92368 COUNTRY HIGHLIGHTS KENYA 2013 The World Bank interviewed a representative sample of the private sector in 5 of the most active economic regions in Kenya. The sample consisted of 713 business establishments surveyed from January 2013 through February p y 2014. The Enterprise Survey p of the business environment as well as p y covers several topics performance easures for each firm. Below are the main highlights from the survey. measures Firms in Kenya exhibit low employment growth Annual employment growth (%) Between 2010 and 2012, firms in Kenya added 12 1 12 jobs at an annual rate of 2.6%, which is below 10 1 10 the average of 6.1% for countries at a similar income level and 5.6% for all economies with ES 8 1 8 data. Large firms grew the fastest, adding jobs at Percentage Percentage an annual rate of 4.7%, followed by medium 6 1 6 firms at 3.8% and small firms at 1.5%. The 4 2013 KENYA ENTERPRISE SURVEY 4 process of job creation has slowed down over 0 time. The annual employment growth rate in 2 0 2 Kenya’s private sector was remarkably lower between 2010 and 2012 than during the period 0 0 0 Kenya 2013 Kenya 2007 Small(5-20) Medium(20-99) Large(100+) 2005-2007. All countries Low income More firms export compared to six years ago The percentage of Kenyan firms which export export, Percent of firms exporting directly or indirectly (at least 1% of sales) directly or indirectly, has remarkably increased 40 70 compared to six years ago. In 2013, 36% of firms 35 60 exported at least 1% of their sales compared to 10% 30 in 2007. In addition, the proportion of sales that is 50 Percentage Percentage exported directly also increased, from 2% in 2007 to 25 40 11% in 2013. As expected, the level of involvement 20 30 in exporting activities varies significantly across 15 locations. It’s the highest in Mombasa (57% of 10 20 firms), followed by Central (45%) and Nairobi 10 5 (34%), while only about 10% of firms located in 0 0 Nyanza and Nakuru export directly or indirectly. Kenya 2013Kenya 2007 Mombasa Central Nairobi Nyanza Nakuru And more days are needed compared to 2007 to clear customs for direct exports and import intensity In addition to experiencing greater export intensity, 25 Kenyan firms also face an increase in the number of days needed to clear direct exports through customs. 20 In 2013, 11 days were needed on average for Number of days 15 exported goods to clear customs compared to 6 days in 2007. The number of days needed to clear imports 10 from customs also increased from 12 days to 21 days. While Kenya’s performance in customs clearance 5 delays for exports is at par with other countries at a similar income level, improving the effectiveness of 0 customs is key to supporting export growth. The Days to clear direct exports through Days to clear imports from customs results of the survey suggest that Kenya’s installed customs Kenya 2013 Kenya 2007 Low income capacity in customs volume is not keeping pace with its growing international engagement. Firms in Kenya report an improvement in the use of financial services r Firms’ access to financial services has remarkably 50 improved in Kenya since 2007. On average, 44% and 41% of Kenyan firms use banks to finance 40 investment and working capital, respectively. The Percentage 30 corresponding figures six years ago were much lower at 23% and 26%. Moreover, the percent of firms with 20 a bank loan in Kenya is 36% which is comparable to the global average and higher than the average of 10 countries in the same income group. It is an encouraging signal that Kenyan firms are more likely 0 Percent of firms using Percent of firms using Percent of firms with to use formal financial services to support their banks to finance banks to finance a bank loan/line of investments working capital credit businesses. Kenya 2013 Kenya 2007 All countries Low income Losses due to crime have declined since 2007 but security expenses have become more burdensome 5 2013 KENYA ENTERPRISE SURVEY The usage and cost of security services in Kenya have both increased between 2007 and 2013. More firms 4 pay for security and they also pay more: 2.1% of total 3 annual sales in 2007 vs. 3.6% in 2013. Security % of annual sales expenses are higher in Kenya than in other countries 2 at the same income level and in all countries with ES data. On the other hand, losses due to theft and 1 vandalism as a percentage of total annual sales have declined and are currently at par with other countries 0 at a similar level of income. Security costs (% of annual sales) Losses due to theft and vandalism against the firm (% of annual sales) Kenya 2013 Kenya 2007 All countries Low income One out of four firms in Kenya private sector consider informal competition as the biggest obstacle Th improvement The i pr i firms’ t in p ri fir ’ experience in i dealing d li with ith Informal I f l competitors i Corruption crime and financial services is consistent with the Electricity change in firms’ perception of the business Access to finance Political instability environment. The percentage of firms choosing access Tax rates to finance and crime as the most important obstacle for Access to land Customs & trade regulations their day-to-day operations declined significantly from Crime, theft and disorder Tax administration 2007 to 2013. The same holds for tax rates and Transport transportation related obstacles. Currently, practices of Licensing and permits Poorly educated workers competitors in the informal sector is the most Labor regulations Kenya 2013 Kenya 2007 commonly chosen top obstacle. About 24% of the Courts firms chose this obstacle in 2013, a figure that is almost 0% 5% 10% 15% 20% 25% 30% Percentage of firms twice as high as the one in 2007. The Enterprise Analysis Unit is a joint World Bank and IFC team of economists, survey experts specialized in private sector development. Surveys implemented by the team reveal what businesses and firms experience across the world by interviewing representative samples of the formal, non-agricultural, non-extractive, private sector with 5 employees or more. The resulting globally comparable firm-level data is used to construct business environment indicators and measure firm performance. The findings and recommendations help policy makers identify, prioritize, and implement policy reforms that support efficient private economic activity. For more information on the survey visit http://www.enterprisesurveys.org Generated using Enterprise Survey data as of March 18, 2014