Ruto’s Economic Nationalism Tests Kenya’s Ties with India, Africa

President William Ruto’s increasingly forceful push to protect Kenyan jobs and businesses is beginning to create tensions with some of the country’s most important economic partners, raising questions over how far Nairobi can pursue economic nationalism without damaging foreign investment and regional integration.

In the space of days, Ruto has ordered Indian conglomerate Tata Chemicals to end its operations at Lake Magadi and directed a crackdown on foreigners operating small businesses and hawking goods in Kenya.

The two decisions are different in nature but reflect the same political message: Kenya’s resources and lower-end commercial opportunities should generate greater benefits for Kenyans.

The approach, however, risks putting Nairobi at odds with countries whose companies, workers and traders are deeply integrated into the Kenyan economy.

Tata decision tests India relationship

Ruto’s order for Tata Chemicals to leave Kenya is particularly sensitive because India is one of Nairobi’s major trading and investment partners.

The president accused Tata of extracting soda ash from Lake Magadi for decades without creating enough jobs or developing industries in Kajiado County. He said Kenya would instead seek investors prepared to establish glass and chemical manufacturing plants locally.

Tata has disputed the allegations and said it complies with regulatory requirements, leaving the dispute open to further legal and regulatory discussions.

The Magadi operation has been an important contributor to Kenya’s export earnings. Kenya exported 254,779 tonnes of soda ash worth $56.9 million in the year to July 2025, according to government data.

For India, the dispute comes against the backdrop of a relationship that has expanded considerably in recent years.

Two-way trade stood at about $3.35 billion in 2023/24, according to Indian government data. Indian exports to Kenya accounted for about $3.18 billion, while Kenyan exports to India were only about $176 million, leaving Kenya with a trade deficit of nearly $3 billion.

President Ruto at a past event. Photo: (William Ruto FB)

The imbalance has been one reason Nairobi has sought greater access to the Indian market.

In 2023, after years of negotiations, India opened its market to Kenyan avocados, providing Kenyan farmers with another outlet for one of the country’s major agricultural exports.

The opening was seen as an important diplomatic and commercial achievement for Ruto’s administration and an example of how bilateral engagement could help Kenya narrow its trade deficit.

The Tata dispute now introduces a different dynamic.

Kenya wants foreign companies to move beyond extracting resources and exporting commodities and instead establish manufacturing capacity that creates jobs and retains more value locally. That is a legitimate industrial policy objective.

But foreign investors may also view an abrupt termination of a major foreign company’s operations as a warning about regulatory and political risk.

The stakes extend beyond Tata.

India has a large corporate presence in Kenya, while Kenyan companies and exporters depend on India’s market. Any deterioration in the commercial relationship could therefore have consequences well beyond the Magadi operation.

Foreign traders bring regional dimension

Ruto’s directive targeting foreign-owned small businesses carries an even more complicated regional dimension.

The president has ordered authorities to crack down on foreigners involved in small-scale businesses, including hawking and small retail operations, arguing that such businesses should be reserved for Kenyans.

The move has particularly raised concerns because citizens of neighbouring countries, including Rwanda, Burundi and Tanzania, are active in Kenya’s informal and small-business economy.

Many operate shops, sell household goods and participate in cross-border commerce that has grown alongside East Africa’s integration.

Kenyan traders have welcomed the government’s position, arguing that foreign traders with greater access to capital and established supply chains are crowding them out of markets that should provide livelihoods for local entrepreneurs.

But the policy touches a much larger issue: Kenya’s commitment to the East African Community Common Market.

The regional bloc is built around the free movement of people, labour, services and capital and provides citizens of member states with rights to work, establish businesses and reside across the region, subject to national laws and requirements.

That does not give EAC citizens an automatic right to ignore licences, immigration rules, taxation or other regulations.

But a policy that broadly excludes foreigners from entire categories of small businesses could sit uneasily with the wider principle of regional economic integration.

The issue has already prompted the government to clarify Ruto’s remarks.

Foreign Affairs Principal Secretary Korir Sing’oei said the president’s comments had been taken out of context and were made in the context of the debate over local-content legislation. He said foreigners who have the necessary documentation, permits and licences remain protected under Kenyan law.

That clarification could prove important.

It allows the government to distinguish between enforcing Kenyan laws against undocumented or unlicensed businesses and imposing a blanket nationality-based ban on economic activity.

A delicate balancing act

Ruto’s political argument is likely to resonate with many Kenyans facing high unemployment, rising living costs and intense competition in the informal economy.

The challenge is ensuring that protecting Kenyan businesses does not undermine the investment and regional relationships that support the wider economy.

Kenya needs foreign investors to bring capital, technology and manufacturing capacity. It also needs its neighbours to continue opening their markets to Kenyan businesses and workers.

Kenyans themselves rely heavily on the same regional freedoms Ruto’s government is now being accused of narrowing. Kenyan businesses operate across East Africa, while Kenyan professionals, traders and investors have built livelihoods in neighbouring countries.

Both policies may prove popular at home. But taken together, they risk making Kenya appear less open at a time when the country is trying to position itself as East Africa’s leading investment and commercial hub.

For Ruto, the difficult task will be to pursue economic sovereignty without turning protection of Kenyan interests into a source of diplomatic friction with the very countries Kenya needs as trading partners, investors and regional allies.

gandae@businessdayafrica.org