Kenya edges up WB business ranking but questions linger

Employees overseeing the canning of tomato paste inside Njoro Canners factory on August 30, 2019. The company engages farmers on contract. [Harun Wathari/Standard]

Kenya’s ranking in the World Bank’s ease of doing business has improved amid a tough environment that has seen companies downsize and send workers home.

The country has moved up five places in the latest ranking ahead of such economic giants as India, Italy, Brazil, and South Africa to settle at position 56. Kenya was ranked at position 61 previously.

Only Mauritius, Rwanda and Morocco were ranked ahead of Kenya in the Doing Business 2020 Report in Africa.

The report compared business regulations in 190 economies.

The report looks at a country’s efforts in improving such areas as starting a business, getting electricity, dealing with construction permits, and trading across borders.

Other indicators include protecting investors, paying taxes, enforcing contracts and resolving insolvency.

Kenya has now moved up 80 places in five years, a milestone that might be blighted by an economic slowdown that has been characterised by massive lay-offs, with most firms citing crippling regulations and structural changes.

An estimated 20,000 people have been fired in the last few months. The report noted that Kenya improved the reliability of electricity supply by modernising its existing infrastructure and by inaugurating a new sub-station in Nairobi.

It also made it easier for people to access credit. “The launch of a credit bureau in Kenya, for example, has helped to reduce interest rates, collateral, and default rates for loans at commercial banks,” said the World Bank.

The plethora of digital lending platforms, some started by banks, have also helped the country move up in the log, with the country ranked fourth towards this end.

However, some analysts have poked holes in this criterion, noting that while the access of credit might have improved, the quality has not.

A raft of directives and tax measures, including new levies of online businesses has been a sticking point, with a number of analysts taking a swipe at the Government’s latest proposal to introduce levies for the digital marketplace.

The Kenya Revenue Authority has already noted that it is having problems collecting taxes as more employees lose their jobs.

Kenya Private Sector Alliance Chief Executive Carol Kariuki said the improvement in the ease of doing business in the last five years has had a tremendous impact.

“Yes, we have seen more businesses registered about 30 weekly and more connected to electricity than any time in our history,” she said, adding that she hoped the country will meet its target of getting into the top 50 by next year.

However, added Ms Kariuki, many businesses have been grappling with a tough operating environment, especially in dealing with regulators.