(DODOMA) – Tanzania’s new decision to restrict foreigners from operating in 15 designated business sectors has triggered concern across the East African Community (EAC), with observers warning it could weaken the region’s economic integration and impact nationals from member states.
On 29 July, Tanzania’s Minister of Industry and Trade, Selemani Saidi Jafo, announced that foreigners are now prohibited from engaging in a range of small and medium sized businesses. These include operating hair salons, offering mobile money services, conducting phone repairs, tour guiding, running small scale media businesses, and participating in light manufacturing industries. The new rules are contained in the “Business Licensing (Prohibition of Business Activities for Non-Citizens) Order, 2025.”
Foreigners found breaching the new order face fines of up to 10 million Tanzanian shillings, equivalent to about $4,000 or 18.4 million South Sudanese Pounds (SSP), using the July 2025 exchange rate of $1 = 4,600 SSP. They could also face up to six months in prison. Tanzanian citizens who facilitate such prohibited activities for foreigners could also be penalised, though with lighter consequences. Businesses already operating under valid licences will be allowed to continue until their licences expire.
Tanzania has defended the move as a way to protect its local entrepreneurs from growing foreign competition in small scale businesses. However, the announcement has prompted widespread debate over its implications for the EAC’s common market, especially as South Sudanese, Kenyan, and Rwandan nationals are among those working in Tanzania’s informal economy.
The EAC, which includes South Sudan, Kenya, Uganda, Tanzania, Rwanda, Burundi, and the Democratic Republic of Congo, was established in 1999 with the goal of building a unified regional economy. Through treaties, a customs union in 2005, and a common market agreement in 2010, the bloc seeks to promote the free movement of goods, services, capital, and people.
The new Tanzanian order appears to contradict the EAC’s principle of non discrimination based on nationality. The East African common market legally guarantees the right of service provision across borders. Commenting on social media, The East African questioned whether Tanzania was “building walls within the EAC,” signalling how the policy risks straining the bloc’s commitment to regional unity.
South Sudan, which joined the EAC in 2016, has continued to rely heavily on access to regional trade and employment opportunities for its citizens. Many South Sudanese small business owners, especially those living in refugee or border communities, often seek livelihoods in countries like Uganda, Kenya, and Tanzania. Restrictions such as these could directly affect South Sudanese nationals who may already be working or hoping to start businesses in Tanzania.
Regional analysts argue that while Tanzania’s desire to protect local industries is understandable, unilateral restrictions such as these undermine the broader goal of regional economic integration. They note that the EAC’s common market has not been fully implemented, and divergent national policies continue to delay progress.
Past examples, such as Tanzania’s currency control regulations in 2022 and earlier this year, have raised similar concerns. Critics say that these measures send mixed signals to investors and weaken trust among partner states. At a time when the EAC is seeking to attract international capital and position itself as a competitive bloc against larger regional groupings like the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA), internal restrictions could reduce confidence and investment.
Although the Tanzanian government has yet to provide a detailed justification for the move, it is widely seen as a response to rising domestic economic pressures and demands to support local entrepreneurship. The policy has not yet been formally debated in the Council of Ministers or the East African Legislative Assembly, but discussions are likely to follow.
Recent data from the EAC Secretariat shows that intra-regional trade currently accounts for about 20 percent of the region’s total trade volume. Foreign direct investment within the region has also been on the rise, further highlighting the economic cost of such trade restrictions. A report by the European Centre for Development Policy Management recently noted that full implementation of the EAC’s common market could significantly increase trade and investment flows, particularly for landlocked states like South Sudan.
Observers say the move risks deepening policy divisions within the EAC and could set a precedent for other countries to introduce similar restrictions, reversing years of effort to build a shared regional economy.
The annual EAC Summit of Heads of State has repeatedly pledged to accelerate integration through a proposed monetary union and, eventually, a political federation. However, the Tanzanian decision reflects ongoing tension between national interests and regional goals.
For South Sudan, the immediate concern is how such restrictions will affect its citizens abroad and whether its own participation in regional commerce will be affected. With limited employment opportunities at home and growing numbers of young people entering the job market, cross border economic inclusion remains a key lifeline.
Regional leaders and institutions are expected to push for dialogue and possible policy reviews to ensure that national laws remain aligned with EAC commitments. For now, the bloc’s ambition of seamless economic unity appears to be facing another serious test.
Penalties Under Tanzania’s New Business Order (2025)
| Category | Penalty Imposed |
|---|---|
| Foreign national running prohibited business | Fine: TZS 10 million = USD 4,000 = SSP 18.4 million |
| Jail term for foreign violators | Up to 6 months |
| Penalty for Tanzanians aiding foreigners | Similar penalties, with reduced severity |
| Transitional provision | Existing licences valid until expiry |