KENYA could hit back at Tanzania’s move to bar foreigners from running small businesses and offering some services , warns Trade and Industry Cabinet Secretary Lee Kinyanjui .
This, even as Kenya calls on Tanzania to reverse the law prohibiting non-Tanzanian's from trading in 15 services, including the operation and ownership of Micro and Small Industries, which will affect Kenyan businesses and traders.
The order, which includes significant penalties for violations, takes immediate effect except for current license holders.
Speaking at a media briefing in Nairobi on Wednesday evening, Kinyanjui said the action by Tanzania is substantive and undermines the core objective of regional economic integration under the Common Market Protocol.
“We cannot rule it out (retaliation), but that will be the last resort but first we want to apply diplomacy and we believe Tanzania will reverse the decision,” the CS said.
Kenya has also accused Tanzania of imposing a number of taxes which have negatively impacted Kenyan goods by making them uncompetitive.
Of concern is the recent Tanzania Finance Act 2025 and the amended Tanzania Excise (Management and Tariff) Act 2019, which have introduced excise duties and the Industrial Development levy, at 10 and 15 per cent, respectively.
The current elephant in the room however is the decision to bar foreigners from participating in small businesses among them wholesale and retail sale of goods, mobile money transfer business, repair of mobile phones and electronic devices, salon businesses (with an exception for hotel or tourism-related operations), home, office and environmental cleaning services, and small-scale mining.
Others are postal activities and parcel delivery within the country, tour guiding within the country, establishment and operation of radio and television, operation of museums or curio shops, brokerage or agency in businesses and real estate, clearing and forwarding services, on-farm crop purchasing operations and ownership or operation of gambling machines or devices (with an exception for casino premises).
Tanzania has also prohibited non-citizens from ownership and operation of micro and small industries.
“Licensing authorities are forbidden from issuing or renewing licenses for non-citizens to conduct these prohibited activities once the order is in effect,” Tanzania Minister for Industry and Trade Selemani Jafo said in a special gazette notice dated July 28.
Non-citizens engaging in prohibited business activities face a fine of at least Tsh10 million (about Sh505,806), up to six months imprisonment, and revocation of their visa and resident permit.
Tanzanian citizens who assist non-citizens in carrying out prohibited business activities are subject to a fine of Tsh5 million (Sh252903), or up to three months imprisonment upon conviction.
Suluhu’s administration is said to be under pressure to provide еconomic opportunities for its population estimated at about 70 million people.
The policy, hence, is part of a broader government strategy to promote citizen-led growth, expand eсоnomic opportunities for Tanzanians and reshape the structure of local business ownership, асcording to Tanzania's Ministry of Industry and Trade.
Tanzania has however been accused of going against the East African Community (EAC) Common Market Protocol, signed in November 2009 and effected on July 1, 2010, which established a single market within the EAC, facilitating the free movement of goods, persons, services, labor and capital.
“Kenya acknowledges and respects the sovereign rights of EAC Partner States to legislate on domestic matters but also believes in the importance of consultation, coordination and consistency in implementing policies that affect cross-border goods transfer,” Kinyanjui said.
Tanzania ranks as Kenya’s second-largest EAC trading partner after Uganda, with intra-community transfers of Sh63 billion in 2024.
Kenya and Tanzania have had long-running trade disputes including bans on certain exports.
In December 2021, they signed an MoU to remove non-tariff barriers to improve cross-border trade and eliminate immigration bottlenecks.
Kenya’s private sector has raised concerns but notes that it is still too early to make any conclusions.
“I don't think they are targeting Kenya, I think they are just trying to see what works for their citizens right now and it is also an election year, so I think we just wait and see,” Kenya Private Sector Alliance (KEPSA) CEO Carole Kariuki told the Star yesterday.
Kenya Association of Manufacturers CEO Tobias Alando said: "we need to have a candid conversation as EAC partners and avoid non-tariff barriers that will break the East Africa Community spirit,"
Kenya Association of Tour Operators chairman Fred Odek said EAC countries should work in harmony and impose policies that do not harm unity.
“Whilst banning foreign tour guides is an internal policy, the word “foreign” should never be used when referring to East African citizens,” Odek said.
