The National Treasury is projecting the third consecutive year of a decline in collections generated from the registration of companies in the country as the volume of entities seeking operation continues to moderate from the peak registered during the Covid-19 pandemic.
According to the latest data, the Treasury projects that registration of companies will generate Sh827.7 million in 2023/24, a 3.2 percent decline from the Sh855.4 million expected in the current financial year.
The latest available data from the Business Registration Service (BRS) shows that private companies registered in 2021/22 were 46,215 down from 50,932 in 2020/21.
In the same period, business names registered declined from 101,674 in 2020/21 to 85,592 in 2021/22.
This means the period between July 2023 and June 2024 will be the third consecutive year during which collections from registrations will be trending downwards, coming from a peak of Sh993.8 million in 2020/21.
The BRS says this downward trend principally reflects the fact that at the height of the Covid-19 pandemic, a number of Kenyans took to running business ventures owing to restructuring and layoffs which hit the business environment and saw many lose their jobs.
“The surge in registrations during 2020/21 was attributed due to Covid-19 and Kenyans ventured into entrepreneurship due to layoffs and job cuts," says BRS Director General, Kenneth Gathuma.
"There was a slight decline in revenue generated during 2021/2022 that was attributed to resumption to normalcy and scaling down on restrictions hence a decline in registration of business entities.”
Data from BRS shows that in the ten months that ended in April 2023, a total of 47,827 private companies were registered compared to 38,834 in the same period a year earlier, a development which could be pointing to a turning point in the decline that has been witnessed.
In the ten months between July 2020 and April 2021, a total of 43,537. Registration of companies accounts for the lion’s share of revenue generated by BRS, averaging 63.0 percent of total collections annually.
In 2023/24, BRS is projected to collect a total of Sh1.3 billion, unchanged from what has been projected for the current financial year.
BRS says that the economy is, by and large, witnessing an increased compliance by firms with regard to registration and this has resulted in total collections growing even as collection from registration of companies declines.
“The continuous increase in the revenue generation is attributed to the increase in registrations of business entities and the compliance obligations filed by registered entities,” Gathuma says.
Fees collected from business name search is the second in revenue generation for BRS with collection for 2023/24 projected at Sh403.6 million compared to the Sh393.5 million projected for the current financial year.
Other sources of revenue include official receiver’s fees, registration of business names, and registration of hire purchase agreements which are expected to net Sh4.1 million, Sh84.8 million and Sh4.9 million, respectively, in 2023/24.