Kenyan authorities have begun enforcing a law that restricts foreign nationals from participating in the informal economy, a move that has sparked fears of xenophobia. President William Ruto announced the policy, which requires that certain trading activities be reserved for Kenyan citizens, as part of a broader effort to protect the country's economy and attract foreign investment. The enforcement of the law began on September 7, with Ruto emphasizing that the focus should be on foreign investors rather than small-scale traders.

The policy has generated mixed reactions among Kenyans. Some residents, like James Mwaurah, welcomed the crackdown, arguing that foreign traders are taking jobs from locals in a struggling economy. Others, such as Babu Claudius, supported the government's initiative but warned against expelling foreigners, noting that Kenya still needs international business and workers. Both groups agreed, however, that foreign nationals must be in the country legally.

Political economist Sheila Owigo Olang suggested that the policy may be motivated by political considerations, coming at a 'convenient' time ahead of elections. She described the crackdown as a 'feel good policy' that could send a message to foreign investors, potentially causing them to delay investments until after the polls. Olang argued that Kenya should focus on broader structural issues, such as corruption and improving the Ease of Doing Business Index, rather than targeting small-time foreign traders.

Kenya's foreign direct investment increased by 38% in 2025 to $3.2 billion, according to UNCTAD. Ruto has expressed confidence in this growth, and the government is also pushing forward with the Local Content Bill 2025, which would require foreign companies to source at least 60% of goods and services locally and employ at least 80% Kenyan citizens. However, Olang questioned whether this measure would address Kenya's unemployment crisis, particularly among youth, where the World Bank estimates a 15.25% unemployment rate for those aged 15 to 24.

The government has not yet released a comprehensive list of businesses affected by the crackdown, and it remains unclear how many foreign nationals will be impacted. Foreign Affairs Principal Secretary Abraham Korir Sing'oei stated that foreign nationals meeting legal requirements, including holding work permits and licenses, will remain protected. He linked the policy to the introduction of the Local Content Bill, asserting it is not a move to expel foreigners from the country.

Questions remain about the legality of the policy under East African Community rules, which allow citizens of member states to move and provide services across the region, provided they comply with national regulations. The situation has drawn comparisons to South Africa, where anti-immigration campaigns have targeted foreign-owned businesses and migrants. Kenya has not experienced the same level of anti-migrant violence as South Africa, though tensions remain.

The full impact of the policy on Kenya's economy and its residents remains unclear. While some see it as a step toward economic protection and growth, others warn of the potential risks to foreign investment and the livelihoods of those in the informal sector. As the situation develops, further analysis and dialogue will be needed to assess the long-term consequences of this policy.