2ND ECOSYSTEM ENABLERS FORUM

BUILDING A STRONGER KENYAN INNOVATION ECOSYSTEM THROUGH COLLABORATION

Caption: An illustration of the approach that was factored into the creation of the County Regulatory Toolkit

For many business owners in Kenya, expanding into another county is usually an aspiration because it means wider market access and an increased customer base. However, owing to a lack of information about regulatory frameworks, most entrepreneurs experience frustrations and sometimes opt not to register their businesses, which eventually leads to mortality. This can be evidenced by a report from the Kenya National Bureau of Statistics Report 2016,(KNBS SME Report 2016), which revealed that out of the 7.4 million entrepreneurs in Kenya, three out of five businesses were bound to close within a month of setting up. 

In order to combat this challenge, last year, the UK Kenya Tech Hub together with the Ministry of East African Community and Regional Department of Business Reforms and Transformation developed a National County Regulatory Toolkit

This toolkit was designed with the intent of serving entrepreneurs at a national level, and this was made possible by the fact that it aggregated all the government ministries together, as well as their respective regulatory support bodies and agencies.

For many entrepreneurs, this toolkit was able to solve their challenges such as company registration processes, provision of market information and necessary regulatory bodies that were needed in the regulatory process. After the implementation of the toolkit, recommendations were made to have a toolkit that could factor enterprises and startups at the county level.

The Ministry of EAC Regional Department of Business Reforms and Transformation and the UK Kenya tech Hub, therefore, developed a County Toolkit which was launched on February 3rd 2022. In order to understand the benefits of the toolkit and its impact on investors and entrepreneurs, ASSEK held a knowledge information session on March 10th 2022 with Victor Agolla, Managing Director at Viffa Consult. 

It was an interesting session that went into espousing the different aspects of the County Toolkit that would include unique features such as :

  1. An aggregate County license – Whereby one business would be able to access all required licenses on one platform, i.e activity licenses and business licenses across different counties. This was developed by taking into account the County Finance Bills of different counties, which are Bills County governments passed on an annual basis to enumerate all licenses, businesses and other forms of revenue to be levied. 
  2. An overview of the total compliance cost -When a business is registered in a county, this tool would be able to calculate the licensing fees and sum this up with permits needed in a specific county. The toolkit also afforded entrepreneurs the ability to compare licenses in different counties in Kenya so that they could be informed beforehand before investing in a county or setting up operations.

Caption: An illustration of how the County Toolkit calculates licensing fees for different counties

  1. Processes required to comply – This was included in the user-friendly customer interface, entrepreneurs and users can download the County Regulatory guide which showcases processes on registering a business while assisting the licensing fees and necessary documentation.
  2. Zonal divisions of counties –These zones would be an inclusive term regardless of whether a region in a county was referred as urban, peri-urban, rural or town area a county may refer to a town as a peri-urban dwelling while another county may term that as a rural area. 

The kick-off phase for the implementation of the projects included 10 counties with a view of scaling into the 47 in the coming years. These counties included Nairobi, Kisumu, Uasin Gishu among others which were selected based on criteria such as Population, MSME Employment Rates and Gross County Product (GCP) among others. 

As the adoption of the County Toolkit takes effect, some further suggestions were collected in regard to operationalizing the tool for its   maximum impact, such as:

  1. Counties needed to avail finance bills or simplified versions summarizing all licenses and respective costs on their website and county offices
  2. Counties need to arrange business licenses in their respective finance bills with respect to individual county integrated plans and current schedules, which will assist investors and entrepreneurs in aggregating the information easily based on their unique sector.
  3. Counties to ease the licensing parameter language. Further to this, it has been recommended that counties standardize their business permits and license language, cost formulas to enable comparison across different counties so as to better help in making informed economic decisions.

As ASSEK, we envision the County Toolkit providing an avenue for growth among players within the entrepreneurship ecosystem space such as entrepreneurs, who will have a guideline on the expansion of their entrepreneurial ventures into counties. We also envision it being utilized as a capacity-building tool for Entrepreneurship Support Organizations supporting startups while providing information linkage which will inform investors on where to invest. We look forward to partnering with the Ministry of East African Community and the UK Kenya Tech hub in operationalizing this toolkit!

Learn more about the tool kit here.