Kenya has set an ambitious goal to build a stronger manufacturing economy capable of creating jobs, attracting investment and expanding exports across Africa.
It is a vision anchored in Vision 2030 and reinforced by growing opportunities under the African Continental Free Trade Area (AfCFTA). Realising that ambition, however, will depend not only on expanding industrial capacity, but also on protecting the integrity of the market in which legitimate businesses operate.
One of the greatest threats to that ambition receives far less attention than energy costs, taxation or access to finance. It is the steady growth of illicit trade.
Smuggled, counterfeit and tax-evading products continue to find their way into Kenyan markets, creating unfair competition for compliant businesses while eroding government revenues and investor confidence. Counterfeit goods, in particular, often fail to meet quality and safety standards, exposing consumers to unnecessary risks while undermining trust in legitimate manufacturers that invest heavily in product quality, regulatory compliance and consumer protection.
The economic consequences are substantial. Estimates vary, but they all point to a problem of significant national importance. Kenya’s Anti-Counterfeit Authority estimated the value of illicit trade at Sh826 billion in 2025, while estimating associated government revenue losses at more than Sh153 billion annually. Internationally, the OECD and the European Union Intellectual Property Office estimate that counterfeit and pirated goods account for approximately 2.3 to 2.5 percent of global trade, depending on the reporting period and methodology. In markets where enforcement remains uneven, the impact can be even greater.
Kenya’s manufacturing sector has already faced considerable headwinds. Its contribution to GDP declined from 11.5 percent in 2009 to approximately 7.1 percent in 2025, even as the sector continues to provide more than 370,000 formal jobs and remains central to the country’s industrialisation agenda. At the same time, businesses continue to navigate high production costs, including high electricity costs that continue to weigh on industrial competitiveness. Against this backdrop, illicit trade places an additional burden on businesses that choose to operate within the law.
When counterfeit or smuggled products enter the market without paying applicable taxes or complying with regulatory requirements, they acquire a structural pricing advantage over legitimate businesses. In some product categories, including writing instruments, counterfeit products can retail at prices up to 50 percent lower than genuine products because illicit operators avoid the costs associated with taxation, quality assurance, safety standards and regulatory compliance.
The result is an uneven competitive environment. Businesses that invest in local production, employment, environmental compliance and consumer safety are required to compete against operators who carry few, if any, of those obligations.
The effects extend well beyond individual companies. Every factory operating below capacity represents jobs that are not created or sustained. Every investor who questions whether intellectual property rights and regulatory standards will be consistently enforced may reconsider where to allocate capital. Every tax shilling lost to illicit trade limits the government’s ability to invest in the roads, ports, electricity infrastructure, healthcare and education systems that underpin long-term economic growth.
The Kenya Revenue Authority has repeatedly identified illicit trade as a significant challenge to domestic revenue mobilisation. At a time when Kenya is working to broaden its tax base while maintaining fiscal sustainability, reducing illicit trade should form part of a broader strategy to strengthen public finances and improve the competitiveness of the formal economy.
There is also a consumer dimension. Many illicit products are cheaper, and in an environment where households continue to face significant cost of living pressures, some consumers and small retailers may be drawn toward lower-priced alternatives. That reality should not be ignored. It suggests that enforcement measures are most effective when accompanied by policies that strengthen domestic manufacturing, improve productivity and help legitimate producers remain price competitive.
Manufacturers around the world are reassessing their supply chains, diversifying production and looking for reliable regional manufacturing hubs. Kenya has invested significantly in positioning itself as East Africa’s industrial and logistics gateway, supported by its strategic location, skilled workforce and access to regional markets through AfCFTA.
The challenge is also evolving. Illicit products are increasingly able to reach consumers through online platforms, social media and fragmented delivery networks, requiring more enforcement efforts across the board to capture online and offline channels. Kenya’s response must therefore evolve alongside these channels, combining stronger digital monitoring, product authentication and intelligence-sharing with online marketplaces and logistics providers.
Maintaining that competitive advantage requires more than attractive investment incentives.
Investors also seek confidence that intellectual property rights will be protected, regulations will be enforced consistently, and businesses that comply with the law will not be disadvantaged by those that do not. A marketplace where counterfeit and illicit products remain widespread sends a signal that can undermine years of investment promotion efforts.
Addressing illicit trade should therefore be viewed not simply as a law enforcement issue, but as an important component of Kenya’s broader industrial and economic strategy.
Encouragingly, institutions including the Anti-Counterfeit Authority, the Kenya Bureau of Standards, the Kenya Revenue Authority and the Directorate of Criminal Investigations have strengthened market surveillance and deepened collaboration with the private sector. These efforts matter.
The task now is to deepen coordination across the entire supply chain, from border entry and ports to wholesale, retail and digital marketplaces. This requires stronger intelligence-sharing, coordinated enforcement and faster action against repeat offenders. Kenya’s ambition to become a regional manufacturing powerhouse is both achievable and worth pursuing. Protecting legitimate businesses from unfair competition, safeguarding consumers and ensuring a level playing field will be essential to turning that ambition into sustained economic growth.
Strengthening the integrity of Kenya’s marketplace is not simply about protecting businesses. It is about protecting investment, supporting jobs, improving consumer confidence and creating the conditions for a more competitive and resilient economy. Achieving this will require sustained collaboration between government and the private sector to strengthen enforcement, improve market surveillance, leverage technology and ensure business comply with the law.