A fresh trade and diplomatic dispute is unraveling within the East African Community (EAC), following Tanzania’s controversial decision to ban foreign nationals from operating in 15 small-scale business sectors.
Kenya has strongly objected to the move, calling it discriminatory and a threat to regional integration, warning that it could “criminalize” legitimate investments made by citizens of fellow EAC member states.
On July 30, 2025, Tanzania enforced the Business Licensing (Prohibition of Business Activities for Non-Citizens) Order, effectively barring foreigners from engaging in businesses like, Salons and beauty services, Tour guiding, Mobile money services, Electronics repair and small-scale manufacturing.
Though existing foreign license holders are allowed to operate until their permits expire, new or renewed licenses will be blocked, and violators face steep fines, imprisonment, or deportation.
Tanzania’s Trade Minister Selemani Jafo defended the law, saying it’s meant to prioritize citizens in informal sectors where foreign presence had grown—especially among Kenyans and Chinese nationals.
Kenya’s Trade Cabinet Secretary Lee Kinyanjui condemned the directive, saying it violates the EAC Common Market Protocol, particularly Article 13, which guarantees equal treatment and free movement of goods, services, labor, and capital across member states.
“The order criminalizes lawful EAC investments and threatens our shared economic future,” Kinyanjui added.
Kenya’s National Assembly Trade Committee Chair, Bernard Shinali, warned that if Tanzania doesn’t reverse the directive, Kenya may impose reciprocal bans—a move that could inflame tensions and disrupt cross-border business, especially in sectors like mining and transport where many Tanzanians work in Kenya.
This isn’t just about hair salons or tour guides. The issue touches on whether East Africans can truly do business freely across borders, as promised under the EAC agreements.
Kenyan SMEs operating in Tanzania now face shutdowns.
Tourism and logistics—major revenue earners—are under threat.
Mobile money services, one of Kenya’s major regional exports, are being limited.
There’s now a real risk of a trade war, where both countries punish each other’s citizens.
Tanzania argues that the restrictions are designed to protect locals and formalize the economy, not target neighbors unfairly. The government claims foreign nationals are over-represented in low-entry, high-demand trades, crowding out locals.
This is part of a broader trend in emerging economies to shield domestic industries, especially where jobs and resources are scarce. However, the timing and scale of Tanzania’s directive have fueled regional anxiety.
The East African Community (EAC) includes Kenya, Tanzania, Uganda, Rwanda, Burundi, South Sudan, DRC, and Somalia, and is built on:
Free movement of people, labor, and capital
Harmonized customs and investment rules
And shared infrastructure and economic policies
Tanzania’s new rules violate several of these principles, creating non-tariff barriers—rules that don’t involve direct taxes but still block trade through bureaucracy or legal obstacles.
Economic Fallout, Kenya exported Ksh 297 billion ($2.2B) to EAC states in 2024.
Tanzania alone accounts for Ksh 63 billion ($470M) of that.
And disruption could damage thousands of Kenyan-owned SMEs, cut tourism revenue, and trigger capital flight as investors pull out of uncertain environments.
Despite rising tensions, negotiations are ongoing, August 4–5: Technical meeting on tobacco trade.
August 11–12: Joint Kenya-Tanzania Trade Committee talks.
Sept 30: EAC-wide compliance review session.
August 30: Deadline for EAC Secretariat to list harmful taxes and levies violating protocols.
Kinyanjui says he is “hopeful that structured dialogue will yield positive results.”
This trade row is more than a diplomatic spat—it’s a test of whether East Africa’s dream of regional integration is still alive. Kenya sees Tanzania’s move as a betrayal of shared goals, while Tanzania insists it’s putting its people first.
Unless balanced through urgent dialogue, mutual trust, and clear rules, this could set a dangerous precedent, unravelling decades of progress and leaving both economies worse off.
