By Billy Mijungu
The greatest fiscal opportunity Kenya has today lies not in increasing tax rates, but in widening the tax base. The real question is how government can strategically align the informal sector to expand national revenue collection without suffocating small traders.
An expanded revenue base gives government room to build more infrastructure, improve services and gradually reduce tax pressure on compliant citizens and corporations. A low tax economy is not built by cutting rates blindly; it is built by increasing the number of contributors.
The informal sector forms a significant portion of Kenya’s economic activity. However, much of it operates outside structured registration, data mapping and predictable revenue systems. Formalisation does not mean punishment. It means organization, visibility and fairness.
The first step should be clear market designation. Every trader should buy and sell within gazetted and properly planned commercial zones. Street hawking, while born out of necessity, undermines order, sanitation, safety and revenue predictability. Hawkers should instead be licensed and allocated designated sales arenas such as structured markets or mall-like trading centres developed by counties and national government in partnership.
Designation must extend to Jua Kali areas. Properly mapped and officially recognized Jua Kali zones, coupled with mandatory registration of artisans and traders, would allow government to create an accurate economic database. With proper mapping, enforcement becomes easier, fairer and less arbitrary.
At the center of this transformation must be the Business Registration Service. Formalisation begins with identity, and identity begins with registration. The Business Registration Service should lead a nationwide simplified registration framework specifically designed for micro and small enterprises. Registration must be affordable, digital, mobile-friendly and accessible through Huduma Centres and county offices.
Once registered, businesses should automatically be integrated into a harmonized system linking counties, licensing authorities and revenue agencies. One registration should generate a business identity that feeds into tax PIN linkage, county permits and compliance records. This eliminates duplication, confusion and harassment while creating a clean national economic database.
Agriculture must also be brought into structured registration. Farms producing agricultural products, whether small-scale or large-scale, should be captured within a national production registry coordinated alongside the Business Registration Service framework. This is not to burden farmers but to integrate them into value chains, subsidy programs, financing systems and moderate tax brackets that reflect scale. A vast and currently unstructured segment of production would then enter the formal revenue ecosystem.
New revenue centres should operate on a dual registration model. First, registration of designated workplaces. Second, listing for simplified and predictable payment systems. Counties must play a central role in providing accurate data on micro and small businesses, feeding that information into a harmonized national registry managed through the Business Registration Service architecture.
Formalisation is not about force. It is about structure. It is about creating an environment where everyone contributes something small so that no one is forced to carry something heavy.
If we organize the informal sector and strengthen business registration as the backbone of identity, we do not merely increase revenue. We increase dignity, access to credit, economic visibility and national planning accuracy.
That is how you crank up the numbers sustainably.
