New dawn as Kenya rises to 3rd most Reformed Country on Doing Business


For the first time in nearly 10 years, Kenya's economic prospects have received a shot in the arm following confirmation by World Bank's Doing Business 2016 as the 3rd most reformed country globally.

In news heralding good tidings for Kenya's local entrepreneurs and investment climate, Kenya has risen 21 places to 108th from the 129th it attained last year, incredibly cementing its status as among the most improved African country globally.

The report finds that Kenya has implemented at least four regulatory reforms in each indicator aimed at making it easier for local entrepreneurs to do business in the country in 2015/16, a higher percentage than any other country in any other region.

It is the first time Kenya's position has improved since its downward spiral from its 71st position in 2006 following the post-election crisis, a vindication of the quality of reforms instituted by the Kenyan government keen to meet its top 50 ranking ambition by 2020.

Each year, the World Bank Group and International Finance Corporation yardsticks countries globally against 10 indicators on how easy it is to do business in the country.

A high ranking on the ease of doing business index means the regulatory environment is more conducive to start and operate a local firm.

Speaking in Nairobi, during the Reports release, H.E William Ruto, Deputy President described Kenya's rise as a positive verification of Government and private sector efforts to transform the country.

Crediting recent efforts to step up the reforms agenda across the regulatory and legal indicators, Ruto said focus on implementation of the on-going reforms will help solidify Kenya's Doing Business ranking next year as Kenya aims to rise to top 50 by 2020.

"While we celebrate this significant progress, Kenya is confident that the monumental series of acts and bills signed recently will transform Kenya's business climate by improving the ease of doing business further as well as suit the needs of modern business in a way boosting our on-going efforts to in the next index," said the Deputy President.

The series of new Acts included The Companies Act, the Insolvency Act and the Special Economic Zones Act, the Business Registration Service, the Companies and Insolvency Legislation (Consequential Amendments) Act 2015 and Finance Act amendments 2015.

"These Acts in addition to the on-going infrastructural projects, and a raft of the other regulatory reforms that have been implemented by the Government serve to pass a valid verdict on Kenya's development agenda," said Ruto adding that Kenya will continue to enhance progress beyond the World Bank indicators to the business and investment climate as a whole.

While gains were mostly associated with efficiency-related measures such as fewer procedures, shorter time periods, and lower costs as reported, quality of regulations implemented was crucial for Kenya's record ranking.

Cabinet Secretary Adan Mohamed said Kenya instituted four reforms in the areas of Getting Credit, Getting Electricity, Starting a Business and Registering Property.

According to the report, the Getting Credit indicator improved upwards which the World Bank Group credits to wide coverage by the Credit Reference Bureaus.

"While these efforts have increased the threshold of people covered by the Credit Reference Bureaus to 14% by January 2015 as compared to 4.9% in 2014," said Mohamed, our 2015/16 focus is to amend the Credit Reference Bureau Regulations section of the Banking Act 2013 to require collection and distribution of data from retailers and utilities companies"

Getting Electricity was also a big winner following Kenya's connectivity initiative aimed to enhance access to electricity.

Electricity connection procedures have reduced to 3 from 6 appropriately reducing the number of days it takes to get electricity connection to businesses from 158 to 110 days.

In starting a business, the reform made in improving the area of stamp duty has reduced the number of days it takes to register a business from 30 to 26 days.
The on-going digitization and automization efforts are expected to further reduce the number of registering a business.

"40% of start-ups registered during the period under review benefitted from digitized regulatory processes through e-Citizen portal and mobile technology. Enactment of the Companies Act 2015 will revolutionise needs of modern Kenyan businesses," said Adan Mohamed, Industrialization Ministry Cabinet Secretary whose ministry was charged with spearheading the Ease of Doing Business Reforms Agenda.

In Registering Property, digitization of land records in Nairobi's Land Registry was cited for reduction of customer interactions points and spurring efficient service delivery.

"Arising from the process re-engineering, three processes namely applications for Consent to Transfer, Land Rent Clearance and Valuation for Stamp Duty have been combined to shorten the time. This re-organisation of processes has reduced the number of procedures from 9 to 6," said the Cabinet Secretary.

The year-on year well performing Paying Taxes indicator marginally improved in with KRA's elimination of manual returns, enabling taxpayers to file returns through an online i-Tax system enabling taxpayers to file PAYE and VAT for about 67 and 72 minutes respectively.

Mohamed said that tax paying businesses are now able to file for refunds for VAT and Corporate Income Tax online using the i-Tax system, while combination of employee related deductions for NSSF, NHIF and PAYE into one process is an actuality.

On Trading across Borders, the Report credited Kenya for rolling out the National Single Window, an electronic system enhancing goods clearance at border points.

"The Government has also established a single command system and operationalized the 24/7 customs operations at the Mombasa Port. This has enhanced service delivery and improved the turn-around time at the Port and it now takes 2 days to clear imports and 1 day for exports," said Mohamed.

Dealing with construction permits improved with the progressive Nairobi County's e-Construction permit system, integrated with online payment "e-Jijipay", hugely improving efficiency in the award of construction permits. It has since reduced issuance of occupancy certificates from 14 to 3 days.

The report showed marginal increase in scores on Protecting Minority; Resolving Insolvency and Enforcing Contracts respectively following legal and policy reforms.

"The draft Insolvency Bill and Companies Bill Draft have been enacted while Judiciary's Performance Management system launched in March 2015 will eliminate the backlogs in the court system," said Mohamed.

According to the private sector, the results are a harbinger of change and testimonial that Government is keen to create an investor conducive environment for the private sector.

"Though we are pleased with the results, this year's report points to certain indicators and sectors which need improvements and more reforms in the next year.
KEPSA works closely in a tripartite agreement with the Ministry of Industrialization and the World Bank on improving our ranking so as to create a more competitive economy," stated Carole Kariuki, Kenya Private Sector Alliance (KEPSA) Chief Executive Officer

And added: "The results also show that by working together we can effectively drive change and improve the overall business environment."

On a continental scale, the report notes that Sub-Saharan Africa continues to demonstrate consistent strong performance with good progress made across all the key indicators.


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