WASHINGTON, October 25, 2016 – Kenya is once again among the economies that landed a spot in the global top 10 improvers list, finds the World Bank’s Group’s latest ease of doing business report.
Doing Business 2017: Equal Opportunity for All, released today, records a total of five reforms for Kenya during the past year, the most ever recorded by the country since the inception of the report. And Kenya implemented the second highest number of reforms carried out in the past year by a Sub-Saharan African economy, with only Niger having implemented more.
Ranked 92, compared to 113 in the previous year, Kenya is now among the top 5 economies in Sub-Saharan Africa where it is easiest to do business. And this improvement in the ranking is largely due to the implementation of reforms to ease the process of doing business. For example, in the area of Resolving Insolvency, Kenya introduced a reorganization procedure and introduced regulations for insolvency practitioners. Starting a Business was made easier by removing the stamp duty fees required for the nominal capital, memorandum and articles of association and eliminating requirements to sign the compliance declaration before a commissioner of oaths. In the area of Protecting Minority Investors, Kenya introduced legal changes focused on mitigating the potential prejudicial effect of conflicts of interest, particularly in the context of related-party transactions.
Kenya also streamlined the process of Getting Electricity by introducing the use of a geographic information system which eliminates the need for a site visit, thereby reducing the time and interactions needed to obtain an electricity connection. This reform reduced the time it takes for a business in Nairobi to get connected to the grid by almost two weeks.
Kenya’s reform agenda in recent years has brought tangible improvements for local entrepreneurs. For example, five years ago, it took an entrepreneur 405 hours to comply with tax obligations. Today, it takes about 196 hours, which is far less than the rest of the region where it takes about 304 hours.
“Kenya is now among the best performers in Sub-Saharan Africa thanks to reforms across different regulatory areas. As Kenya now looks to narrow the gap with other middle-income economies on the global stage, the country will need to focus on areas where entrepreneurs still experience difficulties.” said Cheikh Oumar Seydi, Director, East and Southern Africa, IFC..
Although Kenya has made improvements in recent years, challenges remain, such as in Dealing with Construction Permits, Registering Property, Paying Taxes or Getting Electricity. For instance, it takes 61 days to complete a property transfer in Kenya, whereas it takes on average 51 days globally. Moreover, business in Nairobi endured over 3 hours of outages on weekly basis in 2015- totaling around 163 hours of outages in one year alone.
This year’s Doing Business report includes, for the first time, a gender dimension in three indicators: Starting a Business, Registering Property and Enforcing Contracts. In Sub-Saharan Africa, 13 economies require additional legal hurdles for women entrepreneurs. In Kenya no such barriers exists. For example, a woman can start a business the same way as a man.
The Paying Taxes indicator has been expanded to cover post-filing processes, such as tax audits and VAT refund. The report finds that the region has room for improvement in these new areas. This is the case in Kenya as it is very difficult for local companies to obtain a VAT refund for the purchase of machinery, and the time for audit compliance is almost 22 hours, which is higher than both the global average (about 17 hours) as well as the regional one (about 19 hours).
The full report and accompanying datasets are available at www.doingbusiness.org