Corruption is hindering economic growth in Kenya, and com pounding attempts to make the country the preferred destination for investment.
In the Kenya Competitiveness Benchmark Report 2008, dubbed ‘First Things Faster’ , the Kenya Association of Manufacturers (KAM), said corruption, defined as the e xploitation of public office for private gain, was very strong in Kenya.
The report, recently launched by Prime Minister Raila Odinga, says Kenya, when c ompared with Uganda and Tanzania, where it is perceived corruption levels are lo w er, makes the country an unfavourable destination for investments.
The KAM report says not much has been done to deal decisively with the corruptio n menace, as it distorts policy making, undermines credibility of the government
and diverts resources from public coffers.
Firms are ranking corruption in Kenya among the major constraints, with 30 per c ent putting it at the top three of the constraints.
On the international point of view, according to the report, Kenya and Senegal a re the two main countries ranked as highest in corruption.
Countries like China, South Africa and India have lower levels of corruption, ac cording to the Investment Climate Assessment – ICA of 2007.
Examples of this menace are in the making of payments for utility hook-ups to in formal payments in public procurement, this form of payments take up to 4 per ce n t of companies’ annual sales in Kenya..
Others are incurred through interactions with regulators including inspectors de aling with tax, standards, environment and licensing.
“Kenyan firms are required to not only obtain licenses when they start operation s, but also to renew these licenses annually or periodically, this is when they a re asked for informal payments,” says the report by KAM.
The report says such payments are more frequent with construction permits and wa ter hook-ups and import licenses.
The report notes that the judicial system in Kenya leaves a lot to be desired, c haracterized in long delays in rulings on matters with most cases being thrown o u t due to irregularities in obtaining evidence.
“Many intellectual property rights holders lose a lot of their business to count erfeit and contraband goods,” the report says.
KAM is now appealing to Kenya’s parliament to pass the Anti-Counterfeits Bill of 2007 to protect local intellectual property rights holders in order to encourag e innovation and research.
Kenya is ranked dismally at position 107 out of 178 countries that were studied in enforcing contracts, it takes 46 procedures to enforce a contract in India wh i le it takes 44 in Kenya, the global best performer is Singapore with just 22 pro c edures to enforce a contract while East African Community member, Rwanda, has ju s t 24.