Government protects its local industries from foreign influence through a range of policies such as implementing regulations that prioritize local products in the market. Such regulations include raising tariffs, which are taxes imposed on imported goods, which will make the goods more expensive, Imposing quotas, which limits the quantity of certain goods that can be imported, this restricts the supply of foreign products to protect domestic industries and granting subsidies to local industries to reduce their cost of doing business. However, when the government fails to implement such strategies, it will lead to their gradual decline and eventually they will collapse. This outcome has drastic consequences such as massive unemployment among locals and decline in economic growth of the country.
Softa Bottling Company was founded in 1997 by Peter Kuguru whose aim was to challenge the monopoly that multinational corporations such as Coca-Cola had established by offering affordable soft drinks tailored to the market. Their affordable rates and unique soda flavors made them popular leading to an increase in their market share to 70.0%-80.0% in 2007 from 10.0% in 2004 within areas such as Nairobi and Central Kenya employing over 10,000 people across its operations. However, it is during their prime that their troubles would begin.
The political instability caused by the 2007/2008 post-election violence changed the trajectory of the company’s progress. “After that the government which took over started removing our containers from the roadside so we lost a lot of the marketing channels which we had built”, says Peter Kuguru during an interview with Business Daily. Their competitors started employing unfair trade practices such as vandalism of billboards and products and bribing distributors and retailers not to distribute and sell their products in supermarkets. Despite efforts by Peter to address his issues to the highest level of government for them to step in and help him they did not. “I launched them at every imaginable high level. I took them to former President Moi, former President Kibaki and other officials. I even provided proof to the former head of Public Service, Richard Leakey”, says Peter Kuguru.
The government should have implemented anti-trust laws like countries such as India where their local drink, Thums up, was being attacked by strong multinationals. However, India’s parliament implemented a law that fostered a healthy competition between the multinational companies and the local companies. Other countries such as France and the US have also implemented similar laws that have helped facilitate healthy competition between companies in the same industry. Had the government also lowered their cost of businesses by reducing interest rates on loans borrowed and providing tax holidays to these companies, Softa would still be operational and competitive against these multinationals.
