IFC seeks business registration at the counties

World Bank’s private investment and funding arm has asked Kenya to devolve the business registry and issue a single official identification number as a way of improving the business climate.

The International Finance Corporation (IFC) proposes that steps for starting a business should be reduced to two — an online search and a one-stop shop registration — instead of the current 10 or so to improve Kenya’s Doing Business rankings where the country is currently placed 129 out of more than 188 countries.

Kenya’s position in the Doing Business 2013 deteriorated from position 121 in 2012.

The agency wants automated services such as online tax filing and business registration to be linked up across various government levels.

The services should further be linked up across borders such that it is possible for the authorities to track the status of a Kenyan subsidiary in Uganda or Tanzania, IFC consultant Doris Olutende told a workshop at KICC that discussed business processes.

“The number of procedures could be reduced to just two instead of having so many that increase the cost of doing business. Again we could try one identification number instead of the different ones we have such as PIN for KRA, an ID in other processes and yet still need the NSSF and NHIF numbers,” said Ms Olutende.

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Some of the procedures should be reduced such that a start-up can search online for a business name and then apply for all the other necessary services at a one-stop shop.

Such services would include registration with the Kenya Revenue Authority, the National Social Security Fund, and National Hospital Insurance Fund.

“You need only one front office desk to which the investors go for their business start-up services,” said Ms Olutende.

Ann Gitonga, a policy analyst at the Kenya Institute for Public Policy Research and Analysis (Kippra), said business procedures are so costly with the business permit alone costing anywhere between Sh15,000 and Sh100,000 depending on the size and type of business as well as the number of employees.

Ms Gitonga said some reforms were already in the pipeline but it was difficult to tell what impact they have had in terms of the speed of starting a business or costs.

“The cost of starting a business is significantly higher than in South Africa,” said Ms Gitonga.

One-stop shop

Ms Gitonga said Kenya could emulate the best practices in Singapore, Rwanda and New Zealand, which have one-stop shops that cut many procedures of starting a business drastically.

“In Rwanda, the one-stop shop is in eight places. The country has also simplified complex documents,” said Ms Gitonga.

However, Kenya perform well in a few areas. In the 2013 ranking, Kenya was recognised as a good performer in terms of having no minimum capital in order to start a business.

Brand Kenya CEO Mary Kimonye says reducing the cost of business permits would be appropriate but not easy to carry out because some agencies depend on the revenues.

“There may be many cases where investors do not even look at the Doing Business rankings and will put their money straight away having considered factors relevant to their business. Again some agencies look at the permits as a way to raise revenue and they include this money in their budgets,” said Ms Kimonye.

Margaret Wangu, who works in the office Registrar of Companies, said several business reforms were ongoing and some had already taken place.

Ms Wangu said that registration of business could be done online from January this year and three Huduma Centres were in operation, bringing together several services under one roof since April this year.