DDP 723. Roy Kelly and Nick Devas. "Regulation or Revenue? Implementing Local Government Business License Reform in Kenya." September 1999. 35 pp.

Local governments in most countries license businesses operating in their jurisdictions, whether for regulatory purposes or to generate revenue or both. These two objectives often conflict. Much regulatory activity by local governments, particularly in the developing world, imposes heavy cost burdens on local businesses. This paper examines the theoretical and practical issues relating to business licensing, in relation to both regulation, and revenue raising. It identifies some principles for reform aimed at increasing the revenue generated while reducing the cost burden on businesses. A case study of local business licensing reform in Kenya provides a practical application.

Keywords: Local Government Finance, Local Revenue Mobilization, Business Taxation, Regulatory Reform, Business License Permits, Kenya, Africa

JEL Codes: H25, H71, L51, R38

Roy Kelly is an Associate at the Harvard Institute for International Development, specializing in public finance, fiscal decentralization, and local government finance. His overseas consultancies and research has been in Indonesia, Nepal, Albania, Russia, Poland, Dominican Republic, Uganda, and South Africa. He is currently serving as a senior resident advisor with the Ministry of Local Authorities in Nairobi, Kenya. Email: Rkelly@hiid.harvard.edu

Nick Devas is a Senior Lecturer in the School of Public Policy, University of Birmingham, specializing in public finance, local government finance, urban development and urban governance. Recent consultancies and research has been in Kenya, Ghana, Indonesia and Hungary. Email: C.N.Devas@bham.ac.uk