Discussion Paper No. 161 of 2013 on A Review of Kenya's Institutional and Regulatory Environment in Domestic Trade

Abstract

This study sought to analyze the institutional and regulatory framework relevant to the wholesale and retail trade in Kenya. In order to realize this objective, the study relied on roundtables and comparative case studies. The study revealed there is no institutional and regulatory framework which is specific to the wholesale and retail trade, but all the institutions and regulations in the domestic trade affect all businesses. There exists multiple licenses and fees which reduce investment in this sector. Consideration should be put in strengthening the Joint Loans Board (JLB) facility, owing to the fact that many business enterprises still face credit constraints. This will involve recruitment of more staff to reduce time taken before the disbursement of loans and also increase the amount lent out to traders. The cost of doing business in Kenya is high due to the cumbersome process of business registration and difficulties in complying with various forms of taxes. There is need to have one institution to give direction and regulation to this key sector for it to realize its function. Although licensing of businesses is an important way of regulating businesses for public health, order and safety, many local authorities use the single business permit (SBP) as a way of raising revenue and not for regulation purposes. There is need to improve on the infrastructure in the country to promote inter-county trade. More reforms are required to reduce the number of procedures, time and costs related to business registration.