Pause and address bottlenecks stifling private businesses from thriving
03-08-2016 14:04:00 | by: Bob Koigi | hits: 5482 | Tags:

The East African region has been hailed as a magnet for investors both local and beyond. What with good climate, huge investment in infrastructure, a burgeoning middle class with an affinity for spending and a thriving work force.

It is truly a cocktail of incentives for any investor. Yet behind all the glamour is the disappointment that the business people and prospective investors stare upon setting foot in the region.

Numerous studies including the annual World Bank Cost of doing business index have indicated that the bottlenecks that the region has often ignored threaten to slam the brakes on countries in the region meeting their ambitious plans to attain mid-level economic status by latest 2030.

Take the effect of business regulation for example. The damaging effect of this single factor is so immense that it is felt right from the point of registering a business, through the life business operation to the point of business closure.

The effect is also felt by manufacturers when say, buying or leasing immovable property, complying with the onerous tax requirements, getting credit to finance their business operations as well as in dealing with export and import procedures.

As opposed to being used as a means to regulate business entry and activities in areas where business activities may have security, health or safety implications, it is indeed unfortunate that licensing is often inappropriately used as a mechanism to raise revenue for governments.

One of the three main pillars of Vision 2030 is the economic pillar which is expected to deliver the anticipated 10 per cent economic growth per annum. This pillar lays emphasis on the promotion of investments and a business friendly environment, which is a key function of the local authorities.

It is a well acknowledged fact the world over that the private sector is the engine of any country’s economic growth. In Kenya as is the case with the rest of the world private sector will determine how fast, and if it will be possible, for the country to attain the dream of being a mid-economic country in 16 years.

 It is therefore imperative for the government to create a conducive and enabling environment in which to do business. Well, it is obvious that the local authorities are expected to provide an enabling environment in their area of jurisdiction for investment to thrive, this is not the case as they act as one of the major stumbling blocks to the development and growth of business in the country.

Externally though, Kenyan firms continue to grapple with challenges posed by subsidized imports, counterfeit and substandard goods. This would mean locally manufactured goods would be more costly than such imports.

Over and above this, the average import tariff of 12 per cent for the EAC Customs Union is perceived not to be protective enough compared to say for instance that of India which is said to be at 60 per cent.

Such acts can only undermine industries that are trying to be competitive as the market gets flooded by cheaper products. All these factors have made the cost of doing business in Kenya unacceptably high and this trend if left to persist will sink the country and region’s industries which are the lifeline of the East African economies.

Multiple award winning Kenyan journalist Bob Koigi is Chief Editor East Africa at Africa Business Communities