Kenya is unfriendly for business. It is not welcoming for any new investor. Simply put, Kenya is bad for business and only favors those with deep pockets.
It is very difficult to set up and run a business in Kenya at the moment. In most cases, the business will die even before it takes off.
The cost of doing business in this country is among the highest compared to other East African countries. This is the reason why investors are taking off to other countries such as Rwanda and Uganda.
Before the advent of Covid-19, at least 450,000 small and medium enterprises (SMEs) were shutting down businesses annually. That translated to 30,000 monthly and at least 1,000 daily. With the coming of Covid-19, the numbers are even higher.
Covid-19 has complicated the business environment in Kenya even further. Millions of businesses have shut down with the most affected being hotels, bars, and restaurants, among others. Millions of Kenyans have lost their jobs too.
The government, through President Uhuru Kenyatta, has always promised to have the interests of investments and businesses at heart but the more they say it, the more they kill them.
We can never run away from the fact that SME is the engine of Kenya’s economy. The sector employs 86 percent of Kenyans and contributes at least 45.5 percent to Kenya’s gross domestic product (GDP).
Government policies in Kenya are the number one killers of businesses in Kenya. To set up a simple business like a water refilling station will leave you frustrated, tired, and with no hope to continue.
Let us say you want to set up a water refill and packaging station, here is what you will need to kick off:
County single permit license at 18,500 shillings
Public health license and testing at 13,000 shillings
KEBS certification at 102,000 shillings
KRA Custom excise license at 50,000 shillings
KRA Custom excise bond at 300,000 shillings
KRA custom excise stamp minimum at 50,000 shillings
License from NEMA at 33,000 shillings
Mandatory independent lab testing and MOU at 15,000 shillings
These are the costs that one will need to pay before even thinking of the machinery to package the water, employees, energy, and other running costs.
Reason why manufacturing doesn’t work in Kenya. The political class has ensured that No one else can do business in Kenya except them. Reason why we are a shitty country.
📷 Courtesy pic.twitter.com/9IkMIjpB49
— SokoAnalyst (@SokoAnalyst) September 2, 2020
Let us say you have the financial muscles to pay the required costs, struggle to make your water business take off. The same government will pounce on you like a cheetah slapping you with 0.5 percent of everything you sell at the end of every month.
You will also be required to pay at least 5.75 shillings on every bottle of water you sell (per liter). Also, there is a distribution license that you will need from your county. Some counties charge as much as 50,000 shillings.
With 1,000,000 shillings in Kenya right now, thinking of starting a business is like placing your money in a bet. The most worrying thing is 80 percent of it will go to the government before your business even starts to operate.
Comparing to Kenya, the cost of doing business in Rwanda is a third that is being slapped to businesses in Kenya. In Rwanda, in fact, most investors are allocated free land and given tax vacations just to kick off a business and employ the locals.
Kenya needs an overhaul.