Improve ease of doing business in counties

Kenya has been scoring highly in the Word Bank’s Ease of Doing Business Index , moving up 19 places to position 61 out of a total of 190 economies last year. Yet Kenyans are yet to savour the fruits of this favourable rating , which they feel does not represent the reality on the ground.

The advent of devolution created other centres of power in the 47 counties, which have an effect on business environment. 

At the onset of devolution, counties were seen as Kenya’s growth engines. But doing business in—and with—the counties has become the worst nightmare for businesses, especially start-ups and small and medium enterprises (SMEs), thanks to unnecessary bureaucracy, unpredictable policies and unpaid bills. This is despite SMEs contributing up to 70 per cent to the gross domestic product (GDP).

The above factors have conspired to make business untenable and expensive in devolved units. It’s no wonder an annual roundtable by the Kenya Private Sector Alliance (Kepsa) and Senators warned that counties bureaucracies are holding the country to ransom.

County leaderships’ penchant for introducing random policies as well as deep-rooted corruption has the business fraternity worried as well multiplicity of taxes, levies and policies making it impossible for the sector to thrive. 

The situations calls for an honest conversation, especially on business environment. The process of starting a business, including company registration, need not be a nightmare. 

Rather, counties should find a way of incentivising businesses if the country’s economy is to stabilise.  Lawmakers must start by setting up mechanism to make doing business with counties a predictable process.

Making payment of pending bills predictable could be the starting point. This can be achieved by forward planning. 

President Uhuru Kenyatta’s directive that all ministries and State agencies settle pending bills to give the economy a new lease of life was timely, but it is not sustainable. Paying suppliers and service providers should not be an afterthought.

The knock-on effect of unpaid bills results in overall reduced spending and business activity which has in turn affected the countries economic activities as seen in the latest World Bank Economic update.

It is time counties reviewed their business policies to empower SMEs.