Kenya Warns Tanzania After Banning Foreign Businesses

Kenya has issued a strong diplomatic protest against Tanzania’s new trade restrictions that effectively ban foreign nationals from operating in key business sectors, warning that the measures threaten regional economic integration and violate East African Community agreements.

In a formal statement released Wednesday, Kenya’s Cabinet Secretary for Investments, Trade and Industry, Lee Kinyanjui, condemned Tanzania’s 2025 Business Licensing Order, which prohibits non-Tanzanian citizens from operating in 15 business sectors, including micro and small industries. The order took immediate effect and imposes heavy penalties on violators, though it protects existing license holders.

The diplomatic tension highlights growing concerns about protectionist policies undermining the East African Community’s vision of a common market. Tanzania ranks as Kenya’s second-largest EAC trading partner after Uganda, with bilateral trade worth 63 billion Kenyan shillings in 2024. The EAC region represents Kenya’s largest export market, accounting for 28.1 percent of the country’s total exports valued at 297 billion shillings.

“Kenya urges that these restrictions be lifted and Tanzania revert to agreed EAC policies,” the statement declared, emphasizing that the measures violate the EAC Common Market Protocol, which guarantees citizens of member countries the right to trade and invest across borders without discrimination.

Beyond the business licensing restrictions, Kenya also expressed concern about Tanzania’s Finance Act 2025 and amendments to the Excise Act 2019, which introduced new excise duties and an Industrial Development Levy of 10 and 15 percent respectively. These tax measures compound the barriers facing Kenyan businesses seeking to operate in Tanzania.

The Kenyan government argues that Tanzania’s actions undermine the core principles of the EAC Common Market Protocol, particularly Article 13, which specifically allows EAC nationals to establish and operate businesses without facing discriminatory treatment compared to local nationals.

To address the dispute, both countries have scheduled a series of diplomatic meetings. A technical meeting on tobacco trade is set for August 4-5 in Arusha, followed by a Joint Trade Committee session on August 11-12 to discuss taxes, fees, and trade barriers comprehensively.

Kenya has also been working through multilateral channels, participating in the Extra-ordinary Sectoral Council on Finance and Economic Affairs, which has directed the EAC Secretariat to compile a comprehensive list of fees and charges that violate regional trade rules. This report is expected by August 30, 2025.

The dispute reflects broader tensions within the EAC as member states balance domestic economic pressures with regional integration commitments. Tanzania’s move to restrict foreign business participation appears driven by efforts to protect local entrepreneurs and industries, but Kenya argues such measures ultimately harm both economies by reducing competition and investment flows.

Cabinet Secretary Kinyanjui emphasized Kenya’s commitment to dialogue, stating that the country remains hopeful that discussions will restore trust and ensure fair treatment for all EAC nationals conducting business across the region. “We are one people, with one destiny,” he said, reaffirming Kenya’s dedication to the principles of non-discrimination, transparency, and equity that underpin the EAC framework.

The outcome of these diplomatic engagements will be closely watched as a test of the EAC’s ability to resolve trade disputes and maintain momentum toward deeper economic integration. With significant economic interests at stake, both countries face pressure to find a compromise that protects legitimate domestic interests while preserving the benefits of regional cooperation.