Number of companies registered in Kenya increases by 53 per cent

Companies registered in Kenya over the last five years have more than doubled, signaling an improving business environment.

The International Monetary Fund (IMF) using data from the Kenya National Bureau of Statistics (KNBS) found that registration of companies in Kenya has increased by 52.9 percent over the period.

Joseph Maina of IMF said this indicated a significant transition of informal institutions into more formal ones.

"This means the environment is becoming conducive for institutions to register. There are incentives that the Government is giving," said Mr Maina.

He noted that the incentives might be in terms of accessing procurement services from the Government or accessing certain financial services.

The increase in company registration was both for domestic and foreign companies. Foreign companies are however growing at a greater pace than the domestic companies, said the report.

A recent report by the World Bank on ease of doing business showed Kenya had moved up 28 places in the ranking. This was at the back of such factors as introduction of stamp duty, digitisation and automation of government services.

The IMF report also showed Kenya had experienced an increase in foreign direct investments (FDI) into the country, with Kenya's former colonial master - the United Kingdom - leading the pack of countries that pump in the most FDI into the country.

China is the second highest source of FDI, and its contribution has been peaking over the last ten years, according to the study.

Mr Maina noted that although many companies have registered, not many of them have gone further and listed in the capital markets such as the Nairobi Securities Exchange (NSE). Out of 310,000 registered companies only 65 have been listed, said the report.

He reckoned that this could be due to the fact that most of the companies are family-owned whose owners do not want to cede control of the companies.

"For some, requirements for listing might be a little high," he added.

The report also showed trade had increased, though is still low. The expenditure growth in the last four years almost tripled from $1 billion in 2010 to around $2.5 billion. It means that companies are investing and expanding their books.

The report was an assessment of how the non-bank listed companies performed over time. It looked at 49 listed companies, and two non-listed companies. It used data obtained from financial statements of companies.