Tanzania’s Decision on Foreign Business Activities Raises Concerns Within the EAC
By Defraise Enosh MUHINDO
The East African Community (EAC), a regional bloc committed to enhancing economic integration and cooperation among its members, faces a new challenge with a recent decision by the Tanzanian government. According to an announcement attributed to the Minister of Industry and Trade, Selemani Saidi Jafo, Tanzania has banned foreigners from engaging in 15 specific business activities, including hair salons, mobile money transfer services, phone repairs, tour guiding, media, and light industries. This measure, which entered public discourse on Tuesday, July 29, raises questions about its potential impact on the integration goals promoted by the EAC.
Established in 1999 by Kenya, Tanzania, and Uganda, the EAC has expanded to include Rwanda, Burundi, and South Sudan, with a vision to foster regional trade, the free movement of goods, services, and people, and cross-border investment. The EAC Treaty, signed in 1999 and reinforced by the creation of a customs union in 2005 and a common market in 2010, emphasizes the removal of economic barriers to stimulate collective growth. Recent data indicates that intra-EAC trade has increased significantly, accounting for approximately 20% of the region’s total trade, while intra-regional foreign direct investments (FDI) have also risen.
The annual Summit of Heads of State, which guides the EAC’s strategy, has repeatedly reaffirmed its commitment to deep economic integration, with ongoing negotiations for a monetary union. Initiatives like the one-stop border posts, such as the one inaugurated at Moyale in 2020 by Ethiopian Prime Minister Abiy Ahmed, illustrate efforts to harmonize policies and unlock the region’s economic potential.
The new Tanzanian policy, detailed in the ordinance titled Business Licensing (Prohibition of Business Activities for Non-Citizens) Order, 2025, appears aimed at protecting local small businesses. Foreign offenders risk fines of up to 10 million TZS (approximately 4,000 USD) and six months in prison, while Tanzanians facilitating such activities face similar but lighter penalties. A transitional period allows existing licenses to remain valid until their expiration, according to reports from national medias.
However, this measure has sparked concerns, with The East African questioning on social media: “Is Tanzania building walls within the EAC?” This restriction could affect nationals from other member states, particularly Kenya, where many entrepreneurs operate in these sectors in Tanzania. It appears to conflict with the principles of the common market, which guarantees the free provision of services and non-discrimination based on nationality.
Analysts suggest that this decision could undermine economic collaboration within the EAC. The common market, though ratified, has yet to be fully implemented, and challenges such as differing national policies persist, as noted in a recent ECDPM report. The Tanzanian ban risks exacerbating these divergences, potentially reducing cross-border trade flows and investments, which have been a key driver of growth in the region.
Moreover, this measure comes at a time when the EAC seeks to attract foreign investors and strengthen its integration in the face of competing economic blocs like the SADC and COMESA. Similar restrictions, such as Tanzania’s currency regulations imposed in 2022 and 2025, had previously sparked debates about their compatibility with EAC commitments. While protecting local businesses is a legitimate priority, a unilateral approach could complicate ongoing negotiations, particularly those on a monetary union.
As of now, no official response from other EAC members has been reported, but discussions within the Council of Ministers or the East African Legislative Assembly may emerge in the coming days. Minister Jafo has not yet publicly detailed the exact motivations behind this policy, though sources suggest it responds to internal economic pressures.
As the EAC continues to promote a vision of economic unity, this Tanzanian decision poses a significant challenge. Observers await clarifications from the Tanzanian government and potential reconciliation measures to preserve the spirit of regional cooperation. For now, the balance between national sovereignty and integration remains a central issue for the EAC’s future.
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