Kenya’s making substantial progress in terms of administrative and legal reforms that are simplifying and easing the process of starting business and running a business in Kenya, according to the the Permanent Secretary of Kenya’s Ministry of Finance, Joseph Kinywa.
Kinywa, who was addressing a validation workshop on the Doing Business (DB) report said, “the main agencies driving the reforms, as per the DB indicators, have been at the fore front ensuring that they create a platform that is conductive to any investor who wishes to invest in our country.”
The World Bank (WB) says economies are ranked on their ease of doing business, from 1-183. A high ranking on the ease of doing business index means the regulatory environment is more conducive to the starting and operation of a local firm.
According to WB report of 2010 Kenya was ranked as follows in these indicators: Ease of doing business, 98; starting a business, 125; dealing with construction permits, 35; registering property, 129; getting credit, 6; protecting investors, 93; paying taxes, 126; trading across borders, 144; enforcing contracts, 125; and closing a business, 85.
The Treasury Permanent Secretary said that as a country, Kenya cannot afford to be left behind while others progress. Mr Kinywa said that the Kenyan government is out to embrace the spirit of reforms in different capacities by creating “Reform Champions”, who will run towards making Kenya the best investment destination in the world.
Therefore, he said the World Bank initiative is welcome, as it helps to benchmark against best practices in various areas of economic transformation and development, and enables the government to set targets and work towards achieving them. He added that it is an opportunity for the country to learn from others and improve on its shortfalls, as it strives to improve the way of doing things.
The government has been implementing various regulatory reforms in its key institutions over the past five years to improve on its ranking. These institutions include the Companies Registry, Kenya Revenue Authority (KRA), Lands Registry, Nairobi City Council, Kenya Credit Information Sharing Initiative (KCISI), Kenya Local Government Reform Programme, to name a few whose impact has been positive and has enabled business to thrive.
At the KRA, a comprehensive approach towards VAT reforms has been initiated, which will improve on the “Paying taxes” indicator. In addition, “operational efficiency has been increased at the port of Mombasa and KRA due to the consolidation of document approval procedures; and replacement of the paper-based customs administration with the Revenue Administration Reform and Modernization Programme (RARMP), which is electronic data interface system. This commenced in April 2005 and was completed in June 2010,” Kinywa told the stakeholders who were drawn from all the concerned institutions.
He went on to enumerate other reforms such as the simplification of the Single Business Permit, through decentralization of the licensing function to Division and Wards thus fast-tracking the process and reducing the time taken to obtain a license to about a day, according to the Nairobi City Council. “This is a critical permit that affects all business. Its simplification, therefore, has immediate positive ripple effect on business operations,” the Finance Minister said.
To further improve international/cross border trade and facilitate investment, has set up the National Single Window Systems Project, which implements an electronic Single Window platform for submission, receipt and processing of the trade related cargo clearance documentation. The electronic platform will be the sole entry point for lodgement of trade transaction documentation. It will integrate the electronic systems of stakeholders involved in the cargo clearance process, such as KRA, KBS, Kenya Plant Inspectorate Services, Kenya Ports Authority among others.
The National Single Window System Project was gazetted on 14th January 2011, as the Kenya Trade Network Agency, and is expected to be fully operational by December this year.
The government is also at an advanced stage of setting up the Electronic Regulatory Register (the e-registry), which will not only host all business licenses in force but also ensure scrutiny and transparency of license requirements. Only licenses that will be hosted in the E-registry will be enforceable. The E-registry will also encourage information disclosure for all procedures and documents required to do business and ensure that they are updated.
“These are steps towards the right direction and I would urge all other public institutions to take the initiative and move away from ordinary to extra ordinary service delivery,” he said. The government would also like to promote such reforms to local authorities currently being measured under the sub National Doing Business Indicators by the World Bank Group. The Kenya Local Government Reform Programme, under the Ministry of Local Government, and the office of the Prime Minister are taking a lead on this.
These reforms are intended to go along way in sustaining economic growth by banking on continuous reforms, increased investor confidence and infrastructure growth and development.
The government is undertaking these economic interventions to enable them to achieve the average real gross domestic product growth of 10 percent as set out in the Vision 2030, which is the Government’s medium to long term growth blue print. “Chief among the interventions is need to sustain our macroeconomic stability, which is a pre-requisite for sustained growth,” the PS said “The reforms are aimed at removing binding constraints to higher economic growth as well as creating a conducive environment for business to flourish.”
Vision 2030, places a heavy responsibility on the private sector as the engine of growth and driver of the main projects identified under the six key sectors of the economic pillar, namely: agribusiness, financial services, wholesale and retail, manufacturing, tourism, and Business Progress Outsourcing. “I, therefore, wish to call upon the private sector to take up the mantle and rise to challenge,” Mr Kinywa said.
To read the 2011 “Doing Business in Kenya Report” see: http://www.doingbusiness.org/~/media/fpdkm/doing%20business/documents/profiles/country/db11/ken.pdf