The cost of doing business in Kenya is beyond the financial cost that one incurs while doing business but goes to the bureaucratic processes and regulations that may be looked at as indirect costs to doing business but are what affect business the most. The social-economic space is as significant when it comes to doing business in any country. The past few months have been very difficult months for entrepreneurs in Kenya and this has been attributed to the political climate in the country. Businesses were prepared for the disruption this year as a result of the general elections, this however seems to have escalated to more than the businesses had anticipated. If you have a conversation with any Kenyan that is in business they will be clear business is not doing well. Political environment is one of the most fundamental aspects that has an effect on the operation of businesses.
Beyond the political climate in a country there are the bureaucratic systems that have caused delay or even complete stalling of businesses. Recently the Swedish government moved a huge investment in wind power from Malindi to Tanzania and they cited government bureaucracy for them not being able to set up the plant in Malindi. Although the government defended their position by indicating the country was not ready for such a project, there was indication government bureaucracy played a big role in the cancellation of the project. After the general elections the stock market was adversely affected to an extent that trading stopped for a while during the day the supreme court judgement was delivered. This are just but few examples of effects that the political environment have on businesses.
The economy of a country is driven by the type of leadership and the confidence the people have in the leadership. When the stability of an economy is in question both foreign and local investors shy away. The tourism sector in Kenya has been one of the worst hit for the past few years and has gotten worse in 2017 due to the high political temperatures making tourist to shy away.
What this communicates is that the private sector cannot keep off both the development of policy and the political environment of the country. HE Kibaki, began hosting what are now referred to as “Presidential round tables” with the main players in the private sector. The meetings give an opportunity to the private and the public sector to lay on the table issues that are affecting businesses that the government could have a control over and also give the government the opportunity to interact with the private sector as the main drivers of the economy. The interaction of the private sector and the government needs to be stepped up to give an opportunity to bring out issues that could affect the economy. This include political instability that slows down business, policies by the government that have an effect on the businesses and also moves by the private sector that affect the economy which the government has a responsibility to protect. The government and the private sector should be well aware that none of the two can work perfectly without the other. The synch in their operations cannot be ignored. Bad choices by the government affects the business environment and the decline of the business environment affects the operations of government.
By Sarah Makena.