Doing Business Report Kenya-2019 Note

The World Bank Group released the Doing Business 2019 report, which investigates the regulations that enhance business activity in a country and those that constrain it. The report analyses survey results across 190 economies. The report covers regulations affecting 11 areas of the life of a business which include: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labor market regulation.

Summary of doing business reforms in Kenya in 2017/18

  1. Registering property: Kenya made registering property easier by introducing an online system to clear land rent rates.
  2. Getting credit: Kenya strengthened access to credit by introducing a new law on secured transactions that created a unified secured transactions legal framework and establishing a new unified and notice-based collateral registry.
  3. Protecting minority investors: Kenya strengthened minority investor protections by increasing disclosure requirements, regulating the approval of transactions with interested parties and increasing available remedies if said transactions are prejudicial, increasing shareholders’ rights and role in major corporate decisions and requiring greater corporate transparency.
  4. Paying taxes: Kenya made paying taxes easier by merging all permits into a single unified business permit and by simplifying the value-added tax schedule on its iTax platform.
  5. Resolving insolvency: Kenya made resolving insolvency easier by facilitating the continuation of the debtor’s business during insolvency proceedings, providing for equal treatment of creditors in reorganization proceedings and granting creditors greater participation in the insolvency proceedings.

Other info on Kenya’s improvements:

  1. Online land rent financial management system: In Kenya, the Ministry of Lands and Physical Planning implemented an online land rent financial management system on the eCitizen portal, enabling property owners to determine the amount owed in land rent, make an online payment and obtain the land rates clearance certificate digitally.
  2. Access to credit: Kenya strengthened access to credit by implementing a functional secured transactions system. The new law regulates functional equivalents to loans secured with movable property, such as financial leases and fiduciary transfer of title.
  3. Companies Amendment Act 2017: Kenya enacted the Companies Amendment Act 2017, which holds directors liable for transactions with interested parties valued at 10% or more of a company’s assets and that cause damages to the company. Directors involved in prejudicial transactions are now required to pay damages, disgorge profits and may be disqualified from holding similar office for up to five years.
  4. Continuation of contracts supplying essential goods and services to the debtor: Kenya allowed for the continuation of contracts supplying essential goods and services to the debtor, giving the administrator the power to continue or disclaim contracts of the debtor.
  5. Involvement of Jua Kali in the manufacturing sector: In Kenya, the informal sector, also known as jua kali, is extensively involved in the manufacturing sector. A study of electrical safety management in Kenya’s informal sector shows that most jua kali operators do not follow electrical safety regulations and lack the appropriate equipment for electrical services.

Conclusion:
Behind only Rwanda (#29) and Mauritius (#20) in the ranking, Kenya’s economy remains the most attractive
business environments in Africa. We expect continued improvement, as the government remains committed
to pro-market reforms and the formation of public-private partnerships, especially in infrastructure.

Download the full report here