County debts, red tape paralyse private sector
The private sector wants excessive bureaucracy curtailed while calling for more predictable policies to spur economic growth in counties.
Stakeholders said pending bills were making business untenable and expensive despite Kenya’s good ranking on the Ease of Doing Business Index by the World Bank.
During a Kenya Private Sector Alliance (Kepsa) roundtable with the Senate in Naivasha over the weekend, members said pending bills were holding the country to ransom.
Kepsa chairman Nick Nesbitt said multiplicity of taxes were among the issues facing the private sector when dealing with county governments.
He said Small and Medium Enterprises were particularly troubled, with numerous regulators that end up stifling business.
Affordability
“So many people, for some reason, have the authority to stop a business from running,” said Nesbitt, adding that the country needs to have a conversation on the cost of doing business across the country.
Kepsa chief executive Carole Kariuki asked Senate to come up with a framework that can make firms doing business with counties know “start to finish and timelines”, urging counties to go for services and goods they can afford to pay and settle pending bills.
In September, Treasury estimated that county governments owed the private sector more than Sh100 billion as of February this year.
“The stock of county pending bills were estimated to be in excess of Sh100 billion as at end of February 2019, of which Sh40.5 billion was found to be eligible for immediate payment,” said Treasury.
President Uhuru Kenyatta directed in June that all ministries and State agencies settle pending bills that did not have audit queries to give the economy a new lease of life since the unpaid cash had resulted in reduced overall spending and business activity.
However, different ministries and agencies managed to pay Sh25 billion only owed to contractors, with counties holding a huge chunk of the cash owed to private businesses.
Accessibility
Senate Speaker Kenneth Lusaka said Kenya must manage the red tape and make officials accessible.
“The world is becoming increasingly competitive and unless we make ours competitive, people are going to take their investment elsewhere,” said Lusaka.
“As we deliberate on various economic issues affecting the country, we must change focus as business from the perspective of gain to a wider concern for the societal good. It is no longer business as usual when the threat of job cuts is real, capital flight is no longer news, small businesses have no access to credit and our economic drivers are grinding to a halt,” he said.
Kepsa said the enactment of four new laws Assumption to the Office of the County Governor Act, 2018, Urban Areas and Cities (Amendment) Act, The Physical and Land Use Planning Act, 2019, and the Irrigation Act and the Warehouse Receipts System Act as some of attempts to make it easier to do business in counties.
