Malaba tops Kenya’s ease of business 2012 index

High cost of business and lengthy registration procedures are denying Kenya growth momentum and potential jobs from small and medium sized enterprises, a new report on the ease of doing business has revealed.

The survey by the World Bank found that lengthy procedures for starting a business, weak enforcement of contracts and slow registration of property are key obstacles to entrepreneurship in key towns, especially in the capital Nairobi.

The World Bank’s ranking of selected cities and key towns shows that Malaba is the best place to do business in Kenya having toppled Narok, which held the position last year.

Speedy issuance of construction permits and better enforcement of contracts helped the town on the Kenya-Uganda border to improve its standing.

The ranking examines the business environment for SMEs in 13 towns, including Nairobi, Mombasa, Nakuru, Eldoret, Kisumu, Malaba, Thika, Nyeri, Kakamega, Isiolo, Narok, Garissa and Kilifi.

It does not cover large or foreign-owned businesses and focuses on four thematic areas: Ease of starting a business, ease of dealing with construction permits, ease of registering a property and ease of enforcing contracts.

The report says Malaba has in the past 12 months rolled out reform measures in key areas of issuance of permits and enforcement of contracts.

It now takes a businessperson 64 days to get a permit, putting the border town ahead of South Africa’s average of 127 days.

This year’s ranking, however, shows that Kenya has significantly improved the speed with which construction permits for warehouses are issued, taking position 37 out of the 183 countries surveyed.

“Kenya is among the fastest and cheapest economies in sub-Saharan Africa for dealing with construction permits,” says the report.

But East Africa’s largest economy’s ranking plummeted in key areas of enforcement of contracts, issuance of business permits and registration of property to stand at position 109 from position 78 in 2009 – out of 183 countries surveyed.

The World Bank said that economies that score well on issuance of permits tend to have rigorous but expeditious and transparent processes.

The ranking of countries is based on a detailed examination of the processes by which inspections are done and certificates issued before, during and after construction of a warehouse.

It examines the necessary approvals to build a simple commercial warehouse and to connect it to water, sewerage and a fixed telephone line.

More important for Kenyan policy makers is the finding that the cost of getting a permit in Kenya is much lower as a percentage of per capita income compared to sub-Saharan Africa’s average.