Government nets record Sh1bn from business registration rush

Revenue generated from new business and company registrations hit a record Sh1.09 billion in the 2020/21 financial year, a new report has revealed.

This was mainly spurred by a scramble by Kenyans turning to entrepreneurship to cover for jobs lost during the Covid-19 pandemic.

The Registrar of Companies, the State’s central repository on Kenyan companies and business names, said it posted a 24.2 per cent revenue growth last year and 76 per cent over the Sh836,763,500 collected in the 2019/20 financial year.

“The high revenue collection can be attributed to the influx of registration of business entities during the Covid-19 pandemic when many businesses were registered due to the needs for those who lost jobs to turn to business as a way of learning livelihood,” Mr Kenneth Gathuma, director-general of the Business Processing said in a report seen by Nation.

The revenue performance was also boosted by a directive that required filing statutory notices such as annual returns.

Massive layoffs

Imposed lockdown in 2020 triggered massive layoffs and pay cuts, as Kenyans turned to entrepreneurship after losing their jobs during the pandemic.

Education and tourism firms were the most affected as the majority had to close temporarily, forcing their staff to set up business for alternative incomes.

Also hit were sports, arts, creative industry, agriculture, transport and manufacturing lines.

Closure of economic corridors created entrepreneurs, with most registrations rising in July-September 2020—a period marked by layoffs.

In the quarter, business names registered were 29,941 while private companies were 15.681.

Movable properties

In the financial year, 2020/21 the State listed 154,155 start-up businesses, translating to an average of 428 businesses registered a day.

“The creation of business, in turn, creates demand for goods and services, which helps producers of raw materials and producers of services to get to market for their goods and services and grow the productive economy in Gross Domestic Product terms,” Mr Gathuma said.

In 2020/21, small businesses and low-income earners mortgaged moveable property worth Sh1 trillion to access credit.

“The board acknowledges the impact of movable property securities rights registry has had on the economy, as it has enabled SMEs and smaller income earners to access credit facilities using their movable properties. In the financial year 2020/21, the service (BPS) reported a total of 426,103 transactions worth over Sh1 trillion,” the BPS said.