Kenya has formally objected to Tanzania’s new business licensing rules and tax measures, labelling them discriminatory and potentially obstructive to economic integration.
In a statement issued on Wednesday, Kenya’s Ministry of Investments, Trade and Industry (MITI) expressed serious concerns regarding Tanzania’s Business Licensing (Prohibition of Business Activities for Non-Citizens) Order 2025, which came into effect on July 28, and restricts foreign participation in certain sectors , further escalating trade tensions between the two countries.
Lee Kinyanjui, the Cabinet Secretary for Trade and Industry, expressed concern over Tanzania’s Finance Act 2025 and the amendments to the Excise (Management and Tariff) Act 2019. These amendments introduced new excise duties and an Industrial Development Levy, levied at rates of 10 and 15 percent respectively.
“The Government of Kenya has noted with concern the imposition of new and discriminatory tax measures by the United Republic of Tanzania, which threaten regional trade gains,” he said.
The order prohibits non-citizens from participating in 15 business sectors, including salon operations, tour guiding and mobile money transfers, electronics repair, and micro and small industry ownership.
The order, which took effect immediately, except for current licence holders, carries significant penalties for non-compliance.
“The Business Licensing Order seems to criminalise lawful EAC (East African Community) investments and will harm both our economies. These measures are substantive and undermine the core objective of regional economic integration under the EAC Common Market Protocol (CMP),” he said.
He cited Article 13 of the CMP, which permits EAC nationals to set up and run businesses and forbids partner states from treating other EAC nationals less favourably than their own citizens.
“The Business Licensing Order, which seems to be criminalising lawful EAC investments, will hurt both our economies,” Mr Kinyanjui added. “It is therefore critical, in the spirit of EAC, that bilateral engagements be held to resolve these issues.”
He noted that the EAC remains Kenya’s largest export market, accounting for 28.1 percent of the country’s total exports, which are estimated to be worth Sh297 billion in 2024.
Tanzania is Kenya’s second-largest EAC trading partner after Uganda, with intra-community trade worth an estimated 63 billion Kenyan shillings in 2024.
The CS further said that Kenya, through the Ministry of Investments, Trade and Industry, has been actively participating in consultative forums aimed at aligning national trade policies with the EAC Customs Union Protocol.
He highlighted the outcomes of the 1st Extraordinary Sectoral Council on Finance and Economic Affairs (SCFEA), at which Kenya and the other member states directed the EAC Secretariat to compile a list of excise duties, levies and charges contradicting the Customs Union Protocol. This list is to be submitted by August 30, 2025.
The EAC Secretariat has also been tasked with harmonising the definitions of 'imports' and 'exports' across member states in line with EAC standards by June 30, 2025, as well as with convening a second, compliance-focused SCFEA session by September 30, 2025.
Furthermore, Kenya and Tanzania have arranged additional bilateral discussions to address the disputed measures and settle ongoing trade disputes. These include a technical meeting on tobacco product trade in Arusha from August 4 and 5, and a Joint Trade Committee session on levies, fees and charges from August 11-12.
“We are therefore positive that these engagements will yield positive results based on the foundational principles of the EAC, including the free movement of goods, people, services, labour, and capital,” said Mr Kinyanjui.
“In line with the spirit of the EAC, “one people, one destiny”, we are committed to upholding the principles of non-discrimination, transparency, and equity in all our future trade-related decisions.”
On Tuesday, the new directive, which prohibits foreigners from 15 sparked concern and a backlash from Kenya.
Tanzania’s Trade Minister Selemani Jafo explained that foreigners had increasingly become involved in the informal sector and areas better filled by citizens.
The move was generally welcomed in Tanzania amid growing concerns that foreigners, including Kenyans and Chinese nationals, were encroaching on smaller businesses. Violators risk fines, six months in jail and loss of visas and work permits.
Mr Jafo added that he hoped the ban, announced on Monday, would also encourage foreigners to invest in large-scale businesses. But it has been met with anger in Nairobi, with some arguing that it violates EAC agreements that guarantee free movement of people and trade among its eight member states.
National Assembly Trade Committee Chairman Bernard Shinali warned that the move could trigger reciprocal restrictions. “There are many Tanzanians working in our mining sites too. It is clear that Tanzanians have gone too far and we should cut links with them,” he said.
The Kenyan transport sector also condemned Tanzania's decision to prohibit Kenyan and other East African nationals from operating small businesses within the country.
Vehicle owners and transporters argued that this sudden decision undermines the spirit, objectives and legal framework of the East African Community (EAC), threatening the livelihoods of many families in the process.
“Cross-border tour services are crucial in promoting intra-African travel, and they rely on seamless cooperation between member states,” they said in a statement.
“Banning Kenyan personnel from such roles is not only unjust but blatantly violates the EAC Treaty, the Common Market Protocol, and principles upheld by the World Trade Organisation (WTO), all of which promote the free movement of labour, goods, and services.”
They therefore called for intervention from the East African Legislative Assembly (EALA) and the EAC Secretariat to act with urgency and decisiveness to reverse this backwards move.
“If left unchallenged, it will set a precedent that could destabilise the entire region’s integration agenda,” they said.
