The increasing impact of foreign entities is more evident than ever in the dynamic Kenyan retail landscape. In 2018, international retailers held a mere 8.9% of supermarket branches.
However, by 2023, this figure has surged to an astounding 79.8%. The influx of foreign retailers from France, Germany, South Africa, Mauritius, and Botswana underscores the undeniable allure and profitability of Kenya’s retail market.
Despite major retailers like Game Stores, Shoprite, and Choppies leaving the market due to economic losses, and local chains such as Nakumatt, Uchumi, and Tuskys facing substantial setbacks, the sector continues to attract investors, exemplified by the recent entry of Panda Mart in January.
However, the statistics highlight the drastic decline of local brands from a 91% market share to a mere 20%. Almost all thriving supermarket brands now bear foreign influence, such as Naivas, Quickmart, and Carrefour, pursuing aggressive expansion strategies. The same cannot be said for Kenyan brands.
Shifting focus to the manufacturing sector, a significant increase in loan defaults by manufacturers, totaling KES 133.0 billion, paints a bleak picture of the challenges faced by local players. This raises the question: what can the government do to support, revive, and anchor local businesses amid growing foreign dominance and a deteriorating business landscape?
In light of these challenges, it is imperative that the government takes proactive measures to anchor local businesses and safeguard their interests. The erosion of local market share not only threatens economic stability but also undermines the country’s sovereignty and self-reliance. To this end, government intervention is not just desirable but essential for preserving Kenya’s economic sovereignty and the vitality of its local businesses.
Firstly, the government should implement policies fostering a conducive business environment for local enterprises, including tax incentives, reduced regulatory burdens, and streamlined licensing processes. The current unpredictable Kenyan tax environment negatively affects businesses.
Secondly, the government should enforce regulations protecting local businesses from unfair competition and predatory practices by foreign entities, ensuring a level playing field.
Thirdly, to improve access to finance for local businesses, the government should focus on establishing dedicated funds or financial mechanisms to provide affordable financing and capital, particularly for small and medium-sized enterprises (SMEs). It can also collaborate with financial institutions and development agencies to design tailored financial products meeting the unique needs of local businesses.
Fourthly, promoting skills development and capacity building is crucial. The government should invest in vocational training programs and entrepreneurship education to equip local entrepreneurs with the skills, knowledge, and resources needed to thrive in competitive markets.
Fifthly, the government should concentrate efforts on facilitating market access for local products and services through trade promotion initiatives, export assistance programs, and market linkages with domestic and international buyers.
Lastly, the government should work towards fostering collaborations between government, private sector actors, civil society organizations, and academia to develop holistic and sustainable solutions for supporting local businesses.
The government’s role in anchoring local businesses is indispensable for the long-term prosperity and resilience of Kenya’s economy. As foreign entities continue to exert influence in the retail sector and beyond, concerted efforts are needed to empower and support local enterprises.
Through the above strategies, the government can create an enabling environment where local businesses thrive and contribute to the nation’s economic growth and development. Decisive action is crucial to ensure that Kenya’s entrepreneurial spirit remains alive and flourishing for generations to come.
