Kenya: Supporting growth through improved investment climate

Kenya: Supporting growth through improved investment climate

by / Comments Off / 40 View / 29th September 2012

Tubman Otieno, Mombasa Town Clerk, had reasons to believe the best is yet to come for his city. ‘Mombasa emerged at the top in the ease of registering property out of the 13 Councils that were analysed in the Doing Business in Kenya Report. This, for us, is proof that our city is gearing up to attract more private investment, and that is good news’.

Otieno’s comment followed the June 2012 launch of the World Bank Group’s Doing Business in Kenya 2012 report which found that 13 local authorities have implemented 14 reforms since 2010. The reforms included streamlining the construction permits systems through the use of integrated directorates, easing the resolution of commercial disputes by introduction of a specialised court, and pursuing automated systems such as online registration for taxes.

The report was a deliverable of the Kenya Investment Climate Program (KICP). Launched in 2007 KICP is geared toward regulatory reform, investment generation and easing trade logistics in the country. The program’s strategy notably addressed perceived bottlenecks to enterprises’ development identified in the World Bank Group’s Enterprise Survey for Kenya in 2007. Among the challenges faced were tax rates, access to finance, excessive government bureaucracy, unfair competition to registered businesses posed by informal sector firms, and corruption.

Aligned with the Government’s Vision 2030 development strategy aimed to transform the East African nation into a middle-income country and through dynamic collaboration with its government client, KICP have achieved strong results over the course of its implementation:

Business licensing reform which resulted in the simplification or elimination of 694 of 1325 licenses, contributing to aggregate private sector cost savings of $ 36.3 million per year over 2008-2012; the Government’s reform work has so far led to a reduction in the overall licensing cost of 31.5% surpassing the 25% target adopted by the Government.

Design and launch of a functional and replicable e-construction permitting system, a first in the region. This system is highly replicable and efforts are on-going to deploy it in other cities. The system minimizes interactions and can go a long way to curb corruption in the construction sector.

Technical assistance to improve inspections and enforcement, and the drafting of good practice inspections by-laws for a number of cities.

In May 2012, KICP helped organize the fourth Network of Reformers conference, a peer-to-peer learning event, for East and Southern Africa, in Kigali, Rwanda. The event was attended by 130 participants from 10 countries in the region (including new entrants such as Ethiopia, Mozambique, Comoros and South Sudan) to share reform experiences and build networks that were established four years ago.

The Introduction and the ‘how-to’ training on the concept of regulatory impact assessments (RIA) in regulatory formulation.

Advice related to reforms measured by Doing Business and Sub-National Doing Business reports.

For Frank Twagira, KICP Program coordinator, ‘The various investment climate interventions we have supported the Government in implementing over the years have helped local authorities emerge as key reformers, demonstrating strong ownership to improve the business environment with the objective of attracting and retaining investment. Notable results have been achieved—as highlighted in the two Doing Business in Kenya reports produced under KICP—and underline the need to sustain reform efforts at the decentralised government level’.

The country’s new constitution was promulgated in August 2010. As part of it the country is undertaking significant devolution of powers and roles to 47 counties empowered to be key forces of development. Counties will now wield significant regulatory control and resources and thus have an impact on business and competitiveness.

KICP’s successor program, Kenya Sub-National Investment Climate Program (KSNICP) which will be launched in late 2012, factors in this new development approach by focusing a significant component to local governments. ‘KSNICP fits well with the country’s new constitutional framework in including reform action at the local level. Aligned with this a detailed scoping exercise to look at broader investment climate areas for possible intervention is underway. These will include but will not be limited to national level reform, agribusiness, competition policy, export competitiveness, private participation in infrastructure and ICT’ according to Frank Twagira.

Africa Renewal