1 PENELOPE BROOK Acting Vice President Financial and Private Sector Development The World Bank Group Nairobi September 30,

Doing Business – Overview Doing Business measures the regulations applying to domestic small and medium-size companies through their life cycle 10 indicators in 183 countries The objective: well-designed, streamlined regulations, accessible to all Doing Business 2010 is the 7th report

More economies reform business regulations More than 1,200 business regulation reforms tracked by Doing Business since economies implemented start-up reforms 171 of 183 economies reformed in at least one of 10 areas covered in Doing Business Over 270 reforms in 86 economies informed by Doing Business

Subnational Doing Business Expands the DB indicators beyond the most populous city Captures local differences in regulations or enforcement Includes rules and regulations at all levels of government Gives specific locations an opportunity to tell their story Provides a tool for locations to compete globally Provides information on good practices within the same country that can be easily replicated Combines media appeal of DB with active participation of subnational governments in the reform process

5 Countries: 41 Cities: 299 Subnational Doing Business has projects all around the world

Doing Business in Kenya 2010 Four topics measured in Kenya: Starting a business Dealing with construction permits Registering property Enforcing contracts Data were collected with the help of more than 115 private sector contributors and public sector officials

Doing Business in Kenya 2010 covers 11 localities Garissa Kilifi Mombasa Thika Nairobi Isiolo Nyeri Narok Kisumu Malaba Eldoret

Doing Business in Kenya 2010: Aggregate Rankings 1 Narok (easiest) 2 Malaba 3 Thika 4 Kisumu 5 Mombasa 6 Nyeri 7 Garissa 8 Eldoret 9 Kilifi 10 Nairobi 11 Isiolo (most difficult)

Time and cost to start a business in Kenya and selected economies and regions

Dealing with construction permits— potential for improvement KENYA HIGHEST – 14 procedures (Garissa, Mombasa) KENYA HIGHEST – 127 days (Isiolo) KENYA HIGHEST – 284% (Kilifi)

Time to register property in Mombasa and Garissa

Enforcing contracts: lengthy delays during trial and judgment phase

“Kenyana” would jump from rank 95 to 78, if best practices were adopted Indicator Kenya’s global performance in Doing Business 2010 (represented by Nairobi) Best performing locality within Kenya Best local practice Global rank (183 economies) How Kenyan localities would compare globally Number of procedures to build a warehouse 11 procedures Kisumu 10 procedures 9 Days to build a warehouse120 days Narok 69 days 15 Days to enforce a contract465 days Malaba 330 days 23 Days to register property64 days Mombasa 23 days 51 Cost to register property 4.2% of the property value Thika 4.1% of the property value 78 Cost to build a warehouse 161.7% of income per capita Nyeri 132.4% of income per capita 88 Days to start a business34 days Nairobi 34 days 124 Cost to start a business 36.5% of income per capita Nairobi 36.5% of income per capita 130 Number of procedures to register property 8 procedures All localities 8 procedures 136 Cost to enforce a contract 47.2% of the claim value Isiolo 38.4% of the claim value 140 Number of procedures to start a business 12 procedures All localities 12 procedures 154

75% 9 reformers 90% 28 reformers Number of states ► Great Impact Political support for reform efforts has continued even after two rounds of local elections and one presidential election since first benchmark 58 reforms recorded in 3 years reformersNon reformers Doing Business in Mexico 2005, 2007 & 2009 Competition and peer learning drive reforms

Improving business start up is associated with an increase in economic growth and investment rate. Lowering barriers to entry correlate to less perceived corruption and a smaller informal sector. Removing barriers to entry also gives opportunities of inclusion to youth and women. Efficient property registration can make it easier to transfer property and can help boost the number of new title registrations. Why does it matter?

Business regulation reform matters Evidence from business start-up reform in Mexico Evaluation of impact on formal firm creation of a municipal reform which decreased the time to obtain an operation license from average 30 to 2 days in 93 municipalities. Increase in new start-ups by about 4% (Kaplan, 2006) Increase in employment in eligible industries by 2.8% (Bruhn, 2008) Indicative of how policy reform can lead to substantial real impact

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