Why Ruto's foreign trader crackdown puts diplomacy at risk

Ruto’s crackdown on foreign traders sparks debate over protecting local businesses without straining Kenya’s diplomatic ties. July 23, 2026. [PCS]

What began as a protest against hiked costs of importing goods to the country by traders has taken an unprecedented turn after President William Ruto ordered for shutting down of foreign-owned hawking and small retail businesses.

The pronouncement by Dr Ruto at State House in Nairobi on Wednesday appeared to be in response to recent protests by traders in Nairobi's City Centre against an increase in customs duty to Sh3.2 million.

President Ruto’s crackdown directed to start on Monday 7, may have been framed as a defence of Kenyan entrepreneurs, but its implications, experts warn, stretch far beyond the country’s informal economy.

Experts argue that while the move is appropriate, it risks opening a new fault line in Kenya’s relations with trading partners whose citizens are among those operating businesses in the country, even as they called for a structured approach to the problem.

During the forum, Ruto referenced concerns raised that some foreigners had set up retail businesses selling items such as duvets, competing directly with local hawkers and small-scale traders.

The Head of State directed the Ministry of Trade, led by Cabinet Secretary Lee Kinyanjui, to deliberate with the traders to seal "loopholes that would not allow traders from China to come to Kenya to be hawkers."

He also asked the Kenya Kwanza Parliamentary leadership to fast-track a Bill on the floor of the House seeking to address the gaps.

"As we wait for the law to go on, administratively, from next week, when Lee (Kinyanjui) comes back from Addis on Friday...Monday, wake up for the 'business.' These hawkers who are doing small businesses to close," Ruto ordered.

He added: "We have not built investor confidence for hawkers to come to Kenya. No! The investor confidence we have built is for investors, not hawkers and small traders. We should not be misunderstood."

Without a structured strategy to address the problem, experts warn, the President's remarks would fuel animosity and trigger contempt against foreign traders in the country.

Ken Gichinga, Chief Economist at Mentoria Economics, views Ruto's sentiments as those that put the country in a very delicate situation that needs the government to first conduct fact-finding to establish the exact number and location of the foreign hawkers.

This comes against the backdrop of xenophobic attacks in South Africa, where members of the public have expelled "undocumented" foreigners, with their businesses taken by locals.

"Without a very targeted approach, it could lead to unintended consequences of profiling and business disruption," observed Gichinga.

Prof. Peter Kagwanja, an international policy and governance expert, while agreeing with Gichinga, described Ruto's directive as a "roadside pronouncement," and one that points to promoting populist ideas rather than solving the actual problem.

"It is part and parcel of the many roadside pronouncements which are not policy but simply a knee-jerk response to serious problems which appeal more to populism than to sustainable policy direction," Kagwanja told The Standard.

According to him, the Kenya Kwanza administration needs to define exactly the spaces where we need foreign investment, expressing concern that the remarks would trigger xenophobia.

"Burundians who are here selling coffee may be targeted. It might also target the Ugandans," he observed, drawing a parallel with a dispute that emerged between locals and Ugandans in 1989 "because they (Ugandans) had monopolised the small-scale trade in the country."

"We don't need roadside pronouncements because they render themselves to be interpreted in different ways," Kagwanja averred.

However, he acknowledged that Ruto's directive "is justified. We have a lot of unemployed. We have some of our entrepreneurs competing with foreigners at a level that is supposed to be domestic."

Professor of Economics Sam Nyandema also contended with his Kagwanja and Gichinga perspectives, saying there was a need to regulate the sector, arguing that the existence of non-locals in small and retail trade hurts the informal sector.

"Principally, even though Kenya is an open market economy, we should not allow hawkers from foreign countries to come and start hawking in Kenya, including the Chinese. This does not promote the informal sector more rationally," he said.

"I think it is a wise move," he added, supporting Ruto's move even as he recalled the recent incident where foreigners, including Kenyans doing retail businesses in Tanzania, were expelled.

"They chased all our Kenyans from there and yet many Tanzanians are hawking in Kenya. We must protect our small-scale traders from any foreign competition."

He, however, stated that the decision would come with implications, noting that local entrepreneurs may take advantage and increase the cost of goods, with local consumers left to bear the brunt.

"Once the locals are protected, they will start misbehaving by hiking prices and that will not allow local consumers to access most of these goods from the cheapest source," he expressed.