County Business Environment for Micro and Small Enterprises (CBEM) Index Manual

Abstract

Globally, indices are often used to measure, benchmark and track the performance of economic activity (for example, business and economic performance) in a standardized way to help identify existing gaps and guide in prioritization of policy action. To improve Kenya’s business environment, the Government in 2014 established a multi-institutional Business Environment Delivery Unit, which draws membership from various ministries, departments and agencies. The Delivery Unit is mandated to champion the implementation of various business reforms in partnership with the private sector. This approach was strengthened in 2018 by establishing the Department of Business Reforms and Transformation; a dedicated and resourced Government organ to implement initiatives that make Kenya more competitive both locally and internationally. This has enabled the Government to identify and implement cross-cutting reforms, which are designed to improve the business regulatory environment on the platform of the Ease of Doing Business Reforms Agenda. These reforms are extended to the 47 counties to improve the counties’ competitiveness as investment destinations. The County Business Environment for MSEs (CBEM) Index developed by KIPPRA serves to support the formulation and implementation of holistic, coherent and evidence-based policy making on business environments for MSEs by County Governments. In this context, the development of the CBEM index supports the government’s efforts to improve the quality of doing business by MSEs at county levels as designated investment destinations. The CBEM Index comprehensively measures business environment capacities in each of the 47 counties and provide county-specific scores, insights and diagnostics of conducive business environment creation. In constructing the CBEM framework, KIPPRA identified six thematic areas which include, inter alia, worksite infrastructure, technical capacity, governance and regulatory framework, market environment, financial inclusion, risk preparedness and management. This set of CBEM themes and their specific combinations are mapped across 30 indicators selected carefully from authoritative sources to ensure comparability across all the 47 counties.