This archive report was first published on 18 November 2021.
High Cost of Doing Business in Nairobi ¶
Setting up a business in Nairobi is a daunting task, with entrepreneurs facing significant costs and bureaucratic hurdles. One of the major obstacles is the cost of obtaining necessary licenses and permits.
According to data, the cost of setting up a business in Nairobi can be as high as Ksh130,000, with some licenses costing upwards of Ksh200,000. For instance, an entrepreneur who wants to open a restaurant will need to obtain a single business permit, which costs Ksh15,200 for businesses with five or less employees, and Ksh200 for application fees. Additionally, they will need to register their company, which costs Ksh11,000.
Other licenses required for a restaurant include a food and hygiene license, a fire certificate, and a medical certificate, with costs determined by the number of employees. Proprietors who want to sell alcoholic beverages will need to obtain a liquor license, which costs Ksh6,000 for a simple license, Ksh30,000 for a bar and restaurant, and Ksh50,000 for a bar with wines and spirits.
Entrepreneurs who want to operate past 11 pm will need to purchase a liquor license that costs upwards of Ksh130,000. This has led to concerns from MSMEs that the high cost of doing business in the country is enabling graft and has resulted in the closure of over 6,000 companies since 2017.
According to economic analyst Francis Kamau, "For you to invest in Kenya, you have to go through so many hands to basically allow you get the right piece of land, get the right approvals, etc." This contradicts the government's claim that the country has improved in the ease of doing business index globally.
Kenya was expected to reach 58 by the end of 2020, but the situation remains volatile as the country heads to the general election next year. In the long-term, the ease of doing business in Kenya is projected to trend around 60.00 in 2021 and 80.00 in 2022, according to econometric models.
