Quote from Lawyer on July 31, 2025, 9:49 am

Kenya has announced plans to engage in urgent bilateral talks with Tanzania to address newly imposed trade restrictions that have sparked concerns over their impact on regional integration within the East African Community (EAC). The measures introduced by Tanzania include discriminatory tax policies and a ban on non-citizens operating certain small-scale businesses, which Kenya argues violate key provisions of the EAC Common Market Protocol.

The controversy centers around Tanzania's recent legislative changes, particularly the Finance Act 2025 and amendments to the Excise (Management and Tariff) Act 2019. These laws have introduced new excise duties and an industrial development levy at rates of 10 percent and 15 percent, respectively. Additionally, the Business Licensing (Prohibition of Business Activities for Non-Citizens) Order, 2025, prohibits non-Tanzanians from engaging in 15 specific business sectors, including micro and small enterprises such as mobile money transfers, tour guiding, small-scale mining, and curio shops. While existing license holders are exempt, the order took effect immediately, imposing heavy penalties for violations.

Kenya's Ministry of Investments, Trade, and Industry, led by Cabinet Secretary Lee Kinyanjui, has formally protested these measures, stating they undermine the spirit of regional cooperation and threaten the economic gains achieved through the EAC. The EAC remains Kenya's largest export market, accounting for 28.1 percent of its total exports, valued at approximately 2.3 billion USD in 2024. Tanzania is Kenya's second-largest trading partner within the bloc, with bilateral trade reaching 487 million USD this year.

Kenya has expressed alarm over the potential economic fallout from Tanzania's restrictions. The new policies are seen as a direct challenge to the EAC Common Market Protocol, particularly Article 13, which guarantees EAC nationals the right to establish and operate businesses across member states without discrimination. Kinyanjui emphasized that these measures risk criminalizing lawful investments and could damage the economies of both nations.

Kenyan stakeholders, particularly in the transport and tourism sectors, have voiced strong criticism. Transport operators argue that the restrictions threaten livelihoods and set a dangerous precedent for regional trade. Murang'a Senator Joe Nyutu accused Tanzania of targeting Kenyans specifically, referencing past incidents under former Tanzanian President John Magufuli, such as restrictions on Kenyan cattle exports. Victor Shitakha, chairperson of the Kenya Coast Tourism Association, warned that the directive could strain bilateral relations, potentially alienating EAC member states.

Online discussions among Kenyans have labeled Tanzania's policies as shortsighted and isolationist, arguing that they contradict the principles of free movement of goods, labor, and services upheld by the EAC Treaty and the World Trade Organization. Stakeholders have called on the EAC Secretariat and the East African Legislative Assembly to intervene and ensure the reversal of these measures.

To address the growing tension, Kenya and Tanzania have scheduled a series of bilateral meetings in early August. A technical meeting on tobacco product trade is set for August 4 to 5 in Arusha, followed by a Joint Trade Committee session on levies, fees, and charges from August 11 to 12. Kinyanjui expressed optimism about these engagements, stating that Kenya is committed to resolving the dispute through dialogue grounded in the EAC's foundational principles of non-discrimination, transparency, and equity.

Kenya has urged Tanzania to remove the restrictions and align its policies with the EAC protocol. Kinyanjui stressed the importance of consultation and coordination in implementing policies that affect cross-border trade, emphasizing the shared goal of "one people, one destiny" within the EAC.

The trade dispute comes at a time of heightened focus on regional integration. On July 30, 2025, Kenya and Uganda signed eight memoranda of understanding to boost trade, infrastructure, and tourism, signaling a commitment to stronger EAC collaboration. During a visit by Ugandan President Yoweri Museveni to Nairobi, both nations emphasized the need to resolve non-tariff barriers that hinder small traders and livelihoods. While the Kenya-Tanzania dispute was not directly addressed, the timing underscores the urgency of maintaining open trade channels across the region.

Tanzania's move to restrict non-citizens from certain business activities is framed as an effort to boost local participation and protect economic interests. However, critics argue that it risks destabilizing the EAC's integration agenda, which relies on the free movement of goods, people, services, labor, and capital. The outcome of the upcoming talks will be critical in determining whether the EAC can uphold its commitment to economic unity.

As Kenya prepares for the August meetings, the government remains hopeful that constructive dialogue will lead to a resolution. The EAC's ability to navigate this dispute will test its resilience and commitment to regional cooperation. Stakeholders across Kenya are calling for swift action to prevent further escalation, warning that unchecked restrictions could unravel years of progress in building a cohesive East African market.

Kenya's proactive stance reflects its dedication to fostering a unified EAC, where mutual support and shared economic goals drive prosperity. The nation awaits the outcome of the talks, hopeful that Tanzania will reconsider its policies to preserve the spirit of regional integration.