Kenya, July 29 -- Tanzania has enacted a sweeping ban prohibiting non-citizens from operating small businesses, including salons, retail shops, restaurants, tour guiding, and on-farm crop purchasing, under the Business Licensing (Prohibition of Business Activities for Non-Citizens) Order, 2025, issued on July 28.
Announced by Minister for Industry and Trade Dr. Selemani Saidi Jafo, the "Tanzania non-citizen business ban" aims to reserve these sectors for Tanzanian citizens, promoting local entrepreneurship.
Non-citizens with valid licences can operate until expiry, but violators face fines up to TSh 10 million (KSh 502,927), six months' imprisonment, or deportation, igniting concerns among foreign investors and regional neighbours like Kenya.
The directive, published as Government Notice No. 487A, lists 15 restricted business activities, including mobile money transfers, phone repairs, small-scale mining, postal services, and operating museums or curio shops.
Salons are barred unless located in hotels or serving tourism purposes, while retail and wholesale trade is restricted, except for supermarkets and specialized outlets.
On-farm crop purchasing, a key livelihood for cross-border traders, is now exclusive to Tanzanians, impacting Kenyans and Ugandans who dominate informal trade in regions like Arusha.
The move aligns with President Samia Suluhu Hassan's push for citizen-led growth, following policies like the March 2025 ban on foreign currency transactions to stabilize the Tanzanian Shilling (TZS), which traded at TZS 2,692 per USD in May 2024.
Foreign nationals, particularly from East African Community (EAC) countries, are reeling from the restrictions.
"I've run a salon in Dar es Salaam for five years, and now I'm told to shut down when my license expires," said Jane, a Kenyan entrepreneur, to The Citizen.
The policy allows non-citizens with existing licenses to continue until expiry, but new licenses or renewals are prohibited.
Tanzanians aiding foreigners in these businesses face fines of TSh 5 million (KSh 251,463) and three months in jail, raising fears of economic exclusion in a region reliant on cross-border trade.
The Tanzania Revenue Authority reported that small businesses contribute 30% to GDP, yet many are operated by foreigners, prompting this crackdown.
Critics argue the ban could strain EAC relations, given the 2008 Trade and Investment Framework Agreement promoting free trade. Kenya, a key trading partner with $367 million in bilateral trade, may see its 10,000 citizens in Tanzania affected, especially in Arusha's curio shops and restaurants.
On X, reactions are mixed: one user posted, "Tanzania non-citizen business ban protects locals but risks regional trade tensions." Another warned, "This could drive away investors and hurt tourism."
The policy follows Tanzania's 2021 Tourism Act amendment, restricting tour guiding to citizens, and reflects a broader local content push, with the National Economic Empowerment Council (NEEC) overseeing implementation since 2015.
Supporters, including Dar es Salaam's small business owners, praise the move for empowering locals. "Foreigners dominate our markets, leaving us with crumbs," said Amina, a salon owner in Kariakoo.
The government cites job creation, noting Tanzania's 3.2% population growth and youth unemployment crisis.
However, challenges like limited capital access for locals, as highlighted by the Business Registrations and Licensing Agency (BRELA), could hinder Tanzanians from filling the gap.
The Eastleigh Voice reported that similar restrictions in Kenya's informal sector faced backlash for disrupting trade, suggesting Tanzania may encounter enforcement hurdles.
The ban coincides with other economic reforms, including mandatory travel insurance for non-EAC/SADC tourists (KSh 5,700) and stricter work permit rules, allowing up to 10 non-citizens per investor but requiring local skill transfer.
Analysts warn that aggressive policies, coupled with Tanzania's 141st ranking in the 2020 World Bank Ease of Doing Business Report, may deter foreign direct investment (FDI), which reached $1.2 billion in 2023, primarily from China and India.
As Tanzania balances local empowerment with regional integration, the ban's impact on small businesses like salons and restaurants will test its economic strategy ahead of 2027 elections.
Published by HT Digital Content Services with permission from Bana Kenya.