) and Registering Property (131). It takes on average 112 days for a business to obtain a permanent electricity connection to the grid in Sub-Saharan Africa, compared to a global average of 86 days.
Kenya strengthened access to credit by introducing a new law on secured transactions that created a unified secured transactions legal framework. The country also established a new unified and notice-based collateral registry. Kenya performs extremely well in the Getting Credit area, advancing to a global rank of 8 this year, from 29 the previous year. Kenya is far ahead of its regional neighbors in Sub-Saharan Africa, with a regional average rank of 115 in Getting Credit.
Kenya also strengthened the protection of minority investors by increasing disclosure requirements, regulating the approval of transactions with interested parties, increasing shareholder rights and role in major corporate decisions, and requiring greater corporate transparency. For example, Kenya scores a perfect 10 on the indices measuring the extent of disclosure and director liability. As a result of the latest reform, the country has catapulted to a global rank of 11, from 62, in the Protecting Minority Investors area.
Paying Taxes was made easier by merging all permits into a single unified business permit and by simplifying the value added tax (VAT) schedule on its iTax platform, thus reducing the time it takes to file for VAT.
Kenya made Resolving Insolvency easier by facilitating the continuation of the debtor’s business during insolvency proceedings, providing for equal treatment of creditors in reorganization proceedings and granting creditors greater participation in insolvency proceedings. Kenya has considerably improved its global ranking in this area, to 57 this year.
However, Kenya continues to underperform in several Doing Business areas. In construction permitting, for example, it takes 156 days to obtain all permits and authorizations to build a warehouse in Kenya, compared with the Sub-Saharan Africa regional average of 146 days, and far longer than 91 days in Niger or 113 days in Rwanda. Kenya’s global rank in the area of Dealing with Construction Permits is 128.
Starting a Business also remains a cumbersome process in Kenya. It costs 25 percent of the income per capita to start a business in Kenya, which is almost ten times more expensive than in Cote d’Ivoire (2.7 percent), and the process takes 23 days, compared with just four days in Rwanda.
There also remains much room for improvement in the area of Registering Property. Despite a reform in the past year to make registering property easier, a business has to go through nine procedures in effect a property transfer, compared to an average of 6 procedures in the region. Kenya ranks 122 globally in the Registering Property area.