NATION MEDIA GROUP
By KIARIE NJOROGE, gnjoroge@ke.nationmedia.com
In Summary
- Kenya ranks 99th out of 140 economies in the 2015-16 Global Competitiveness Index (GCI) released Wednesday, down from 90 last year.
- Corruption was cited as the most problematic factor in doing business with weak institutions in government also pulling Kenya’s score down.
Corruption and burdensome taxes have cut Kenya’s competitiveness in the latest ranking by the World Economic Forum (WEF).
The country is ranked 99th out of 140 economies in the
2015-16 Global Competitiveness Index (GCI) released Wednesday, down from
90 last year and trails regional rival Rwanda-which has risen to
position 58.
Corruption was cited as the most problematic factor
in doing business with weak institutions in government also pulling
Kenya’s score down.
High corporate taxes has also dimmed Kenya’s
competitiveness. The government takes 38.1 per cent of the profits
posted by firms in form of taxes compared 28.8 per cent in South Africa
and 33.5 per cent in Rwanda.
Kenya had an average score of 3.9 points from a
maximum seven across 114 indicators that range from labour,
macroeconomic stability, education, institutions and infrastructure
among others.
In all the indicators that are corruption-related,
the country scored poorly reflecting the weakness in combating the vice
that has remained rooted in Kenya’s government and private sector. For
example, the index gives a poor score of 2.9 (out of 7) for diversion of
public resources.
Diversion of resources for key programmes like
infrastructure has been blamed for slowing down the improvements
necessary to attract and retain investors in the country.
The report also paints a poor picture of the
country in terms of irregular payments and bribes as well as favoritism
in decisions made by government officials.
Besides Rwanda, Kenya’s other neighbours were
ranked below it with Ethiopia jumping nine places to 109. Uganda was at
115 while Tanzania is ranked 120.
The index provides a glimpse into the key factors
that determine economic growth and a country’s level of present and
future prosperity.
“By doing so, it aims to build a common
understanding of the main strengths and weaknesses of an economy so
stakeholders can work together to shape economic agendas that address
challenges and enhance opportunities,” the report adds.
Kenya performed relatively well on the quality of
the education system where it scored 4.3 points out of seven to see it
ranked at position 36.
Other areas of good performance are financing
through local equity market (4.4 points), the country’s capacity to
attract talent (3.7 points) and capacity for innovation (4.3 points).
But terrorism which has severely affected tourism
at the coast is shown to be a major drawback. Kenya has been ranked last
in the business costs of terrorism showing the huge amount being lost
due to the terror attacks as well as the insurance covers and security
costs.The country also ranks low at position 134 on the cost associated with
insecurity and organised crime. Police services are put to be unreliable
in the country.
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