Influence of Licensing on Investor Behavior Amongst the Micro, Small and Medium Enterprises in Nairobi City County
Abstract
Government regulations in Kenya have been identified as major impediments in doing
business, among other factors, making Kenya a low investments country internationally.
Licensing has been identified as one of the major government regulations that businesses
must comply with. The study investigates the influence of licenses on investor behavior.
It highlights the exact problems encountered by business people when acquiring licenses.
The methodology used to perform this research is the collection of data from a random
sample of the MSMEs within the Nairobi CBD. Questionnaires have been used as the
main instruments that enable the collection of data from the respondents. The issues
highlighted by the research are costs of licenses, time consumed in acquiring licenses,
efforts made in acquiring licenses, corruption issues and number of licenses required. The
findings of the research show that cost of licenses, time spent to obtain licenses, efforts
made in acquiring licenses, informal payments made by the investors while obtaining
licenses and the number of licenses required affect the investor behavior. The findings
show that many MSMEs prefer to make informal payments such as bribes so as to obtain
their licenses quickly and to evade the penalties charged by the government. The
conclusion of the research shows that a lot is yet to be done by the government in terms
of reforming the licensing procedures. The reforms that have been made are not enough
to encourage investors to make investment decisions. There are still many aspects of
licenses that negatively affect investor behavior. The recommendations made in this
research paper include reviewing the cost of obtaining licenses so as to reduce the costs if
possible; reducing the number of licensing procedures so as to reduce time spent in
obtaining licenses; reducing the number of licenses required; instilling ethics so as to
prevent corruption; and adopting electronic methods of issuing licenses so as to reduce
the efforts required in obtaining licenses.
Publisher
University of Nairobi