Ruto tests EAC trade pacts with foreign-owned businesses crackdown

Hundreds of Burundian Nationals at the Burundi Embassy along Denis Pritt road, Nairobi.[Kanyiri Wahito, Standard]

Kenya’s move to shut down small businesses operated by foreign nationals is putting its binding commitments under the East African Community’s Common Market Protocol to the test, analysts have warned, and may expose the region’s largest economy to retaliatory measures that could harm Kenyan commercial interests across the bloc.

The Common Market Protocol, ratified by Kenya in 2010 and fully in force, commits partner states to five “freedoms” and two “rights”.

These includes the free movement of goods, persons, labour, services and capital, plus the right of establishment (the ability to set up and manage businesses in another partner state) and the right of residence.

Articles 7 and 10 of the protocol specifically require partner states to guarantee free movement of persons and workers, and to observe non-discrimination, meaning they cannot treat nationals of other EAC states differently based on nationality.

“Under the EAC framework, partner states have committed themselves to free movement of persons, labour, goods, services and capital, as well as the right of establishment,” the East Africa Law Society (EALS) said in a statement. The Common Market Protocol also requires partner states to observe non-discrimination against nationals of other partner states on grounds of nationality.

The risks of disregarding these obligations are substantial, analysts said.

EAC partner states account for more than 29 per cent of Kenya’s total annual exports, according to Principal Secretary for EAC Affairs Dr Caroline Karugu. Kenya’s trade with EAC countries reached Sh351.23 billion in 2025, with Uganda alone accounting for about Sh126 billion.

Regional trade experts warn that discriminatory measures could trigger reciprocal action. “Partner states are reportedly considering retaliatory measures if Kenya continues to impose discriminatory duties,” PS Karugu told a parliamentary committee recently, adding that “Kenya will be the country that loses because we are the greatest beneficiaries of the East African Community”.

The threat is not abstract, a review of recent regional trade disputes involving Kenya shows.

In March 2025, Tanzania imposed levies on Kenyan products including eggs, dairy, meat and confectionery, while Kenya’s Agriculture and Food Authority had earlier imposed a two per cent levy on cereals from Tanzania, prompting protests and a suspension.

A section of countries are said to be assessing Kenya’s restrictions on foreign petty traders to determine whether they comply with the EAC Common Market Protocol.

“The Ministry continues to closely monitor the measure announced by the Government of Kenya, with the aim of determining whether the activities intended to be reserved exclusively for Kenyan citizens are inconsistent with the provisions of the Common Market Protocol,” said Ambassador Mindi Kasiga, Head of the Government Communication Unit at Tanzania’s Ministry of Foreign Affairs and East African Cooperation.

Legal analysts caution that Kenya’s extensive commercial footprint across the region could become a target for retaliation.

KCB Group and Equity Group, Kenya’s two largest lenders, generate significant profits from regional subsidiaries units in Rwanda, Uganda and Tanzania contributing double digits of total profits.

KCB Bank and Diamond Trust Bank operate in Burundi, alongside Kenya Airways, which runs routine flights to Bujumbura. Manufacturer Kenafric has expanded into Tanzania, Uganda, Burundi and the Democratic Republic of Congo.

“Uncertainty among citizens of other EAC partner states could undermine confidence in the Common Market and potentially affect how Kenyan citizens are treated elsewhere in the region,” EALS warned.

Under Article 30 of the EAC Treaty, any natural or legal person resident in a partner state may refer matters regarding the legality of any act of a partner state to the East African Court of Justice (EACJ). If the court rules that a member state’s enforcement measures breach the treaty, that country is legally obligated to rescind or amend the non-compliant legislation without delay.

The East Africa Law Society has officially petitioned the EAC Chairperson and Secretary-General to activate regional review mechanisms, warning that targeting informal cross-border businesses based on nationality violates the Common Market Protocol.

EALS acknowledged Kenya’s right to enforce immigration and licensing laws but stressed that “authority must be exercised within the legal framework binding the State”.

“A person alleged to have breached Kenyan law should be dealt with on the basis of the applicable law and the circumstances of the individual case. Nationality should not, in itself, be treated as evidence of illegality,” EALS said.

Former Chief Justice David Maraga has sharply criticised the government’s crackdown, arguing that enforcement is based on a presidential directive rather than an enacted law.

