Im­proved busi­ness en­vi­ron­ment is good news for lo­cal in­vestors

Daily Nation (Kenya) - - OPINION - Mr Mohamed is the Cab­i­net Sec­re­tary, Min­istry of In­dus­try, Trade and Co­op­er­a­tives

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 multi-in­sti­tu­tional 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 subsa­ha­ran Africa.

Pro­ce­dures

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.

ADAN MOHAMED The gov­ern­ment un­der­stands the need to cre­ate a con­ducive en­vi­ron­ment for the pri­vate sec­tor.”

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