Kenya has been ranked poorly on ease of starting and operating business online, despite high internet penetration and mobile subscription rates, making it difficult for start-ups.
Social hostility resulting from rejection of new ideas, high risk in investment capital and long procedures faced by small businesses in setting up entities have been cited key obstacles for start-ups.
A new SME landscape in Africa report by a South African-based, Think room consultancy places Kenya in position 8 out of 12 countries surveyed with long time it takes to start a business and low cultural support blamed on the low ranking.
The report, titled An SME Landscape Study: The Conduciveness of Starting and Conducting Business in Africa reports that it takes 30 days before a business is operational, with start-ups required to pass through 10 procedures before they are registered.
Entrepreneurial strength in the country is slotted a at position 86 among 130 countries performing relatively better than the country’s ease of doing business at number 136 and ease of starting a business at position 143 out of 189 nations globally.
Nigeria was also been ranked low in the report leaving South Africa the only among largest economies in Africa that has conducive business environment for SME’s to mushroom and thrive.
“The findings pertaining to these countries are of particular interest, as they stand in contrast to their rankings amongst other African countries in terms of GDP growth,” said the report.
“The ability for SMEs to have access to online infrastructure is vital in the African market. It opens up opportunities for trade and e-commerce, and access to cloud-based software at a fraction of the cost of traditional IT infrastructure,” said Microsoft’s Senior Business Development Manager for the SME audience in Africa,Perry Kamel.
According to the World Bank’s LPI score, Kenya ranked 74th out of 160 countries for the state of their infrastructure and logistics.
Kenya’s internet penetration stands at 47.3 percent, with 74 mobile cellular subscriptions for every hundred Kenyans.
Nigeria’s internet penetration is however lower than Kenya’s at 39.7 percent of the population though it has more people with mobile phones than Kenya at 78 mobile cellular subscriptions for every 100 Nigerians.
Over the last two years Kenya has experienced a boom in e-commerce businesses with global brands like OLX, Jumia, Pigiame, Kaymu opening shop to cash in from rising in demand for convenience shopping by savvy Kenyan shoppers.