By Business Insider Reporter
Tanzania’s recent changes to business licensing and taxation laws have drawn strong criticism from Kenya, with concerns that the measures could disrupt regional integration under the East African Community (EAC) and threaten cross-border investments, including those by Tanzanian citizens in neighbouring markets.
Kenya’s Cabinet Secretary for Trade and Industry, Lee Kinyanjui (pictured above), has raised objections to several provisions of Tanzania’s Finance Act 2025, particularly the Business Licensing (Prohibition of Business Activities for Non-Citizens) Order, 2025, which bars foreigners – including EAC nationals – from engaging in 15 categories of business such as micro and small-scale industries.
The Order took effect immediately for new entrants and imposes heavy penalties for non-compliance.
Kinyanjui described the move as one that “criminalises legitimate EAC investments” and undermines the shared goals of the EAC Common Market Protocol (CMP), which guarantees equal treatment for citizens of member states across borders.
“These measures go against Article 13 of the CMP, which permits EAC nationals to establish businesses in any partner state without facing discrimination,” Kinyanjui said in a statement released from Nairobi.
Implications
While the law has sparked concern in Nairobi, it raises broader questions for Tanzania’s business environment and its position as a regional investment hub.
The country has long marketed itself as an open and competitive destination for East African entrepreneurs, and these regulatory shifts could impact perceptions among investors from across the EAC.
Tanzania’s leadership, under President Samia Suluhu Hassan, has in recent years championed investment reforms to improve the business climate, including efforts to digitise licensing systems, streamline approvals, and attract capital. But this has seen proliferation of local businessmen who have engaged in minor activities to the chagrin of local traders.
Therefore, the latest move aim at protecting local traders.
Analysts in Dar es Salaam suggest the policy may be aimed at protecting small-scale Tanzanian entrepreneurs, but without robust mechanisms for exemption or transition, it risks discouraging EAC-based cross-border investment – including from Tanzania into Kenya and vice versa.
Cross-border trade concerns
Kenya remains one of Tanzania’s top trading partners within the EAC.
Intra-EAC trade reached TSh4.5 trillion (approx. KSh297 billion) in 2024, with Tanzania accounting for a significant portion of that figure.
The new rules have reportedly led to a spike in the cost of Kenyan goods in the Tanzanian market, in some cases by as much as 65 percent, reducing their competitiveness.
Kinyanjui noted that Kenya is seeking to resolve the dispute through existing regional mechanisms.
Scheduled discussions include a technical meeting on tobacco trade in Arusha (August 4–5) and a Joint Trade Committee session (August 11–12) focused on tariffs, fees, and levies.
The 1st Extraordinary Sectoral Council on Finance and Economic Affairs (SCFEA) also directed the EAC Secretariat to identify and address all taxes and duties that contravene the EAC Customs Union Protocol by August 30, 2025.
Looking ahead
While the law is rooted in Tanzania’s sovereign right to regulate its economy, regional businesses and investors will be watching closely to see how implementation unfolds. There are growing calls for a more consultative approach that balances national interests with regional commitments under the EAC Common Market Protocol. As Kinyanjui concluded; “Kenya remains committed to the EAC spirit of ‘one people, one destiny,’ and will work with Tanzania to ensure that trade flows are not hindered by regulatory misalignment.”
