BY BENARD AYIEKO
Kenya has changed. Devolution is a reality. The Constitution has brought in significant changes in the social, economic and political landscape of East Africa’s biggest economy.
With a GDP of $63.121 billion, GDP per capita of $1,432, economic growth of 5.6% recorded last year and a population of nearly 45 million people providing ready market for goods and services, the country is currently strategically placed to attract more Foreign Direct Investments.
Kenya’s GDP accounts for 40% of the region’s GDP, followed by Tanzania at 28%, Uganda at 21%, Rwanda at 8% and Burundi at 3%. With such glowing statistics in favour of East Africa’s largest economy, it is practically impossible for an investor who is eyeing the regional market to ignore Kenya as the perfect launching pad for their investments.
Today, Kenya is on the global map as the ultimate regional business hub for foreign investments. Since last year, the country has witnessed successive State visits by global leaders, heads of state and governments including the U.S President Barrack Obama, Italian PM Matteo Renzi, Pope Francis, Israel PM Benjamin Netanyahu and India’s PM Narendra Modi. These visits point to a vote of confidence in the prevailing business environment.
One of the reasons why investors have upped their appetite to trade and invest in Kenya is due to the advent of the new system of government that brought in the 47 devolved units. As a result, two levels of government were created: central and county government. What the Constitution has done is to decentralize all aspects of socio-economic development. Trade and investment opportunities that initially were held at the centre have now been devolved. Counties now compete with each other to attract investments.
This has led to increased trade and investment promotion at the county level. You will recall that Machakos was the first County to host a trade and investment conference in May 2013 to showcase existing investment opportunities. Just recently we have witnessed the Trans-Nzoia Investment Conference and Expo and the Homa Bay International Investment Conference. These conferences are part of the evolving and running story of the wonders of devolution.
The hosting of county trade and investment conferences has brought about inter-county competition meant to lure local and foreign investors, making the battle for attracting investors stiffer. This inter-county competition has made counties to be creative in terms of branding and marketing themselves as the ultimate destination for trade and investments. In 2013, you will recall that Machakos County announced numerous incentives to attract investors including provision of free land. It is against this backdrop that the need for County Ease of Doing Business Index comes in handy. This sub national index similar to the one that the World Bank did for Russia, Mexico and Nigeria will be an invaluable guide to investors seeking to launch operations in various counties.
Even though the parameters under consideration are totally different from the ones adopted by the World Bank for ranking economies, the principle behind ranking the 47 counties on the Ease of Doing Business should be the same. Essentially, counties with higher rankings (a low numerical value) should indicate better, simpler regulations for businesses and stronger protections of property rights.
As we move towards entrenching devolution and its impact, the County Ease of Doing Business Index will help investors look out for counties that are favourable and attractive to their interests even before matchmaking their investment interests to the existing investment opportunities. Perhaps, the index will reveal how easy it is to do business in counties based on variables such as: investor support and protection, location within the country, qualified workforce, quality of life, county business environment, security, infrastructure, costs of obtaining Business Permits and Licences (BPLs), registering properties, county levies, transparency in business regulation, among others.
The move by the World Bank to partner with Kenya to fund this research geared towards ranking the 47 counties on the ease of doing business will go a long way in opening up counties for real economic growth and help Kenya to climb to a higher rank on the ease of doing business globally. A healthy inter-county competition for ease of doing business will herald good tidings for Kenya’s local entrepreneurs and investment climate.
