A fresh dispute over Kenya’s import regime has brought the financial pressure facing small businesses into sharp focus, after traders in central Nairobi shut their shops and took to the streets to protest a higher customs benchmark.
Police fired tear gas to disperse demonstrators on Friday, according to a Reuters witness, as hundreds of businesses in central Nairobi remained closed. The protests reflect growing concern among small-scale traders who say the new customs valuation will make it more expensive to bring goods into the country and could squeeze businesses already operating on thin margins.
At the center of the dispute is a decision by the Kenya Revenue Authority (KRA) to increase the minimum customs benchmark for consolidated 40-foot containers from 2.5 million Kenyan shillings to 3.2 million shillings, equivalent to about $24,700.
The KRA says the adjustment, which took effect on August 20, is necessary to tackle the under-declaration and undervaluation of imported goods. According to the authority, some importers have been declaring goods below their actual value to reduce the duties they pay, creating an uneven playing field for businesses that comply with customs requirements.
The authority argues that such practices do not only reduce government revenue but also put compliant traders and local manufacturers at a disadvantage.
Yet the traders’ objection is rooted in a different reality. Many small businesses depend on consolidated shipments, where goods belonging to several traders are packed into a single container to spread shipping and clearance costs. For these businesses, even a change in the minimum customs reference point can have significant consequences for the final cost of bringing merchandise into Kenya.
Traders fear that higher assessed values will eventually be reflected in the prices they charge consumers, making imported goods more expensive while reducing their own margins.
“We are standing for our citizenship and our right to do business and our right to build our future,” said Muturi Kariuki, one of the traders who participated in the demonstrations.
Kariuki was among those who closed their businesses as part of the protest. Other traders said some shops were shut because of concerns about safety as tensions rose in the city center.
The confrontation highlights a difficult policy balancing act for Kenya. Authorities have a legitimate interest in preventing customs fraud and protecting domestic manufacturers, but measures intended to improve compliance can have unintended consequences when they affect businesses that operate at the smaller end of the import market.
The crucial distinction in the KRA’s position is that the 3.2 million shilling figure is a minimum reference point rather than an automatic valuation for every container. Importers whose goods are worth more than that amount are expected to declare their actual value and pay the corresponding duties.
That clarification may help address some of the confusion surrounding the policy, but it does not necessarily resolve traders’ concerns. The practical question for small importers is how customs officials will apply the benchmark and whether the new system will lead to consistently higher assessments for consolidated shipments.
The protests also expose a broader tension within Kenya’s economy. Small traders play a major role in distributing consumer goods and creating livelihoods, particularly for entrepreneurs who lack the capital to operate large-scale import businesses. Any policy that raises their operating costs can have effects beyond the traders themselves, potentially feeding into retail prices and household spending.
At the same time, allowing undervaluation to continue would undermine legitimate businesses and domestic producers that compete against cheaper imports whose true customs values may not be properly declared.
The challenge for the KRA, therefore, is not simply enforcing a higher benchmark. It is convincing traders that the system will be transparent, predictable and fairly administered.
Nairobi’s small businesses face an issue that is ultimately about survival as much as taxation. The government, meanwhile, must close loopholes without pushing legitimate traders further into financial distress.
How Kenya manages that balance could determine whether the new customs regime becomes a meaningful tool against import fraud or another source of friction between the government and the country’s already pressured small-business community.