By Dennis Kirwa
The Kenya National Chamber of Commerce and Industry (KNCCI) President, Dr Erick Rutto, has called for urgent reforms to make the country more business-friendly.
Dr. Rutto is particularly focused on removing barriers that hinder entrepreneurship and stifle innovation.
During an interview on Spice FM, he warned that the current regulatory and tax environment is discouraging new enterprises, limiting job creation, and reducing the country’s competitiveness.
“To grow our economy, we must remove barriers that inhibit businesses,” Dr. Rutto emphasized.
He pointed out that Small and Medium-Size Enterprises (SMEs) face over 20 different levies and licenses—costing upwards of KSh 337,000—before they can begin operations.
These prohibitive startup costs, he argued, are excluding thousands of potential entrepreneurs and slowing the pace of economic formalization.
To address these challenges, Dr. Rutto proposed introducing a national unified business permit to streamline registration, along with a tax holiday for startups to help them achieve stability and profitability.
He advocated for a phased approach to taxation that supports young businesses as they grow, rather than burdening them from the start.
Dr. Rutto highlighted that the cost of credit for Kenyan manufacturers—currently between 18% and 19%—is unsustainable, especially compared to countries like China and India, where interest rates range between 4% and 8%.
These disparities, he explained, significantly undermine local manufacturers’ competitiveness and discourage investment.
He noted that Kenya’s regulatory environment has not kept pace with its infrastructure development.
Despite significant investments in roads, ports, and energy, the country has not fully capitalized on these assets due to burdensome costs and bureaucracy that discourage industrial activity.
Consequently, Kenya now faces heavy debt repayment obligations and increased taxes on an already strained business sector.
Dr. Rutto argued that reducing the cost of starting and running a business would boost formal employment and expand the national tax base over time.
“We must look at long-term benefits. Lower entry barriers mean more businesses, more jobs, and more tax revenue down the line,” he stated.
He also emphasized Kenya’s KSh 1.2 trillion local market as a major opportunity for local industries, provided they receive the right policy environment to thrive.
With appropriate incentives and regulatory reforms, Dr. Rutto believes Kenya can transform itself into a vibrant hub for manufacturing, innovation, and entrepreneurship.
As Budget 2025 discussions commence, his remarks underscore the urgent need for policy changes that prioritize business growth, job creation, and inclusive economic development.
Dr. Rutto’s call for tax reform and reduced regulatory pressure reinforces growing demands from the private sector for a more enabling environment for economic transformation.