Kenya has initiated a crackdown on foreign nationals operating small retail shops and engaging in street hawking, following a directive by President William Ruto to shut down such businesses starting September 7.
President Ruto announced this decision on September 2 during an address to micro, small, and medium-sized enterprise (MSME) traders at State House in Nairobi.
He stated that while foreign investment is welcome in capital-intensive sectors, foreigners should not compete with local citizens in small-scale trading and hawking activities.
What is Kenya doing?
President Ruto has ordered authorities to commence the shutdown of small businesses owned by foreign nationals from September 7, asserting that hawking and small-scale retail must be reserved for Kenyan citizens.
The government plans to take immediate administrative measures while the Kenyan Parliament reviews the proposed Local Content Bill, 2025.
Additionally, Ruto has instructed National Assembly Majority Leader Kimani Ichung’wah and Trade Cabinet Secretary Lee Kinyanjui to expedite the bill’s passage through Parliament.
Why is Kenya moving against foreign traders and small retailers?
According to Hesbon Hansen Owilla, a professor at Aga Khan University in Nairobi, this policy is essential to protect local Kenyan traders.
“Yes, this is the best way to protect Kenyan small businesses and traders,” Owilla told Al Jazeera. “Kenya aims to attract only investors who bring substantial capital to drive economic development and job creation, rather than allowing small-time foreign traders who stifle local Kenyan entrepreneurs while benefiting from Kenya’s robust infrastructure and social securities.”
“It is similar to expatriates; a nation cannot allow foreign workers into roles where locals already possess the necessary expertise,” he added.
The proposed Local Content Bill, 2025, aims to mandate foreign companies to increase local sourcing and employment, among other requirements. Currently, the bill is under parliamentary consideration and has not yet been enacted into law.
What businesses and traders are affected?
The directive specifically targets foreign nationals operating small retail shops and engaging in hawking, as highlighted by President Ruto during the announcement.
While Kenya’s broader MSME sector encompasses a wide array of businesses, the government has not yet released a comprehensive list of all businesses covered by the September 7 directive, nor has it estimated the number of foreign nationals impacted.
President Ruto also instructed Majority Leader Ichung’wah to consult with the State Department for Immigration’s principal secretary to establish permit requirements for foreign investors and traders. Consequently, it remains unclear how the directive will affect foreign nationals who already hold valid business permits.
On September 6, Foreign Affairs Principal Secretary Korir Sing’Oei clarified that foreign nationals who comply with Kenya’s legal requirements, including holding valid work permits and licenses, remain legally protected to operate businesses. He noted that Ruto’s remarks were taken out of context and were intended to align with the Local Content Bill, 2025.
How significant is foreign investment in Kenya?
According to the 2024 Foreign Investment Survey by the Kenya National Bureau of Statistics (KNBS), the country’s stock of foreign direct investment reached 1.458 trillion Kenyan shillings ($11.27 billion) by the end of 2023, representing an 8.5 percent increase from 1.343 trillion shillings ($10.4 billion) at the end of 2022.
These figures reflect foreign investment across the broader Kenyan economy and are not limited to the small-scale trading activities targeted by the new directive.
Surveyed foreign-invested enterprises employed 224,769 people in June 2024, with 221,267 of those being Kenyan employees. Foreign employees made up 1.6 percent of the workforce in these enterprises.
What is the Tata Chemicals case?
The dispute involving Tata Chemicals is separate from the crackdown on small foreign-owned businesses.
Tata Chemicals Magadi operates a soda ash business at Lake Magadi in Kajiado County. On July 28, the Kenyan government suspended the company’s mining operations due to alleged compliance issues under the country’s mining laws, which also impacted its soda ash exports.
On September 3, President Ruto ordered Tata Chemicals to leave Kenya, stating that the company had not provided sufficient benefits to the local community in Kajiado County. He announced that the government would introduce two new companies to establish glass and chemical manufacturing facilities in the area.
Tata Chemicals stated that it has submitted the requested information to Kenyan authorities and is awaiting further communication. The company affirmed its compliance with regulatory commitments and its dedication to resolving the issue through legal and regulatory channels.
The Tata dispute centers on the company’s soda ash operations at Lake Magadi and remains entirely separate from the directive targeting foreign nationals operating small retail businesses and hawking.
What does this mean for foreign investment?
Solomon Kinyanjui, an international business consultant and Managing Director of Sols Inclinations Ltd, explained that the issue is not about rejecting foreign investment, but rather distinguishing between capital that complements local enterprises and activity that displaces them.
“The issue is not whether foreign capital is welcome, but what role it should play in Kenya’s economy,” Kinyanjui told Al Jazeera. “Foreign investment should complement Kenyan enterprise, not substitute for economic activities that Kenyans can competitively undertake themselves.”
He noted that the most compelling case for foreign investment lies in its ability to bring capital, technology, skills, industrial capacity, and access to export markets. However, he warned that the government must clearly define these boundaries and apply rules predictably.
Hafsa Abdiwahab Sheikh, a journalist, noted that the policy could yield both benefits and costs depending on its implementation.
“The policy could create more jobs for Kenyans and encourage skills transfer, while helping protect local employment,” she told Al Jazeera.
“However, if implemented unpredictably, it may discourage foreign investment and increase business costs, leading to higher prices. It could also strain relations with foreign communities if foreigners are blamed for unemployment.”
