Alex Njeru: To Improve The Business Environment. Kenya Must Tackle Corruption

Kenya rose twenty-one places in the 2017 the World Bank’s Doing Business Report, in the same week a new five billion shillings scandal was smouldering in the Ministry of Health.  This week the grand corruption at the NYS, is unravelling in our very eyes.

This typifies Kenya’s quest to improve its business environment, reasonable success on one hand and corruption on the other, threatening to erode the very gains of the reform process.

While the country has been very successful at making technical tweaks in making it easier to operate a business, thanks in part to initiatives like the Huduma Centres, it has not been as successful in fighting corruption and institutionalizing rule of law.

Whereas, practical changes meant to make it easier to operate a business are necessary, they are by no means the end goal of the reform process. Rule of law reforms and practical regulatory reform complement and supplement each other.

A clear, impersonal rule of law system clears shrouds of doubt for investors. In a globally competitive world investors are more likely to move resources in risk free economies, rather than corrupt and politically restive environment, like the one Kenya has become

It is thus not surprising that, most of the country’s in the top ten of the Ease of Doing Business index, like New Zealand, Hong Kong, Singapore and the United Kingdom have a legacy of a solid governance and rule of law systems.

It is ironical that while the government has been globetrotting, posturing Kenya as new business destination under the auspice of its “economic diplomacy” foreign policy, news of scandal upon scandal keep hitting our front pages consistently.

In the other related index that measures the ease of economic activity in the world, the Fraser Institute’s “the Economic Freedom of the world Report ranks Kenya’s legal system a lowly ninety sixth in the world.

Whereas reducing the regulatory burden associated with starting and operating a business certainly helps, it does not constitute the entire business environment. Investors and entrepreneurs, new or old listen to other subtle factors like the perceived corruption when making decisions about investment.

It matters not how many international investment forums the country organizes, if headlines about grand corruption keep hitting the front pages, investors are not going to come in their droves.

Corruption stems from two possible sources, the first being the fist being a burdensome regulatory environment and the second being of ethical and moral nature.

The first one should be easy to deal with; for example takes a hundred and sixty days, seventeen procedures and a multiplicity of regulatory agencies to build a warehouse in Nairobi. Without doubt, these procedures create an opportunity for graft.

The second type of corruption is more insidious and complex to deal with. It requires not only the political will to deal with, but also a substantial decline in the public’s tolerance towards corruption.

The government has to be unequivocal in its quest to engender good governance. But, the public could help by expressly communicating its displeasure with bad governance and misconduct from public officials.

Quite so often what is and what is not corruption is a question open to political interpretation. These need not be the case; the question of waste particularly with public finances is not one that should be open to relative interpretation.

Whereas, it must be acknowledged that fighting a phenomenon that is already culturally entrenched is not easy, steps such as congregations rejecting questionable bundles of cash by politicians in harambees could help.

See, for the government to achieve its goals in business environment reform, it must pay as much attention to rule of law reforms as it is paying in other reforms. This is an aspect of reform that needs political will rather than clever thinking.

The need to have fight corruption and have good governance is much more urgent now given the devolved system of government we find ourselves in. Both, the National and County governments should make active efforts to reduce graft in their respective domains.

Only, then can entrepreneurs have the freedom to create value for the country with utmost ease.