Why Kenyan traders are pushing back against foreign retailers

Kenyan traders have raised concerns over the growing presence of foreign-owned businesses  in the country’s small-scale retail sector, arguing that some foreign operators are competing directly with local traders in businesses that can be run by Kenyans.

The traders, who recently petitioned President William Ruto over a raft of concerns affecting small businesses, say their objection is not to foreign investment but to foreign nationals entering low-capital retail activities and competing with local traders.

Andrew Oswago, a trader on Nairobi’s Luthuli Avenue and a leader in the MSME Alliance of Kenya, said local traders face challenges accessing affordable financing and competing with foreign businesses that they claim enjoy advantages in their home countries.

Oswago said Kenyan traders importing goods from countries such as China incur the cost of purchasing the goods, paying taxes and running their businesses, only to face competition from manufacturers or suppliers from the same source markets who later establish businesses in Kenya.

“The issue is with the businesses coming to cannibalise what has already been established,” Oswago said.

He gave the example of the electronics sector, saying traders who import public address systems and other equipment from China can find the same manufacturers or their agents establishing shops in Kenya and selling similar products.

According to Oswago, this creates what traders consider an  uneven playing field because foreign manufacturers have lower production costs and, he claimed, may receive incentives in their home countries that are not available to Kenyan traders.

He also alleged that some foreign traders are able to bring goods into Kenya at unusually low costs, raising questions among local traders over how the goods are imported and cleared.

However, Oswago acknowledged that he could not substantiate the claim that foreign traders were using dubious methods to bring their goods into the country.

“Maybe I might not be in a position to adequately substantiate that,” he said, while citing what he described as unusually low consolidation and cubic-metre charges as the basis for traders’ concerns.

The traders also point to employment as a key concern, arguing that foreign-owned small businesses can limit opportunities for Kenyans in sectors where local entrepreneurs could operate.

Oswago cited Kenya’s solar industry, claiming that a large proportion of solar vendors are now non-Kenyans and that Kenyans are largely employed in lower-level roles in some of the businesses.

“Our Kenyan market should be, first of all, given preeminence to our people,” Oswago said, arguing that foreign investors should instead focus on establishing factories or large distribution centres that supply Kenyan traders.

“We welcome the foreign investors, but let them come to Kenya, establish a factory, or a big distribution centre, so they distribute to us, the Kenyans who are already in the business space.”

The traders’ position comes amid growing attention on foreign nationals operating businesses in Kenya, following protests by traders and President Ruto’s subsequent directive for government agencies to address concerns raised by local businesspeople.

The issue has also caused anxiety among foreign traders, particularly nationals from neighbouring East African countries, after reports of a planned crackdown emerged.

Oswago, however, sought to distinguish between the traders targeted by the Kenyan MSMEs’ concerns and small-scale traders from neighbouring countries.

He said the traders’ complaint was not aimed at people from East African countries selling products such as food items, but at foreign operators entering established low-capital businesses and competing directly with Kenyan traders.

He also said some foreign nationals were operating in Kenya without proper registration, arguing that the government should establish their status rather than simply expel them.

The debate has nevertheless raised questions over how Kenya can protect local MSMEs while maintaining an open investment environment and ensuring that foreign businesses operating in the country comply with the law.

Critics of the traders’ position have questioned whether restricting foreign-owned small businesses  would address unemployment, while others have argued that alleged unfair competition should instead be addressed by closing loopholes in taxation, customs and business registration.

Oswago said the traders had previously raised their concerns with relevant government agencies through letters and petitions but did not receive what they considered a satisfactory response, prompting them to escalate the matter to the President.

The traders are now calling for clearer rules that distinguish between foreign investment that adds capacity to the Kenyan economy and foreign-owned businesses that directly compete with local small-scale traders.