VENTURES AFRICA – The World Bank ranking on the ease of doing business in selected cities has identified Malaba as the best place to do business in Kenya; Malaba succeeds Narok which took the first position last year.
While Narok slide to the second position on this year ranking; Nairobi, the country’s capital city, came in 13th on the list of cities with the ease of doing business in Kenya.
The report stated that lengthy procedures for starting a business, weak enforcement of contracts and slow registration of property are the key obstacles to entrepreneurship in key towns, especially in the capital Nairobi.
Speedy issuance of construction permits and better enforcement of contracts was what helped the Malaba, a town situated on the Kenya-Uganda border, improve its standing.
The report stated that Malaba has in the past 12 months rolled out reform measures in key areas of issuance of permits and enforcement of contracts as it now takes a businessperson 64 days to get a permit, putting the border town ahead of South Africa’s average of 127 days.
According to Business Daily Africa, the new report on the ease of doing business revealed that “High cost of business and lengthy registration procedures are denying Kenya growth momentum and potential jobs from small and medium sized enterprises.”
The recent World Bank ranking examines the business environment for SMEs in 13 towns, including Nairobi, Mombasa, Nakuru, Eldoret, Kisumu, Malaba, Thika, Nyeri, Kakamega, Isiolo, Narok, Garissa and Kilifi; while excluding large or foreign-owned businesses.
According to the report, it is easiest to start a business in Thika; to deal with construction permits in Malaba; to register a property in Mombasa; and to enforce a contract in Garissa. It is, however, most difficult to start a business in Kisumu, to deal with construction permits in Nakuru, to register property in Isiolo and to enforce a contract in Nairobi; Standard Digital reported.
The cities were adjudged based on the ease of starting a business, ease of dealing with construction permits, ease of registering a property and ease of enforcing contracts.
Overall, the survey indicated the East Africa largest economy (Kenya) has significantly improved the speed of issuing construction permits for warehouses thereby taking 37th out of the 183 countries surveyed.
The report regards Kenya among the fastest and cheapest economies in sub-Saharan Africa for dealing with construction permits.
However, the country’s ranking on the general ease of doing business worsened as a result of its lower ranking in key areas such as enforcement of contracts, issuance of business permits and registration of property.
Kenya slid from its 106th position the previous year to position109. This is even a far cry from its 78th position in 2009.
“Position 109 is very bad and this is mainly due to rampant corruption, lack of access to finance and inefficiencies related to government bureaucracy,” Kenya’s Prime Minister, Raila Odinga said.
The Prime Minister said yesterday while launching the report that it is not acceptable that Rwanda, which for many years suffered civil strife, can reform its business environment to the point of beating Kenya.
He blamed the present low ranking on the habit of resisting change by Kenyans. He pointed out that many Kenyans are unwilling to embrace crucial reforms designed to improve business environment that will position the country as a favourite regional investment destination.
“We must change,” Raila advised.
Country rankings are based on a detailed examination of the processes by which inspections are done and certificates issued before, during and after construction of a warehouse. It examines the necessary approvals to build a simple commercial warehouse and to connect it to water, sewerage and a fixed telephone line.
Kenya has in the past eight years reformed its business licensing regime culminating to the simplification or elimination of 694 out of the total 1,325 licences.
This effort has helped businesses to save Sh5.2 billion ($62 million) per year, according to the International Finance Corporation (IFC), the World Bank’s private financing arm.