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
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.