Opinion & Analysis

Business permits appetite makes counties unpalatable

A Nakuru resident shopping for items: Counties have to do all it takes to be business-friendly. FILE PHOTO | NMG
A Nakuru resident shopping for items: Counties have to do all it takes to be business-friendly. FILE PHOTO | NMG 

The Commission on Revenue Allocation’s data released last week show that some county governments are charging higher for business permits compared to what Nairobi asks for similar outfits yearly.

Migori, for example, charges Sh150,000 for single business permit for a 3,000 square metre supermarket while Nairobi’s is at  Sh80,000. Kwale charges Sh90,000.

While the evident sharp appetite for higher revenues is understandable in the push to run the affairs of the regional governments smoothly, some actions may just work against the noble goal.

Devolution arrangement gives these governments autonomy to push the wheel of growth and the best way to do so is getting the bigger picture of long-term growth, not rosy revenue figures today.

Indeed, the benefits of long-term investments far much outweigh the annual collections that are a drop in the ocean compared to benefits like jobs, security, and support for other sectors like farming, and the general robust activity.

A supermarket, for example, is a big employer and promises contracts for suppliers and farmers.

As a matter of fact, the counties should learn from the annual World Bank ‘Doing Business’ index that investors rely on to determine their locations and expansion opportunities.

In this index, the cost of permits, electricity, water, labour, and  business registration among other requirements are analysed to pick the most attractive investment zones and regimes.

Again, countries use these figures to run reforms with the goal of retaining the existing businesses, attracting more and influencing expansion.

For counties that are keen on direct big projects, they have to do all it takes to be business-friendly, lest they force investors to migrate to friendlier counties and countries.

It is to review these charges and come up with better strategies that stimulate growth and revenues.