Kenya rises 21 places in the Ease of Doing Business rankings

Photo ©klndonnelly via flickr

Kenya has risen 21 places in Ease of Doing Business rankings, moving from 129th to 108th out of 189 countries worldwide.

Economies are ranked on their ease of doing business, from 1–189.

A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm.

The rankings are determined by sorting the aggregate distance to frontier scores on 10 topics, each consisting of several indicators, giving equal weight to each topic.

The rankings for all economies are benchmarked to June 2015.

In sub-Saharan African countries, Mauritius was ranked top (32 worldwide), followed by Rwanda (62 worldwide), Botswana (72 worldwide), South Africa (73 worldwide), Seychelles (95 worldwide), Zambia (97 worldwide), Namibia (101 worldwide) and Swaziland (105 worldwide) before 9th placed Kenya.

When we look at how Kenya ranked against last year, the biggest rise was in getting credit which increased by 90 places from 118th to 28th.

You can see the full breakdown below.

Topics DB 2015 Rank DB 2016 Rank Change in Rank
Starting a Business 148 151 -3
Dealing with Construction Permits 152 149 +3
Getting Electricity 141 127 +14
Registering Property 121 115 +6
Getting Credit 118 28 +90
Protecting Minority Investors 114 115 -1
Paying Taxes 99 101 -2
Trading Across Borders 131 131 No Change
Enforcing Contracts 102 102 No Change
Resolving Insolvency 145 144 +1

When we look at the reasons behind Kenya’s ranking, the country was found to have made it easier to start a business by reducing the time it takes to assess and pay stamp duty and had also made progress on property transfers, making them faster by improving electronic document management at the land registry and introducing a unified form for registration.

Kenya also improved access to credit information by passing legislation that allows the sharing of positive information and by expanding borrower coverage.

When looking at the ease of getting electricity, the utility in Kenya reduced delays for new connections by enforcing service delivery timelines and hiring contractors for meter installation.

However, Kenya made dealing with construction permits more difficult by requiring an additional approval before issuance of the building permit and by increasing the costs for both water and sewerage connections

Kenya also rose 4.64% points in the Distance to Frontier measure, from 53.60% points to 58.24% points.

The distance to frontier score aids in assessing the absolute level of regulatory performance and how it improves over time.

This measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005.

It allows users both to see the gap between a particular economy’s performance and the best performance at any point in time and to assess the absolute change in the economy’s regulatory environment over time as measured by Doing Business.

An economy’s distance to frontier is reflected on a scale from 0 to 100, where 0 represents the lowest performance and 100 represents the frontier.

For example, a score of 75 in DB 2015 means an economy was 25 percentage points away from the frontier constructed from the best performances across all economies and across time. A score of 80 in DB 2016 would indicate the economy is improving.

In this way the distance to frontier measure complements the annual ease of doing business ranking, which compares economies with one another at a point in time.

Below is how Kenya ranked in the Distance to Frontier categories.

Topics DB 2016 DTF (% points) DB 2015 DTF (% points) Change in DTF (% points)
Starting a Business 74.47 72.55 up 1.92
Dealing with Construction Permits 59.37 57.34 up 2.03
Getting Electricity 58.57 53.91 up 4.66
Registering Property 56.63 54.35 up 2.28
Getting Credit 70.00 35.00 up 35.00
Protecting Minority Investors 46.67 46.67 No change
Paying Taxes 71.96 71.96 No change
Trading Across Borders 57.83 57.83 No change
Enforcing Contracts 56.25 56.25 No change
Resolving Insolvency 30.64 30.19 up 0.45

The steps of launching a business, time to complete and the associated costs for Kenya are shown below.
Included are: the number of procedures entrepreneurs can expect to go through to start up and formally operate an industrial or commercial business, as well as the time and cost to complete these procedures and the paid-in minimum capital requirement as a percentage of gross national income (GNI) per capita.

No. Procedure Time to Complete Associated Costs
1 Reserve a unique company name at the Huduma Center or the Companies Registry 1 day on average KES 100 per name reservation
2 Receive stamp duty assessment on the memorandum and articles of association and the statement of the nominal capital 1 day 1% of nominal capital (KES 20 for every KES 2,000 or part thereof of capital) + KES 2,000 for stamp duty on Memorandum and Articles of Association
3 Pay stamp duty at the Huduma Center 1 day KES 110
4 Stamp the memorandum and articles of association, and a statement of the nominal capital 1 day no charge
5 Sign the Declaration of Compliance before a commissioner of oaths or a notary public 1 day KES 200
6 Register with the Registrar of Companies at the Attorney General Chambers in Nairobi 12 days on average KES 9,280
7 Register for taxes at the Kenya Revenue Authority 1 day no charge
8 Apply for a business permit 5 days KES 15,000
9 Register with the National Social Security Fund (NSSF) 1 day no charge
10 Register with the National Hospital Insurance Fund (NHIF) 1 day no charge
11 Make a company seal (takes place simultaneously with another procedure) 2 days, simultaneous with previous procedure between KES 2,500 and KES 3,500

Below shows how Kenya ranks against the other Sub Sahara African countries.

Indicator Kenya Sub-Saharan Africa OECD high income
Procedures (number) 11.0 8.0 4.7
Time (days) 26.0 26.8 8.3
Cost (% of income per capita) 35.3 53.4 3.2
Paid-in min. capital (% of income per capita) 0.0 45.1 9.6