Informal sector business in Kenya : the impact of national policy on local government practice

Approximately 40% of the urban labor force in Kenya is now engaged in informal sector business activities, and government projections suggest that some 75% of all new employment generated in urban areas in the next decade will be in the informal business sector. In recent years, the Government of Kenya (GOK) has formally recognized the significant contribution made by the informal sector in meeting priority GOK objectives for expanded employment opportunity and economic growth with equity. Recently adopted GOK policy outlines a strategy of support for the sector and calls for reform of regulatory measures at the local government level that have impeded its growth. This study examines the extent to which local governments are responding to the GOK"s call for a more facilitative regulatory framework for informal business activity. The study found that local governments have been slow to respond and that outdated local by-law provisions, business licensing requirements, licensing fee structures, building controls, and enforcement procedures remain in place -- the net effect of which runs counter to the intentions of GOK policy. Recommendations are made for modification of local regulatory practices toward the informal business sector in several key areas, with particular attention to reform of business licensing procedures. (Author abstract)