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A trade dispute is brewing within the East African Community (EAC) as Kenya has formally lodged a complaint against Tanzania over new business rules that it says are prohibitive to non-locals.
The move, outlined in a letter by Principal Secretary State Department for East Africa Community Affairs Caroline Karugu, to the EAC Secretariat, has been described by Kenya as a significant setback to the unity of the regional trading bloc.
According to the complaint, Tanzania's new regulations violate the EAC's common market protocol, which guarantees the free movement of goods, services, and capital among member states.
The new rules have been criticised for creating significant hurdles for Kenyan traders and businesses operating in Tanzania.
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Principal Secretary, State Department for East Africa Community Affairs Caroline Karugu
In its letter, the government expressed its strong opposition to the measures, emphasising that they undermine the principles of integration and cooperation that form the foundation of the EAC.
The complaint urges the EAC to intervene and ensure that Tanzania complies with its obligations under the treaty.
The East African Community has acknowledged receipt of Kenya's letter and has announced that it has begun a review of the matter.
In a statement, the EAC said it is committed to upholding the Common Market Protocol and will review the compliance of the set protocols by member states.
This is not the first time that trade tensions have flared up between Kenya and Tanzania.
In the past, the two countries have engaged in retaliatory trade restrictions, including the imposition of tariffs and non-tariff barriers, which have hurt businesses on both sides of the border.
The current dispute threatens to further strain relations between the two largest economies in the EAC and could have far-reaching consequences for regional trade and integration.
The business community is watching the situation closely, with many expressing concern that a prolonged dispute could disrupt supply chains and increase the cost of doing business in the region.
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Background of the Ban
Tanzania has implemented a ban on foreign ownership in 15 business sectors, a decision that is expected to hit Kenyan cross-border traders the hardest.
The new regulations restrict foreigners from owning and operating businesses in a wide range of sectors, including retail trade, mobile money services, and tourism.
According to Minister for Industry and Trade, Selemani Saidi Jafo, the ban is aimed at safeguarding opportunities for local entrepreneurs, imposes hefty fines and potential imprisonment for violators.
This ban is seen as a major blow to the principles of the East African Community (EAC) common market, which aims to promote the free movement of goods, services, and capital among member states.
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The list of banned businesses is extensive and covers many of the sectors where Kenyan entrepreneurs have a significant presence in Tanzania. These include:
Retail Trade: This will force the closure of small shops, kiosks, and other retail outlets run by Kenyans, particularly in border towns.
Mobile Money Services: A sector where Kenyan companies have a strong foothold.
Tour Guiding: This will affect Kenyan tour companies that offer cross-border packages.
On-farm Crop Purchasing: This will disrupt the supply chain for agricultural products like maize and bananas, which are often bought directly from Tanzanian farms by Kenyan traders.
Other sectors: The ban also includes businesses such as salons, cleaning services, car hire, and phone repair shops, which are often run by Kenyans in Tanzania.
The ban is expected to have a significant impact on the livelihoods of many Kenyans who have invested in these businesses in Tanzania. It is also likely to lead to supply disruptions and price hikes for certain goods in Kenya.