Local businesses decry high costs and unfriendly policies

When Trade and Industry PS Eusebius Juma Mukhwana appeared before Parliamentary vetting committee. [Boniface Okendo, Standard]

The cost of doing business and the country’s preference for foreign investors have been mentioned by key stakeholders as a hindrance to enterprises’ ability to grow and create more employment opportunities.

While there have been positive strides courtesy of government policies, as noted by the newly formed CEOs Association, the State needs to be friendlier to Kenyan businesses.

The Association chair Rogers Odima said while foreign businesses are treated with streamlined government services on how to set up in the country, the same is not accorded to local entrepreneurs.

Odima said the government has initiatives like Kenya Investment Authority (KenInvest) that make it easier for foreign businesses to set up in the country such that they just have to go through one channel.

He said the same treatment should be given to local businesses.

“Can’t we have what I would call a customer service centre for businesses so that when you go in, you are told of all the necessary licenses from the Ministry of Health, Ministry of Labour, Ministry of Environment and so on at one go?” he posed during an interview with The Standard.

He said the CEOs forum is willing to host that service centre as a partner to the government.

“We just talk of foreign investors, but what of you who is a local investor? How many county licenses are you going to pay as cess?” he posed. This is in addition to other licenses issued by other agencies like National Environmental Management Authority (Nema).

Odima said the government is too harsh on Kenyan enterprises rather than being supportive by nurturing them.

“For example, when Kenya Revenue Authority comes, what they care about is your records. Whatever problem you have is not theirs. They (the State) come as policemen rather than friends,” he said. “That is one of the issues we want to engage with them and say, we can create employment but work with us. Even if it is a moratorium for something as simple as pay as you earn (PAYE) or some other government regulation,” he added.

At a small and medium enterprise (SME) Convention held in Nairobi by Kenya Association of Manufacturers (KAM), Industry Principal Secretary Dr Juma Mukhwana called out businesses for lamenting the country’s unfriendly environment arguing that more foreign enterprises are fighting to set shop in the country.

“The world is moving. We cannot be complaining,” said the PS adding that Kenya has negotiated trade treaties like the East African Community and the African Continental Free Trade Area (AfCFTA) that businesses can utilise to expand their market.

“We see many coming to Kenya. They see Kenya as a launching pad for manufacturing in Africa,” said the PS.

KAM Chief Executive Officer Anthony Mwangi explained that ease of doing business in the country is like a moving target. When one issue is tackled, others slip through the fingers.

For example, following the pronouncements of President William Ruto during the AMCHAM-Kenya (American Chamber of Commerce) Business Summit held in Nairobi in March, starting next financial year, the national tax policy will take effect and will be in place for three years.

This, he explained, will bring predictability to businesses that seek to invest in the country.

But as Mwangi noted, there are so many factors that affect the ease of doing business.

“You touch tax; does it solve all the other problems, no. Does it move the needle? Yes.  Should we wait for them to move together? No,” said Mwangi.  

He described the process of easing the cost of doing business as incremental.

“You deal with tax you put it away, at least we know we have stability for three years. Power slips through the fingers, and perhaps does not get through, you go to logistics and get through. It is not a linear process,” he added.

During the summit, President Ruto as well announced that tax-verified refunds beginning next financial year would be paid within six months or be computed as net-off automatically when the taxman comes to ask for his dues.

Mwangi also pointed out this as a setback for manufacturing businesses in the country.  

“Some companies have reduced their exports from 70 per cent of production to 30 per cent.  Why, Value Added Tax (VAT) refunds. There are companies that are owed billions by the government just because of tax refunds,” he said.

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