Kenyans Running Small Businesses in Tanzania Hit Hard by New Trade Directive

A recent directive issued by Tanzania's Ministry of Trade and Industry prohibiting foreign nationals from engaging in 15 categories of small and medium-sized enterprises (SMEs) has sparked diplomatic tensions with Kenya. 

Signed into law on 28 July 2025, by Trade Minister Selemani Saidi Jafo, the Business Licensing (Prohibition of Business Activities for Non-Citizens) Order has been met with criticism from Kenyan lawmakers and business leaders who view it as a violation of the EAC's Common Market Protocol. The new regulation bars foreigners from participating in a range of grassroots business activities, including retail trade, mobile money services, electronics repair, salon operations, tour guiding, and small-scale mining. 

The Tanzanian government contends that the policy is designed to bolster citizen-led growth and safeguard local jobs. However, critics argue that it undermines the principles of regional cooperation and threatens the livelihoods of thousands of Kenyan entrepreneurs operating within Tanzania.

The timing of the directive is particularly sensitive, occurring in the lead-up to Tanzania’s general election in October. President Samia Suluhu Hassan’s administration is under pressure to deliver economic opportunities to its 60 million citizens. The policy is viewed as part of a broader strategy to consolidate domestic support by prioritising Tanzanian ownership in low-capital sectors, though its implications for regional diplomacy and cross-border commerce are considerable.

Kenyan lawmakers have reacted with alarm, with some calling for reciprocal measures against Tanzanian goods and services. Bernard Shinali, Chair of the National Assembly’s Trade, Industry and Cooperatives Committee, has urged the Kenyan government to consider imposing restrictions on Tanzanian goods and services, calling the move "economic aggression." "It is clear that Tanzanians have gone too far," he said. "We should just cut links with them."

Tourism stakeholders have also voiced concerns. Victor Shitakha, Chairman of the Kenya Coast Tourism Association, warn that the ban would negatively impact Kenyan tour operators who rely on access to Tanzania’s destinations like the Serengeti and Mount Kilimanjaro. 

"This goes against the spirit of the EAC protocol that guarantees free movement of people and services," he commented.

The EAC’s Common Market Protocol, ratified in 2010, commits member states to promoting the free movement of goods, labour, services, and capital. It also enshrines the right of establishment and residence for citizens of partner states. Tanzania’s new policy appears to contravene these commitments, raising questions about its dedication to regional integration.

The directive mandates that licensing authorities immediately cease issuing or renewing business licences for non-citizens in the affected sectors. Violators face penalties of up to Tsh10 million (approximately KSh503,000), six months’ imprisonment, or both. Tanzanian citizens found assisting foreigners in prohibited activities also risk fines and jail time. While the order allows foreigners with existing valid licences to continue operations until expiry, the lack of clarity on enforcement timelines has created uncertainty among Kenyan traders.

Approximately 40,000 Kenyans currently live and work in Tanzania, many of whom are engaged in informal trade and small-scale enterprises. The new restrictions threaten to displace these individuals, potentially leading to forced closures and deportations. For Kenyan entrepreneurs who have established livelihoods in Tanzanian towns such as Arusha, Mwanza, and Dar es Salaam, the policy represents a significant personal and economic challenge.

The East African Business Council has condemned the directive, asserting that it undermines the fundamental principles of the EAC and jeopardises the region’s SMEs. "This is not what the EAC is based on," said Chairman John Lual Akol. "If Tanzania is going to impose such violations, it endangers the spirit of integration."

Kenyan legislators are now calling for a formal response. Defence, Intelligence and Foreign Relations Committee Chair Nelson Koech urges restraint while stressing the need for clarification. "We must await justification from Tanzanian authorities to know whether and to what extent it affects Kenyans," he said. Labour Committee Chair Ken Chonga describes the move as contrary to the EAC charter, which guarantees access to employment opportunities across member states.

The directive includes a ban on foreigners offering domestic and office cleaning services, postal and parcel delivery, and acting as brokers in real estate and business transactions. Gambling operations outside licensed casinos are similarly restricted. Some exceptions exist for tourism-related businesses, such as salons located within hotel premises or supermarkets serving local producers.

Tanzania’s protectionist stance is not unprecedented. Several African nations, including South Africa, Nigeria, and Ghana, have implemented similar policies reserving certain business activities for their nationals. 

In May 2025, Tanzania further tightened its economic controls by banning the use of foreign currencies in domestic transactions, mandating that all goods and services be priced in Tanzanian shillings. This move, aimed at strengthening monetary sovereignty, added to the perception of growing insularity in Tanzania’s economic policy.