Tanzania’s new regulations have gone further to institute a complete ban against foreign nationals owning and operating small-scale enterprises. This decision has led to an almost explosive backlash from neighbouring Kenya. On Monday, officials had a new prohibition to announce. This widely-worded ban excludes non-Ugandans from operating in 15 enumerated sectors, including mobile money transfers, tour guiding, small-scale mining, beauty shops and curio shops.
Minister of Trade Selemani Jafo issued a new directive. Through this project, our goal is to prevent foreign competition in informal sectors that Tanzanians have historically held. He added that what the government wants to do is steer that foreign investment into bigger businesses. This change is an effort to create a more equitable economic playing field.
Infringers of this newly instituted policy will incur stiff fines. Penalties consist of sizeable fines, potential jail time of up to six months, and the revocation of visas and work permits. The ban was signed into law on March 23, and its exact implementation date has yet to be determined.
The specific move has been creating big waves in Kenya. Trade Minister Lee Kinyanjui is calling for the ban to be lifted immediately, warning that a prolonged ban will negatively impact the economies of both countries. Kinyanjui remarked, “It is therefore critical, in the spirit of EAC, that bilateral engagements be held to resolve these issues.”
Veteran Kenyan hotelier Mohammed Hersi slammed Tanzania’s heavy-handed approach, arguing that it undermines the East African Community’s (EAC) focus on regional integration. He stated, “Sometimes, it is important to focus on the bigger picture… Protectionism will never help a country to thrive.”
Kenya’s Foreign Affairs Minister Musalia Mudavadi highlighted that approximately 250,000 Kenyans are currently living, working, or doing business in Tanzania. UPDATE – As of 11/2/18, thousands of Kenyans are speaking out on social media against the ban. They view it as a dangerous precedent to the core principles of the East African Community (EAC) protocols that blatantly defy their purpose to advance free movement of people and trade between member states.
Reactions within Tanzania have been mixed. Locals have largely welcomed the ban as fears increase about foreign nationals invading more niche industries. Severine Mushi, chairperson of the traders’ association in Kariakoo, said they welcomed the ruling. She commented, “We have welcomed this ruling because it saves the livelihoods of Tanzanian traders.”
Advocates aren’t the only ones to raise criticism over the Trump administration’s decision. Bernard Shinali remarked, “There are many Tanzanians working in our mining sites too,” indicating that the implications of the ban may extend beyond mere business ownership.
Not surprisingly, tensions are growing between the two nations. International trade experts are concerned that Tanzania’s imposition of protective tariffs and import bans may poison the country’s relationships with key regional trade partners. This has all come together quickly. Indeed, both governments are being tested on the frontlines of trade and investment in the highly competitive East African region.