Samia draws praise and criticism over new trade rules

By Newsflash Team

Tanzania has sparked a regional uproar this week with a set of trade policies perceived to clash with East African Community (EAC) principles and threaten regional integration.

The controversy erupted on July 28 when Tanzania’s Ministry of Trade released a Special Supplement effectively banning foreigners from operating in 15 categories of “small” businesses. This coincided with the rollout of the country’s new Finance Act, which introduced contentious tariffs on goods imported from fellow EAC member states.

While the policy applies to all foreign nationals, Kenyan traders have been the most vocal in their protests, arguing that the Business Licensing Order will disproportionately harm their ventures—especially in tourism. Tanzania’s Minister for Industry and Trade, Selemani Jafo, specified the affected sectors, which include small-scale retail, hairdressing, tour guiding, and artisanal mining, now reserved exclusively for Tanzanians.

The directive flies in the face of the EAC’s core tenets of free movement of goods, services, labour, and capital. Kenyan business leaders argue the move constitutes yet another non-tariff barrier, contradicting the Common Market Protocol (CMP) ratified in 2010. That agreement allows EAC citizens to move freely and engage in both skilled and unskilled trade activities within the bloc.

Yet, Tanzania’s latest policy explicitly bars foreigners from participating in businesses like mobile money operations, phone repair, salons, and guiding tourists. The administration of President Samia Suluhu Hassan, under pressure to create local job opportunities ahead of the October 28 general election, is presenting this as an economic inclusion strategy for the country’s nearly 60 million citizens. According to the Trade Ministry, the directive is part of a wider effort to empower Tanzanian entrepreneurs and promote citizen-led growth.

A brewing diplomatic and economic storm

The policy shift, however, threatens to trigger retaliatory actions from other EAC member states—Kenya, Uganda, Rwanda, Burundi, South Sudan, Somalia, and the Democratic Republic of Congo. In tandem, Tanzania’s Finance Act 2025 introduces an industrial development levy on imports, which affects a variety of goods including alcoholic beverages, energy drinks, detergents, and clinker. This tariff contradicts the EAC Customs Union rules that exempt intra-bloc goods from duty.

Defending the policies, Mr. Jafo said Tanzania had encountered challenges with foreigners engaging in businesses they weren’t legally allowed to operate. He explained that President Samia directed the ministry to identify and restrict certain business sectors exclusively to citizens. “We created a team of experts who reviewed business categories and recommended exclusions. The new budget reflects these changes,” Jafo said.

The directive has sparked mixed reactions—ranging from backlash in Kenya to praise among Tanzanian entrepreneurs. In Nairobi, Prime Cabinet Secretary and Foreign Affairs Minister Musalia Mudavadi said President William Ruto and President Samia are already in dialogue over the matter, which could affect the livelihoods of approximately 250,000 Kenyans residing in Tanzania. Trade Minister Lee Kinyanjui has called the new measures discriminatory, warning that they jeopardize investments made under EAC agreements. “The Business Licensing Order seems to nullify legitimate regional investments and will damage both Kenyan and Tanzanian economies,” he said in a statement. Although Kenya is not currently considering tit-for-tat measures, Kinyanjui cautioned that they may be explored if Dodoma doesn’t reverse its stance.

Regional pressure builds amid local popularity

Kenya’s government is preparing for high-level engagements to address the escalating dispute. A Joint Trade Committee is scheduled to meet on August 11 and 12 to deliberate on the new levies and fees. Meanwhile, EAC Principal Secretary Caroline Karugu confirmed that Nairobi has formally written to the EAC Secretariat urging Tanzania to review the controversial order. “The directive poses a serious threat to regional economic integration and contradicts the spirit of the EAC,” Karugu noted.

EAC Secretary-General Veronica Nduva also weighed in, emphasizing the need for compliance with the Common Market Protocol. She said unilateral actions that restrict previously liberalized sectors violate EAC commitments, and reminded member states that such moves had been condemned during the Sectoral Council on Legal and Judicial Matters in November 2024.

The Secretariat is now auditing the degree of adherence to EAC obligations and will present its findings at the upcoming Trade, Industry, Finance, and Investment council meeting.

Still, enforcement of EAC decisions remains a chronic challenge, and observers doubt Tanzania will heed the warnings. With President Samia seeking re-election and the policy enjoying local support, analysts say reversing the directive could cost her political capital. In Kariokor Market, Dar es Salaam—home to a mix of Kenyan, Zambian, and Chinese traders—many believe Kenyans are the main targets of the new restrictions. Tanzanian business owners, on the other hand, have welcomed the directive, hoping it will finally level the playing field in the country’s informal sector.