A recent study scores Kenya poorest in the region as an investment destination.
In the World Bank report, Ease of Doing Business, Kenya has dropped 12 places to position 121st in the world’s global list of economic competitiveness.
The position may not make immediate sense, but a look at her East African peers reveals a disturbing trend. Kenya’s business competitiveness gets worse every year. Last year, Kenya was placed at position 109 and 106 in 2011.
What is more disturbing is the fact Kenya compares so unfavourably against Uganda and Rwanda in this index.
The report raises serious issues on the country’s contract laws, non-tariff barriers like time taken clear businesses in cross-border trade and slow processes of property registration in the country. This has inadvertently added to the costs of doing business and sliced the country’s global and regional ranking as an investment destination.
This trend has over time reflected in the country’s falling Foreign Direct Investments (FDIs) in comparison to her neighbours as investors overfly Kenya for more friendly countries. Rwanda particularly has been a beneficiary of Kenya’s inefficiencies.
Unchecked, these inefficiencies threaten to send more investors packing. It thus behoves upon everybody; Government bureaucrats and the private sector alike to deal with some of the challenges that bedevil the economy.
The new Government particularly has the immediate challenge of cleaning up the country and to specifically eliminate hidden cost centres that serve to hurt investments, growth and development.
The setting up of a one-stop centre to tackle issues of investment is a call long overdue. The Government’s success at dealing with unemployment — one of the most critical challenges stunting the economy — will hugely hinge on how it treats investors.
Fortunately, there exist some mechanisms at regional level to deal with some of the issues raised in the report. For instance, a full implementation of the Customs Union, which is already on the cards, will help fast-track movement of goods, people and capital across borders.
