The number of new business entities registered in Kenya increased by 2.9 percent in 2023, reaching a total of 141,194. This was the highest number of new business registrations recorded in the country, according to the data from the Business Registration Service (BRS).
The main driver of this growth was the surge in private company registrations, which rose by 8.7 percent to 56,376. This was the largest increase among all types of business entities, and accounted for 40 percent of the total new registrations. Private companies are entities whose members’ liability is limited by shares, and which are restricted from inviting the public to subscribe to their shares.
The growth in private company registrations offset the decline in business name registrations, which dropped by 0.8 percent to 83,458. Business names are entities that represent sole proprietorship ventures, and which expose their owners to personal responsibility for their debts or liabilities.
The Factors Behind the Growth
The growth in new business registrations, especially private companies, was influenced by several factors, such as:
- The Covid-19 pandemic: The pandemic disrupted the economic activities and livelihoods of many people, and forced them to look for alternative sources of income and opportunities. Some of them decided to start their own businesses, either to supplement their existing income or to pursue their passions and interests. The pandemic also created new market demands and niches, such as e-commerce, health, and education, which attracted new entrepreneurs and investors.
- The ease of doing business: The government of Kenya has been implementing various reforms and initiatives to improve the business environment and facilitate the registration and operation of businesses. Some of these include the digitization of the business registration process, the reduction of the fees and charges, the simplification of the tax system, and the provision of incentives and support for small and medium enterprises (SMEs).
- The entrepreneurial culture: Kenya has a vibrant and dynamic entrepreneurial culture, which is driven by the young and educated population, the availability of technology and innovation, and the presence of mentors and networks. Kenya has also been ranked as one of the most entrepreneurial countries in the world, and has produced many successful startups and entrepreneurs, such as Safaricom, M-Pesa, and BRCK.
The Implications of the Growth
The growth in new business registrations, especially private companies, has several implications for the economy and the society, such as:
- Increasing employment and income: New businesses create new jobs and income for their owners and employees, as well as for their suppliers and customers. New businesses also contribute to the tax revenue and the gross domestic product (GDP) of the country, and help to reduce poverty and inequality.
- Enhancing innovation and competitiveness: New businesses introduce new products or services, or improve the existing ones, to meet the needs and preferences of the market. New businesses also challenge the established players and stimulate competition, which leads to better quality and lower prices for the consumers.
- Fostering resilience and diversity: New businesses diversify the economic activities and sectors, and reduce the dependence on a few dominant industries or markets. New businesses also increase the resilience and adaptability of the economy and the society, as they can respond quickly and effectively to the changes and shocks, such as the pandemic.
The growth in new business registrations, especially private companies, is a positive sign for the economic recovery and development of Kenya. By supporting and nurturing these new businesses, the government and the stakeholders can ensure that they achieve their full potential and benefit the country and the people.