Enforcing Competition in Informal Markets by Francis Kariuki
Global Forum on Competition
Enforcing Competition in Informal Markets:
My Cockpit views- Flight- CAK 2013-2023
OECD, Paris - 2 December 2025
Francis Wang’ombe Kariuki, MBS
Senior Consultant – Competition & Trade Policy
Bowmans Law
Background
Informal Sector Influence
• Contributes 80% of employment – Boda-bodas (transport/delivery), Mama Mbogas(supports the agriculture supply chain), Jua-kali (artisans and furniture); vibandaski (small eateries and pubs);
• August, 2022 - The Current regime comes to power ‘riding on a W heelbarrow’ – The ‘Hustler’ Movement.
Informal Sector and Formal SectorSymbiosis
Supplier of inputs – metal works (Jua kali), food Vendors, Artisans including the Furniture Industry
Source of low-cost inputs to the formal sector – Construction industry, The hospitality industry Supports formal sector – delivery/distribution
Alternative outlet for the formal sector – hawking, consumption in informal sector
Informal and formal Sectors - Dissension
• Informal Sector has dominated some markets – Urban Tranport Sector, Artisans (For example wheelbarrow manufacturing);
Informal and formal Sectors - Dissension
• Compete vigorously (fairly?, unfairly?) – Delivery and logistics (platform based riders vs. Bodas – unregistered riders); retail sector; milk industry;
Informal and formal Sectors - Dissension
• Informal sector tempers Market power in some sectors – new brands aimed at lower income, reduced prices – pushed by kadogo economy dominated by the informal sector
Brookside perceived to be dominant (45% market shares) in milk processing market
Highly informal market though regulated
Political Economy issues (Brookside ownership) and sensitivity of the Industry – Kenya has a large dairy herd/many dairy farmers.
The Authority had just been established – lack of capacity and credibility risks
Findings
It was a horizontal merger – overlaps in buying milk from farmers, processing and marketing of fresh milk, production and marketing of Long-life milk.
Milk production was at 4.1 billion litres Annually.
2 billion litres is retained at household (for consumption) while the rest 2.1 billion litres is marketed through formal and informal channels.
Dairy processors accounted for 24% of the marketed milk – 504 Million litres while the informal sector accounted for the rest- 76% – 1.59Billion litres
Applying data from research papers and corroborated by the Industry regulator’s (Kenya dairy Board) data;
Data obtained from the large retail stores;
Liquid milk accounted for more than 90% of the sales of milk processors –the sales from value added products had minimal effect on firms’ turnover;
Analysis
Marketed milk included both processed and unprocessed milk (raw milk);
Use of natural experiment (imposition of 16% VAT on processed milk - used as a proxy for SSNIP test);
• Fresh milk sales declined by 17.4% for all processors. Brookside’s declined by 18.1%.
• CAK procured expertise of a re-known Competition Expert Economist.
• Market share of Brookside was calculated at 7.35% and that of Buzeki was at 1.44%
Lessons
• Availability of Data is critical and avenues to corroborate it;
• Capacity to collect and analyse data;
• Competition Agencies should have an interfacing mechanism with relevant sector regulators;
• Informal sector can provide credible competition and/or supportive role to the formal sector. However, issues of health and safety diminishes this capacity;
• Non-functioning of informal sector may deepen market power or even disrupt the supply chain in the formal sector
