On August 15, 1947, British colonial rule in India ended. The borders marked by Sir Cyril Radcliffe tore apart British India, displacing over 14 million citizens, hundreds of thousands of whom sought refuge in East Africa, especially Kenya. Kenya later gained independence from Britain in 1963, and since then its economy has seen periods of rapid growth, challenges, and recovery. But to what extent is this a consequence of the immigrant communities that developed there?

Why was Indian migration to Kenya so successful?:

Although the collapse of British colonial rule in India brought along the largest spurt of emigration, it was by no means the first. Indian diaspora predates the traumatic events of partition, primarily in 1896 with the construction of the Uganda-Kenya railway. Following the 1833 Slavery Abolition Act, an Indian indenture system replaced slave labour in British colonies, leading to the UK government bringing in over 32,000 workers, particularly those highly skilled traders from Gujarat and Punjab. Despite enduring low wages, limited medical care, and harsh living conditions (such as surviving in fear of being killed by lions), many labourers alongside Indian traders and businessmen involved in the project stayed in the region, establishing the Indian minority communities that exist today.

Many of these same Indians from Gujarat and Punjab, brought a strong entrepreneurial spirit into Kenya and formed small retail outlets and trade centres, creating an informal yet vital supply chain network. Gradually, these businesses accumulated significant capital, often reinvesting in expanding trade, real estate, and manufacturing. By 1950, Indian traders had control of roughly 85% of commercial trade in Kenya, with Indian-owned shops dominating retail and wholesale markets in cities such as Nairobi and Mombasa. This strong market presence ensured that Indian companies became integral to Kenya’s supply chain network, aligning with the country’s urbanisation and contributing steadily to tax revenues, job creation as well as the fulfilment of consumer demand.

Influence of Cultural Practices:

The dominance of Indian entrepreneurs in these markets set standards in sectors like wholesale trade, where product diversification and pricing models became benchmarks for Kenyan businesses. This anchoring effect shaped how Kenyan firms priced goods and made financial decisions, modelling them based on successful Indian firms. The cultural practices of family-centred, community-oriented entrepreneurship among Indians influenced local Kenyan business behaviour, fostering collective efforts and altering risk assessments. Cooperative saving schemes, such as “chamas,” exemplify how Indian risk-averse tendencies have encouraged the rise of saving and lending groups in Kenya, enhancing social cohesion. Additionally, the Indian community’s strong emphasis on education and future-oriented saving has significantly impacted Kenyan intertemporal choices, encouraging a cultural shift toward long-term goals over immediate consumption.

Over generations, Indian communities in Kenya have nurtured entrepreneurial talent, with many small and medium enterprises (SMEs) of Indian origin supported by strong family networks that enable resource and knowledge sharing. These SMEs played a vital role in Kenya’s economic growth by creating employment, innovation, and diversifying regional economies. Through collaboration with family abroad, Kenyan Indians also accessed markets, financial resources, and expertise from India, facilitating joint ventures and franchising. Such familial ties built trust and confidence among investors, making foreign direct investment (FDI) much more attractive. Consequently, Indian firms have continued to pour money into Kenyan industries such as pharmaceuticals, IT services, and agribusiness, emerging as the leading source of Asian FDI with over 60 active projects, surpassing China. According to Kenya’s 2023 Foreign Investment Survey Report, India accounts for 57.7% of FDI in Kenya, whereas China has fallen to 12.2%. For example, the Adani Group recently proposed a 30-year lease with a $1.85 billion investment to manage and expand Nairobi’s Jomo Kenyatta International Airport.

Employment and Social Contributions: 

Indian-owned enterprises in urban areas have also created direct employment opportunities for tens of thousands of Kenyans, serving as major employers and enabling secondary employment through local suppliers and service providers. Indian immigrants have also addressed critical shortages in healthcare and education, contributing to Kenya’s human capital stock and enhancing workforce quality and competitiveness. This improvement in labour productivity supported the growth of a middle class, positioned between Europeans and native Africans experiencing both exploitation and certain privileges. Institutional racism was prevalent, evident in discriminatory practices of wage disparities, with Indians receiving a fraction of the pay of Europeans. However, Indian immigration has introduced hybrid economic models blending African and Indian financial and trade practices. To illustrate, Indian business tactics, such as extended credit and negotiation through haggling, are now common in Kenyan markets, giving rise to a more diverse and resilient economy.

Economic Transformation through Finance, Infrastructure, and Industrialisation:

These Indian communities initially established informal financial networks, like the aforementioned savings groups, which gradually formalised into larger financial institutions that served both urban and rural areas, advancing financial inclusion and enabling broader participation in Kenya’s formal economy. The Diamond Trust Bank and Bank of Baroda were crucial in developing digital payment platforms, banking services, and corporate banking in Kenya. Additionally, remittances from the Indian diaspora have become a significant income source, strengthening foreign exchange reserves, supporting local consumption, and fostering small-scale investments in family-owned businesses. The trust within traditional Indian social networks has similarly facilitated informal credit systems and collective investments among Kenyan Indian communities, where loans and support are often extended through personal relationships rather than formal banking procedures.

Indian businesses played a key role in Kenya’s construction and real estate sectors, driving urban expansion through investments in commercial buildings, housing, and infrastructure, which contributed to the country’s gross fixed capital formation and asset growth over the 20th century.

Firms introduced by the Indian immigrants have significantly shaped Kenya’s economic transition from an agrarian base to an industrialised economy. Many early textile factories, food processing plants, and manufacturing units were established by Indian immigrants, diversifying Kenya’s economy beyond agriculture and advancing import substitution strategies to reduce reliance on foreign goods. These efforts also supported educational initiatives, such as literacy and numeracy programs within Kenya’s schooling system.

Although Indian immigrants have made notable contributions, their economic dominance in certain sectors has led to perceptions of inequality and tension among indigenous Kenyan communities. Yet currently, diplomatic ties between India and Kenya are strengthening – especially after India’s role in including the African Union in the G20. Trade between the two nations now exceeds $2.5 billion, with Kenya seeking a $250 million line of credit to modernise its agriculture.

In sum, the Indian diaspora has left an undeniable mark on Kenya’s economic landscape, contributing to its growth from a largely agrarian economy to an increasingly diversified and industrialised one. From trade and manufacturing to real estate and financial services, Indian entrepreneurs have enriched Kenya’s sectors with investment, innovation, and a robust work ethic. Despite challenges and tensions stemming from their economic influence, the cultural and economic interweaving of Indian and Kenyan practices has fostered a resilient, hybrid economy. Today, as diplomatic and economic ties between India and Kenya solidify, there is further potential for shared growth, collaboration, and prosperity that builds on this legacy.