Breaking 50: The Kenyan Government & IBM Research Collaborate to Improve the Country’s Ease of Doing Business Ranking

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Updated:  31 October with 2019 Rankings

Today, the World Bank released its annual Doing Business ranking of the world’s economies and Kenya has again improved to 61 from 80 last year and 92 the year before. Kenya was also ranked 7th on the list of improvers, which highlights economies improving the most across three or more areas in 2017/18.

Why is this important? The survey is an important guide for everyone from economists to entrepreneurs to large enterprises who wish to expand into new markets. In fact, research released by the World Bank in 2012 illustrated that a one per cent increase in the Doing Business score equals between $250 million and $500 million of foreign investment.

No one knows this better than the Minister for East Africa Community and Regional Development, Mr. Adan Mohamed.

“The key to sustainable growth and job creation lies in the growth of the domestic companies and the attraction of local and foreign investors to invest capital and expertise into the economy. A key enabler for this to occur is the establishment of a suitable business environment for businesses to thrive and we as a government have made this a top priority.”

After a few meetings with the Industrialization Ministry the IBM lab in Kenya agreed to a joint collaboration focused on improving the country’s Ease of Doing Business ranking.

Not that it was necessary, but Cabinet Secretary Mohamed gave the IBM scientists a little extra motivation coming straight from President Uhuru Kenyatta, “Our country’s ranking was ranked 136th out of 189 countries by the World Bank in 2013 and it was seen as a major inhibitor. Our goal is to be in the top 50 of the list by 2020.”

One of the scientists meeting with the Ministry was Dr. Charity Wayua who returned to her homeland after receiving a PhD in Chemistry from Purdue University. Wayua, recalls feeling motivated by this challenge and was extremely excited to get started.

“While my skills were in biological systems, I soon discovered that improving another type of system, such as the government, would also be an interesting challenge. As a Kenyan, I also felt this was a great opportunity and responsibility for me to use my skills to significantly impact our economy  — nothing could deter me from this goal.”

To begin, the team performed a simple benchmark based on each of the 10 indicators used by the World Bank, such as getting electricity and starting a business.

At the time, starting a business took 52 times longer in Kenya than New Zealand, which was ranked this year as the best country for doing business. It also costs 117 times more to start a business in Kenya and requires 11 procedures.

After the initial studies were performed the team began to pinpoint the major pain points for entrepreneurs using a patented methodology developed at IBM Research known as artifact-centric process modeling which collects and analyzes data that would support or refute a hypothesis developed by the team.

Wayua explains, “Instead of focusing on tasks, activities or workflows we zoomed in on the data that’s being utilized, processed and obtained to achieve a particular goal. We then used design thinking methodologies and met with dozens of individuals working at each agency to observe them serving customers and processing applications.”

“In addition, we reviewed hundreds of previous applications finding time stamps of when certain steps were completed, forms that customers are required to fill out. This enabled us to understand where delays and inefficiencies occurred. We then traced this back to the laws that regulates each of the processes to understand if the law had value or was an inhibitor to efficiency.”

The team then started to identify changes that needed to be implemented. For example, the team reduced the number of interactions with government for starting a business from 11 to just three simplified steps. This required, legal amendments, collapsing of some procedures into simplified ones as well as cost reductions. These improvements and others launched Kenya to be ranked 80th in the 2018 report..

We are thrilled with IBM’s approach and contributions that have led to the significant improvements Kenya has registered. With their expertise we believe we have the right partnership to enable us to implement the next set of deep transformations that will enable us reach our goal of being within the top 50 – hopefully ahead of our 2020 goal,” says Cabinet Secretary Mohamed.

With these initial improvements addressed the team is now looking at the impact technology can have on breaking the 50 ranking threshold.

Wayua adds, “We are currently creating an online company registration system that would enable citizens to submit and check the status of their new business application from the comfort of their homes or their mobile phones, while enabling the government officers to quickly process the application.”

The IBM team is also investigating the role of cutting-edge technologies, such as cognitive computing and Blockchain to further improve the efficiency and effectiveness of government service delivery.

Wayua adds, “This is only the beginning in terms of what we can do for Kenya and other developing nations. I’m confident this can scale. Lookout New Zealand.”

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