Small-scale traders in Gikomba, Nyamakima and Kamukunji markets in Nairobi have new competitors -- the Chinese.
Tens of Chinese traders have opened shops in the crowded, informal markets that have for decades served as the entry points for second-hand clothes and cheap Chinese imports.
Backed by strong financial muscle, the traders who have taken strategic control of the supply chain from import to wholesale and down to the retail level, are giving local traders a run for their money.
The teeming Gikomba market has for decades been a magnet for traders from neighbouring countries, including Tanzanians, Rwandese and Congolese, but local traders say the Chinese businessmen have posed a new threat to their survival given their deep pockets.
"It is not just here, we used to distribute to other towns like Kisii and Eldoret but the Chinese have also opened shops there, where they now distribute as well. It is getting worse, stocks are moving slower and traders are getting really frustrated," said Lydia Njeri, whose shop is adjacent to a Chinese second-hand clothes dealer in Gikomba’s Mumbai Building.
Many other traders that the Business Daily talked to during a recent visit expressed similar sentiments. Kenya’s trade with China, which has grown exponentially in recent years, is heavily tilted in favour of the Asian economic giant.
Kenya imported goods worth Sh371 billion from China last year, against a paltry export figure of Sh11 billion. The Chinese ambassador to Kenya, Wu Peng, recently told journalists that China was not to blame for the imbalance but steps were being taken to improve Kenyan exports to China.
As trade with Beijing has grown in multiples over the past two decades, Chinese traders have moved from selling goods in bulk in godowns located in industrial area to engaging more in retail trade on Luthuli Avenue, Hurligham, Nyamakima, Gikomba and Kamukunji.
Local traders say they can hardly compete while faced with price undercutting and strong business links for the Chinese from their business associates in Beijing. Traders decry worsening prospects for their businesses that also include secondhand shoes, kitchenware and baby items at both retail and wholesale levels. At Gikomba, Kenya’s biggest secondhand clothes and household items market, the Chinese operate retail shops adjacent to the very traders they sell wares to at wholesale prices.
Those that the Business Daily encountered hardly speak English, and employ Chinese staff to carry out tasks like recording sales while hiring Kenyans to ferry the bales using carts.
Trade tensions have been brewing with minor brawls in backstreet shops largely going unreported. The last one happened in Nyamakima on Friday, May 17, when a Chinese trader reportedly slapped a Kenyan, triggering a scuffle that ended up in substantial damage to the Chinese shop.
Traders have recently suffered losses from slowed cargo clearance after the government heightened its crackdown on illicit goods. They now say they are facing unfair competition from the Chinese who import in bulk without relying on the consolidated containers that the taxman has been targeting for thorough inspection.
With most of the import goods also coming from China, local traders are slowly being left as spectators in the game they have played for years as the mandatory pre-export verification, which happens in China, is also used to frustrate those who opt for direct imports.
The Kenya Bureau of Standards’ nominated cargo inspectors in China mostly employ Chinese staff, who the Kenyan traders claim do everything to delay their cargo and fast-track the ones being shipped by the Chinese.
The frustrated traders say weak enforcement of labour and immigration laws have made it easy for the Chinese to operate freely while they can hardly even think of setting up similar businesses in China.
Efforts to reach the Chinese embassy in Nairobi to respond to the claims of unfair business practices were not successful. The Director of Immigration Services, Alexander Muteshi, blamed Kenya’s lax laws that have allowed the influx of Chinese nationals involved in small businesses and asked us to direct our questions to Parliament instead.
"You have raised a very valid concern. The challenge however for us is to review our laws to raise the investor amount threshold and also not to act contrary to World Trade Organisation requirements of locking out investors. It is a matter that needs to be addressed by our Members of Parliament to give us guidance," Mr Muteshi said.
A section of legislators last year demanded that Chinese citizens working as hawkers, drivers or casuals be kicked out of the country for taking jobs that can be done by Kenyans.
Led by Kiharu lawmaker Dindi Nyoro, they asked Interior Secretary Fred Matiang’i to crack down on undocumented immigrants, saying there was an influx of Chinese who were hawking or running retail business in the country. The crackdown seemingly did not yield much.
Kenya puts the minimum threshold for a foreign investor at Sh10 million. China–Dubai Traders Group chairman James Kariuki agreed that the law should make it harder for foreigners eyeing small-scale businesses that local business owners can do to enter Kenya. The lobby group has been focused on reducing air transport costs for small- and middle-scale traders.
"We must make our working permits more expensive to the extent that those coming must be heavier investors; but we must also agree that China now controls almost every aspect of our economy after we allowed them to do it," said Mr Kariuki.