Written by PMPS 2012-06-26 16:49:00 Read 415 Times

Prime Minister Raila Odinga has called for a reduction in the cost of doing business in Kenya to enable the country to compete effectively in the global market. 

Saying licensing costs that account for approximately 1.1 per cent of Kenya’s GDP were unacceptably high, the PM emphasized that for the country to compete in the global market a high-quality, and low cost business environment must be availed. 

“Business regulation should never be used to impose unreasonable costs as a means of extracting revenue. On the contrary-transparency, accessible effective and efficient rules will only spur economic activity,” He said

Kipkaren market/PHOTO OBED SIMIYU

Mr. Odinga was delivering a key note address during the launch of the ‘Doing Business in Kenya 2012 Report’ at the Kenyatta International Conference Centre Tuesday. 

The report benchmarks Kenya against 183 economies around the world and is second in a series analyzing regulations that impact on small and medium enterprises in 13 Kenyan towns namely Mombasa, Kilifi, Garissa, Isiolo, Nyeri, Thika, Nairobi,Narok, Nakuru, Eldoret, Malaba, Kakamega and Kisumu. 

The PM expressed concern that Kenya’s performance in Doing Business has declined among the 183 countries examined, noting the country is ranked at number 109 this year down from 72 in 2008. 

He said that at the moment we are ranked at number 166 in paying taxes, 141 in trading across the borders, 133 in registering property and 132 in starting business, adding that this is a very poor performance-and it is a negative trend replicated in the global competitiveness index 2010-11, where Kenya is ranked number 106 among 139 countries. 

Noting these rankings has a direct impact on how Kenya is perceived as an investment destination; Mr. Odinga observed that corruption, lack of access to finance and inefficient government bureaucracy are the three most problematic factors. 

The PM called for a one stop shop in licensing businesses in Kenya where an investor can obtain all the licenses they require in starting the business in one place, noting this should be done to lower the rankings in doing business in the country to below number 40 from the current ranking at number 109. 

Mr.Odinga called on the licensing bodies to cede some of their authority, saying it was time Kenya which has some of the best trade and investment policies on paper in this region implemented them to make the one stop shop goal possible. 

‘‘Why is Kenya still operating with the company’s Act and cumbersome procedures dating from 1948? It takes an average of 40 days to start a business in Kenya. In Rwanda it takes two days. This is stark comparison is not in our favor,’’ He said.

Nevertheless, the PM noted that the Sub-National Doing Business report had indicated that in Kenya there were some good practices in operation. 

He called on the Kenyans to tap into the devolution provisions of the constitution to make the new counties competitive and attractive to investors. 

Mr. Odinga also stated that the Kenya had embarked on reforms in several areas critical to the country’s macro-economic environment.

‘These include key legislation, tax administration and licensing reforms that will mean an annual saving of US $ 170 million to the private sector,’ he added. 

He went on to say that the country had made significant progress in the provision of information and communications technology, including rolling out the broadband network and digitizing government records. 

Saying supportive knowledge about the exchange and health competition among towns and local authorities will be key to future economic success; he challenged the Ministry of local government to ensure that reported reforms are not limited to the 13 pilot local authorities. 

The acting Minister for local government Fred Gumo and the World Bank country director Mr. Johannes Zutt also spoke at the function.  

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