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Presentation of report findings

Mierta CapaulProgram Manager

Global Indicators and Analysis DepartmentWorld Bank

Nairobi – June 26, 2012

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What does Doing Business measure?

Doing Business indicators:

Focus on regulations relevant to the life cycle of a small to medium-sized domestic business.

Are built on standardized case scenarios.

Are measured for the most populous city in each country.

Are focused on the formal sector.

DO NOT measure all aspects of the business environment such as: macroeconomic stability, corruption, level of labor skills, proximity to markets, or regulation specific to foreign investment or financial markets.

DO NOT measure all aspects of the business environment such as: macroeconomic stability, corruption, level of labor skills, proximity to markets, or regulation specific to foreign investment or financial markets.

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Doing Business indicators – 11 areas of business regulation (10 included in the ranking)

Property rightsInvestor protectionAccess to credit

Entry Administrative burden Flexibility in hiring

Recovery rateReallocation of assets

Subnational Doing Business: How does Kenya benefit from it?

• Goes beyond largest city to create baseline and capture local difference in regulations

• Gives specific locations an opportunity to tell their story

• Pinpoints bottlenecks and provides good practice examples

• Allows locations to compete locally and globally

• Promotes peer to peer learning

• Initiates a reform process by engaging local governments and reforms stakeholders

• Measures progress over time through repeated benchmarking

• Creates an incentive to maintain the reform effort even when governments change

Diagnostic Tool

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M&E Device

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Reform Instrument

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Doing Business in Kenya in 2012, second in the subnational series, benchmarks 13 locations

Doing Business in Kenya 2010 •Created micro-level data for 10 cities in addition to Nairobi: Eldoret, Garissa, Isiolo, Kilifi, Kisumu, Malaba, Mombasa, Narok, Nyeri, and Thika

Doing Business in Kenya 2012 •Adds 2 new cities (Kakamega and Nakuru)

•Updates benchmarks for cities previously measured

•Tracks business reforms in all cities

•Data is current as of March 2012

Both reports cover 4 indicators1. Starting a business

2. Dealing with construction permits

3. Registering property

4. Enforcing contracts

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What are the key findings?

Overall, it is easier to start a business, deal with construction permits, register property and enforce a contract in Malaba, Narok and Thika.

Business reforms implemented over the past three years have made it easier for local entrepreneurs to start and operate a business throughout Kenya.

Challenges remain – overall starting a business is burdensome and construction permitting is more expensive due to costly environmental expert assessments.

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No single city outperforms

the others in more than one area

CityAggregate

rank

Ease of starting a business

Ease of dealing with construction

permits

Ease of registering

property

Ease of enforcing contracts

Malaba 1 6 1 4 3Narok 2 8 5 5 2Thika 3 1 7 3 7Garissa 4 12 3 8 1Eldoret 5 10 2 7 5Mombasa 6 9 7 1 8Isiolo 7 2 4 13 4Kisumu 8 13 10 2 9Kilifi 9 3 11 11 6Nyeri 10 10 6 10 10

Kakamega 11 6 9 9 12Nakuru 12 4 13 6 11Nairobi 13 5 11 12 13

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It is easier to do business in all 13 cities now than 3 years ago

CityStarting a business

Dealing with construction

permits

Registering property

Enforcing contracts

Business reforms

National Local National Local National Local National Local

Mombasa x     Eldoret x     Isiolo x    Garissa x      Kakamega x        Kilifi x        Malaba x        Nakuru x        Narok x        Thika x        Kisumu   x        Nairobi x        Nyeri   x        

Doing Business reforms making it easier do to businessDoing Business reforms making it more difficult to do business

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Business entry reforms resulted in time and cost savings for local entrepreneurs

DB Kenya 2010 average

DB Kenya 2012 average

67

45

48.4

43.4

1210

37

81.2

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Sub-Saharan average 2012

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Time differences to start a business across locations reveal potential for future improvement

DB Kenya 2012 average (45 days)

DB Kenya 2010 average (67 days)

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Obtaining building plan approvals is 4 times faster in Malaba than in Nakuru

Time (days)

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Mombasa overhauled its construction permitting process

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Variations in time to register property point to opportunities for local improvements

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Isiolo remains the only city charging a local property transfer tax

Isiolo reduced the cost to register property

• Isiolo cut the local transfer tax by 15 percentage points (from 20% to 5%) reducing overall costs by 62%

• But Isiolo remains the only city charging a local property transfer tax, in addition to the nationally mandated stamp duty of 4%

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Enforcing a contract in Kenya is easier than in the average Sub-Saharan Africa city

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A city adopting all Kenyan best practices would rank 14 places higher than Kenya’s* current rank in Doing Business

Doing Business indicator Best practices within Kenya“Kenyana”(global rank)

Kenya in Doing Business 2012*

(global rank)

Starting a business

10 procedures All cities

123  132 32 days Nairobi

39.3% of income per capita Narok

Dealing with construction permits

9 proceduresKisumu, Malaba, Mombasa, Nairobi, Thika

23 37  64 days Garissa, Malaba

133.7% of income per capita Malaba

Registering property

9 procedures All cities

103 133 28 days Mombasa

4.1% of property value Thika

Enforcing contracts

40 procedures Mombasa, Nairobi

92 127 351 days Garissa, Narok

38.4% of claim value Isiolo

Ease of doing business 95 109 

* Represented by Nairobi.

Source: Doing Business database

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Good business regulations and governance

In countries where business regulation is efficient and information on documentation requirements and fee schedules is easily accessible, the perception of corruption is lower

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Kenya Investment Climate Program (KICP): 2008-2012

Active since 2007:

• In 2007 the WBG Investment Climate Advisory Services responded to a GoK request to support reform of the country’s investment climate

Components of KICP:• Regulatory reform: Licensing Reform, Regulatory Reform Strategy, E-

registry and automation, Inspection and Enforcement Reform, Regulatory Impact Analysis, Doing Business, Subnational Doing Business and PPD

• Investment generation• Trade logistics

Achievements of KICP:• Kenya named a top reformer in Doing Business 2008• Business licensing reforms with 60% licenses either abolished or

streamlined leading to private sector cost savings• e-Registry

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THANK YOUTHANK YOUwww.doingbusiness.org/Kenya www.doingbusiness.org/Kenya