Tanzania ban on foreign small businesses rattles EAC

Zawya

30-07-2025

Tanzania's recent decision to reserve small businesses for its citizens is creating a storm, threatening to become a new non-tariff barrier to free trade within the East African Community (EAC).
This move challenges the traditional free movement of citizens across borders to establish small enterprises like salons, mobile money services, phone repair shops, and tour guiding, provided they hold the relevant licences.
But, under pressure to create economic opportunities for its nearly 60 million people, Tanzania has now prohibited foreigners from operating these businesses.
According to the Ministry of Trade and Industry, this policy is part of a broader government strategy to promote citizen-led growth, expand economic opportunities for Tanzanians and reshape the structure of local business ownership.
However, the move risks disrupting EAC commerce and could prompt affected countries to retaliate with similar bans on Tanzanian citizens.
sector.
'Since 2020, there has been a problem in moving Kenyan tour vehicles to Tanzania and the latest was the neighbouring country attempting to ban Kenya Airways from operating in their country. This week's notice is against the EAC protocol which allows free movement of people and cargo in the region,' he said.
He urged both nations to 'resolve the crisis since animals have no boundaries.'
That MoU aimed to improve cross-border trade and facilitate resource sharing by removing immigration bottlenecks, following previous bans on each other's tour guides and flight suspensions, which were later reversed.
Dr Sam Ikwaye, Executive Officer of the Kenya Association of Hotel Keepers and Caterers (KAHC), emphasised the importance of integration. 'We are waiting if Kenya might be given special treatment in this notice considering a number of MoUs we have with Tanzania,' he noted.
Kenya has yet to issue an official response to the directive from Tanzania, which lists several businesses now exclusive to Tanzanian citizens, including small mining ventures and real estate.
Sweeping prohibitionsIn the circular, Government Notice No. 487A, dated July 28, 2025 - Business Licensing (Prohibition of Business Activities for Non-Citizens) Order, 2025 - Industry and Trade Minister Selemani Saidi Jafo, prohibits foreigners from participating in 15 specific business activities, encompassing general trade, service provision, media, tourism and light industry. Farmers are also barred from selling their produce directly to foreigners at the farm.'Upon coming into effect of this order, licensing authorities shall not issue or renew a licence for a non-citizen to carry out any of the business activities prohibited under this order,' Mr Jafo declared. Non-citizens with existing valid licences, however, may continue operations until their permits expire.
The prohibition follows complaints from some Tanzanians that foreigners, including Chinese nationals, were operating businesses that should be reserved for locals, such as retail at the country's largest Kariakoo market in the commercial hub of Dar es Salaam.
Tanzania now joins other African nations such as South Africa, Zimbabwe, Ghana, Nigeria, eSwatini, Zambia and Botswana in ring-fencing certain economic activities for their nationals.
Currency controlThe new trade restrictions are not an isolated incident. In May, Tanzania banned the use of foreign currencies for local transactions, mandating that all goods and services be priced and paid for in Tanzanian shillings and contracts signed in foreign currencies be amended within one year.'It is an offence to quote, advertise or indicate prices in foreign currency; to compel, facilitate or accept payment in foreign currency; or to refuse payment in Tanzanian shillings,' the Bank of Tanzania stated.
The central bank urged citizens to report violations, aiming to promote local currency use and stabilise the economy.
Specifics of the banThe new rules specify that salons can only be run by foreigners if they are part of hotel premises or tourism sites. Foreigners are also barred from operating mobile money transfer shops, mobile phone repair, or any other retail outlet, unless the business is a supermarket or a wholesale centre serving local producers.
Violators face fines of up to Tsh10 million ($3,898), imprisonment for up to six months, or both, with potential revocation of residence permits and visas.
Tanzanian citizens assisting foreigners in these prohibited activities could face a Tsh5 million ($1949) fine or a three-month jail term.
The government has further restricted foreigners from offering domestic, office, and environmental cleaning services, small-scale mining operations, and postal and local parcel delivery services.
In tourism, tour guiding is now exclusive to Tanzanian nationals, as is the establishment or operation of radio or television stations, museums and curio shops.
The order also targets intermediary services and light industry, prohibiting foreigners from acting as brokers or agents in business and real estate transactions, engaging in clearing and forwarding services, or purchasing crops directly from farms.
Gambling operations outside licensed casino premises and the ownership/operation of micro and small industries are also off-limits to non-citizens.
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