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Wednesday, October 30, 2013

Kenya drops in World Bank’s investor appeal ranking



Central Bank of Kenya governor Njuguna Ndung’u and World  Bank's lead economist Apurva Sanghi (right) during the launch of the bank’s report on Kenya at the Sarova Stanley hotel October 29, 2013. Photo/DIANA NGILA
Central Bank of Kenya governor Njuguna Ndung’u and World Bank's lead economist Apurva Sanghi (right) during the launch of the bank’s report on Kenya at the Sarova Stanley hotel October 29, 2013. Photo/DIANA NGILA   Nation Media Group
By George Omondi
In Summary
  • World Bank’s Doing Business 2013 report released Tuesday shows that the country did not implement any regulatory reform in the year to June 2013, pushing it down to position 129 compared to last year’s 121.
  • For Kenya, this is the fourth consecutive year of declining global ranking, having scored overall position 106 in 2010/11, 109 in 2011/12 and 121 in 2012/13.
  • The World Bank measures a country’s ease of doing businesses in terms of regulations affecting 11 areas from starting a business, dealing with construction permits, getting electricity, registering property, and getting credit

Kenya has dropped eight positions in its global appeal to investors, signalling yet another hidden impact of the March 4 General Election on business.

The World Bank’s Doing Business 2013 report released Tuesday shows that the country did not implement any regulatory reform in the year to June 2013, pushing it down to position 129 compared to last year’s 121.

The private sector said the report card reflected the true situation on the ground. “I am not surprised at all by the report because this was time for politics,” said Kenya Association of Manufacturers chairman Polycarp Igathe.

July 2012 to June 2013 was dominated by high-stake politics and associated court battles. The intense campaigns and uncertainty over the elections date clouded the first half while the second part was consumed by actual elections and a court petition.

Apart from Sh32 billion that the Treasury paid directly to manage the March elections, failure to implement reforms adds to the list of indirect burdens of polls that delayed planting for the long rain season and significantly slashed manufacturing output.

The World Bank measures a country’s ease of doing businesses in terms of regulations affecting 11 areas from starting a business, dealing with construction permits, getting electricity, registering property, and getting credit.

Others are protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and employing workers.

“The priority of all organs of State... was to give Kenya peaceful elections and roll out devolution successfully,” said former chairman of Kenya Private Sector Alliance Patrick Obath.

“The way forward is for politicians to move with speed to make up for the lost time.” In the 2012/13 period, Rwanda implemented eight regulatory reforms, taking the position of Africa’s second best nation to start and run a business after Mauritius.

Globally, Rwanda was ranked number 32 while Mauritius took position 20. The report says Burundi caught assessors’ attention with its reforms to ease registering property, Benin was well rated in the ease of trading across borders while Côte d’Ivoire took far-reaching measures in enforcing contracts
For Kenya, this is the fourth consecutive year of declining global ranking, having scored overall position 106 in 2010/11, 109 in 2011/12 and 121 in 2012/13.

Agencies charged with promoting investments said the Doing Business report does not capture all reforms that make Kenya attractive to private capital.

“There is a big difference between the Doing Business report and Annual Review reports which are based on timely information gathered by the planning ministry,” said Moses Ikiara, CEO of the Kenya Investment Authority.

In spite of its inability to implement any reform during the political transition, Kenya still overtook Uganda to rank as East Africa’s second best place to do business after Rwanda.

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