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Taxation and raising capital give Kenya good name in Africa

by November 28, 2016 General

A group of Kenyans listens to a tax briefing in Nakuru on iTax, KRA’s technology on filing returns. PHOTO | FILE 

Posted  Monday, November 28   2016 at  18:48

Kenya has been ranked as the eighth most entrepreneur-friendly country in Africa boosted by a favourable financial policy.

The Ashish J. Thakkar Global Entrepreneurship Index, which measures five areas, showed that Kenya’s strongest pillars are finance which includes taxation, ease of raising capital as well as venture capitalist attractiveness.

Namibia was ranked as the country with the friendliest entrepreneur environment in the continent while Kenya’s regional rival, Rwanda, came in second while Botswana was third.

The report says entrepreneurs are more likely to thrive in countries where there is an open, competitive market. Countries are measured based on five pillars: policy, infrastructure, education, entrepreneurial environment and finance- each with multiple sub-themes.

Among the five pillars, Kenya only managed a fifth place in the finance category among other African countries. It did not feature in the top five in the other four pillars with Rwanda, Namibia and South Africa dominating.

“Credit is easily available and business transparency is high,” the report by Mara Foundation says of Rwanda in a pointer to the dividends of consistent improvement in ease of doing business.

Kenya is globally ranked 60th out of the total 85 countries analysed in the index. Singapore is first followed by New Zealand and Denmark.

Ashish J. Thakkar, the founder, Mara Group says that Singapore’s ranking is due to robust pro-entrepreneurial policies, high level of education and strong entrepreneurial culture.

“Singapore has done particularly well in developing itself as a regional hub for venture capital investment,” he says.

“One reason it scores so highly is due to schemes such as the government-backed Early Stage Venture Investment Fund which, each year, awards five venture capitalists with matching government funding that enables them to invest widely and confidently.”

Kenya is yet to fulfil her entrepreneurial potential due to gaps with the report citing cartels, for example, on key sectors.

Stimulate entrepreneurship

“When anti-competitive or monopolistic business rules and practices exist, it can mean higher prices for customers on even essentials like rice, flour and milk,” the report stated.

“In Kenya, South Africa, and Zambia, if the price of food staples was reduced by just 10 per cent by tackling cartels and improving regulations that limit competition, it could save consumers over $700 million a year and lift 500,000 people out of poverty.”

The report is an indicator of the steep task ahead for the government which has been trying to stimulate entrepreneurship through various initiatives supporting women and youth enterprise.