Ruto had directed Parliament to expedite the Local Content Bill, 2025, which Maraga noted had not been passed into law.

“A directive read at State House does not amend the Constitution, and it does not release Kenya from the East African Community Common Market Protocol,” Maraga said. “We cannot profess to lead a regional Jumuiya while simultaneously subverting its foundational frameworks”.

Maraga acknowledged the economic difficulties facing Kenyan traders but rejected the argument that foreign traders were responsible.

“Kenyan traders are drowning, and that pain is real. But close every foreign-run stall tomorrow and the price of maize does not move by one shilling,” he said. He attributed the difficulties facing small businesses to government and structural economic problems, including pending government bills, rising county licence fees, expensive credit and disproportionate enforcement by the Kenya Revenue Authority.

Citing government figures showing that foreign nationals accounted for about 1.6 per cent of the workforce in foreign-invested enterprises in 2024, Maraga said: “This was never where the jobs went. A government that cannot give you a market will always offer you an enemy to blame” describing the crackdown as “scapegoat policy”.

Tana River Senator Danson Mungatana, who heads Kenya’s delegation to the Pan-African Parliament, yesterday condemned reported anti-Burundi sentiments and actions targeting Burundian nationals, warning that Kenya must not allow xenophobia to take root.

“Kenya must not become a country where fellow Africans are harassed, intimidated or targeted because of their nationality,” Mungatana said.

He called on the Ministry of Interior and security agencies to investigate reported incidents and take action against those found to have engaged in criminal conduct. “Kenya cannot allow organised xenophobia, ethnic hostility or incitement against fellow Africans to take root,” he said.

Mungatana stressed that concerns over foreign nationals competing with Kenyan businesses should be addressed through licensing, taxation, immigration and labour laws rather than mob action or intimidation.

“Where a person is operating without the required permit or licence, the remedy is the law. Where there is a breach of immigration law, the remedy is the law,” he said. “There can be no justification for mob action, threats, harassment, discrimination or vigilantism”.

The Kenya National Commission on Human Rights (KNCHR) has warned that the crackdown could trigger widespread human rights violations if enforcement is not conducted lawfully and without discrimination.

The Commission said it had received petitions from refugee communities and migrant populations in several counties alleging threats, intimidation, discriminatory treatment and online attacks.

KNCHR Chairperson Claris Ogangah cautioned government agencies against “summary enforcement measures that impose punitive consequences on individuals before they are afforded due process”.

The Commission also warned members of the public against taking the law into their own hands and referenced the controversial Operation Usalama Watch conducted in 2014, warning that “lessons from the violations, trauma and economic disruption associated with the operation should guide current enforcement efforts”.

The Confederation of Micro and Small Enterprises Organizations of East Africa (CMSEO-EA) urged all East African MSMEs operating in Kenya to remain calm, comply with Kenyan law and ensure that their immigration status, work permits, business licenses and other required documentation are in order.

The regional umbrella body reaffirmed its commitment to the principles of the EAC Common Market, noting that thousands of Kenyans live, work, trade and invest across Uganda, Tanzania, Rwanda, Burundi, South Sudan and the Democratic Republic of Congo, contributing significantly to the economies of those countries.

The government has since announced a 90-day regularisation window for undocumented EAC nationals.

Government spokesperson Charles Owino said the Ministry of Foreign Affairs is in talks with various embassies to facilitate the issuance of documents, adding that for the duration of the registration period, all individuals undergoing registration will be presumed legally present in Kenya.

Foreign Affairs Principal Secretary Korir Sing’oei apologised to Burundian nationals over harassment linked to confusion surrounding the crackdown.

State House Spokesperson Hussein Mohamed clarified that the directive does not constitute a blanket prohibition against lawfully documented EAC citizens and emphasised that “no individual or group has the authority to harass, intimidate, threaten or interfere with foreign nationals or their businesses”.

The government also insisted it maintains “a policy of absolute zero tolerance toward any form of harassment, intimidation, or xenophobia”.

But the damage to confidence may already be done. Hundreds of Burundian nationals flocked to their embassy along Dennis Pritt Road in Nairobi on Monday, seeking passports and travel documents. Similar scenes played out at bus terminals and border crossings, with many choosing to leave rather than face an uncertain future.

“We must be a country confident in our ability to solve our problems internally while looking Africaward for the friends we need in forging global strength,” Maraga said.