The Star (Kenya)

Ease of do­ing busi­ness: Highly ranked but re­al­ity is dif­fer­ent

The prob­lem with reg­u­la­tions in the coun­try lies in the harsh, ar­bi­trary man­ner of en­force­ment

- Business · Kenya · Coast Province

129 in 2013. But busi­ness own­ers say the go­ing is not that easy be­cause the man­ner in which laws are en­forced is detri­men­tal to busi­ness in­ter­ests. “Rather than have busi­nesses spend colos­sal amounts of en­ergy and re­sources, push­ing back against sti­fling reg­u­la­tions or wor­ry­ing about which un­fore­seen un­favourable poli­cies will hit them next; we need to be find­ing ways to har­monise and sta­bilise the busi­ness en­vi­ron­ment,” says Sachen Gudka, chair­man of the Kenya As­so­ci­a­tion of Man­u­fac­tur­ers. Reg­u­la­tions ex­ist to pro­tect work­ers, pub­lic safety, busi­nesses and in­vest­ments. A coun­try with­out laws reg­u­lat­ing the con­duct of busi­ness be­comes a gang­sters’ par­adise. Safety stan­dards get thrown out the win­dow. In­vestors and con­sumers lose trust in the econ­omy. This is the sit­u­a­tion in war-torn coun­tries where state author­ity has col­lapsed. There­fore, the key for gov­ern­ments is to find the right mix of reg­u­la­tory over­sight that al­lows busi­ness to grow.

Among the key achieve­ments in the gov­ern­ment’s drive to im­prove the busi­ness cli­mate is the digi­ti­sa­tion of li­cens­ing pro­cesses. Today, busi­nesses can ap­ply for li­cences and pay elec­tron­i­cally, thus, elim­i­nat­ing the need to ac­tu­ally send some­one with doc­u­ments to var­i­ous state agen­cies. The reg­is­tra­tion of com­pa­nies is in line with 21stcen­tury global trends. There is greater trans­parency in pro­cesses for pur­chase and sale of prop­erty such as mo­tor ve­hi­cles and land.

Small-scale traders need only a busi­ness per­mit from their county gov­ern­ment. Medium sized to large busi­nesses must com­ply with the re­quire­ments of com­pany reg­is­tra­tion, the county busi­ness li­cens­ing reg­u­la­tions, land zon­ing laws, in­come tax and VAT reg­is­tra­tion, health cer­tifi­cates (for food), mo­tor ve­hi­cle reg­is­tra­tion, NSSF, NHIF, and oc­cu­pa­tional safety reg­u­la­tions.

Busi­nesses deal­ing in al­co­holic bev­er­ages are re­quired to com­ply with liquor li­cens­ing laws. Some busi­nesses, such as those in the pe­tro­leum in­dus­try, sale of com­mu­ni­ca­tion de­vices, courier ser­vices and avi­a­tion, must get ad­di­tional li­cences from the reg­u­lat­ing author­ity of that sec­tor.

Then there are the lesser-known li­cences that of­ten get peo­ple into trou­ble, such as the Mu­sic Copyright li­cence for play­ing mu­sic in pub­lic ar­eas. Many peo­ple get sur­prised that they have to pay mu­sic copyright fees for tele­vi­sions in­stalled at the re­cep­tion area. Taxi driv­ers whose ve­hi­cles have car ra­dios also get into trou­ble for not hav­ing mu­sic copyright stick­ers on their wind­shields.

The prob­lem with reg­u­la­tions in Kenya lies in the harsh, ar­bi­trary man­ner of en­force­ment. Peter Mwairongo, a mid­dle-aged land­lord at the Coast, has first-hand ex­pe­ri­ence of of­fi­cial harass­ment. “I have to deal with county askaris,

Na­tional Con­struc­tion Author­ity and Na­tional En­vi­ron­ment Man­age­ment Author­ity of­fi­cials who show up as soon as they see con­struc­tion ma­te­ri­als on the ground,” says Mwairongo. “Even when you have the nec­es­sary per­mits, they will find some­thing they can use to ex­tract money. It’s very frus­trat­ing.”

Cosy­ing up to law en­forcers is how­ever no guar­an­tee of stay­ing in busi­ness be­cause an­other group of of­fi­cials from the same agency may ar­rive also de­mand­ing their share of bribes. This op­er­at­ing en­vi­ron­ment has cre­ated a car­tel of fraud­sters mas­querad­ing as en­force­ment of­fi­cers from state agen­cies.

 ?? / MERCY MUMO ?? Ven­dors off­load cab­bages from a lorry at Muthurwa mar­ket on Tues­day
/ MERCY MUMO Ven­dors off­load cab­bages from a lorry at Muthurwa mar­ket on Tues­day
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