Kenya Opts for Diplomacy Over Retaliation in Tanzania Business Permit Dispute

Nairobi, Kenya – August 8, 2025 — Kenya will pursue diplomatic dialogue, not retaliation, in response to Tanzania’s new restrictions barring foreign traders—including Kenyans—from operating in several economic sectors. This was the firm stance taken by Foreign and Diaspora Affairs Cabinet Secretary Musalia Mudavadi, who briefed Parliament’s Defence, Intelligence and Foreign Relations Committee this week.

740+ Kenyan Traders Affected by Tanzania’s New Business Rules

Mudavadi confirmed that over 740 Kenyan entrepreneurs currently operating in Tanzania are facing jeopardy due to recent licensing directives by Tanzanian authorities. These directives prohibit non-citizens from participating in numerous sectors, including:

• Petroleum product supply

• Freight forwarding

• Construction and civil works

• Food processing

• Transport and distribution services

According to Mudavadi, these abrupt restrictions could lead to business losses exceeding KSh 19 million if the diplomatic standoff persists.

“Diplomacy, Not Xenophobia”

The CS urged Parliament to resist calls for retaliatory action, such as imposing reciprocal visa or trade barriers against Tanzanian citizens in Kenya. Instead, he advocated for a measured response anchored in the East African Community (EAC) Common Market Protocol, which guarantees the free movement of goods, labour, and services across member states.

“This issue calls for diplomacy, not xenophobia,” Mudavadi told lawmakers. “The solution lies in constructive engagement, not a tit-for-tat approach.”

He added that treating Tanzanians in Kenya with respect during this sensitive period would demonstrate maturity and a commitment to regional peacebuilding.

EAC Under the Microscope

Signed in 2010, the EAC Common Market Protocol was designed to create a seamless business environment across partner countries. However, analysts say the current dispute exposes persistent regulatory nationalism and non-tariff barriers that threaten the bloc’s unity.

“Despite the protocol, there are gaps in implementation, and this case exemplifies how national protectionism can derail integration,” said Dr. Henry Mwakio, a regional policy expert at the East Africa Policy Forum.

Mudavadi echoed similar concerns, saying Kenya would push for clarity through EAC Secretariat-led consultations and bilateral channels with Dar es Salaam, while protecting Kenyan traders’ interests.

Concerns Raised by Business Groups

Kenyan businesses operating in Tanzania have reported rising licensing fees, mandatory local ownership quotas, and difficult permit renewal procedures, which they say contravene the spirit of the EAC agreement.

“We feel targeted. These rules are changing without notice, and we’re incurring losses,” said James Otieno, a petroleum supplier based in Arusha.

Mudavadi reassured Parliament that he would provide regular updates as talks progress, and that President William Ruto’s administration remains committed to resolving trade tensions without escalating conflict.

Why This Matters

As the situation unfolds, all eyes will be on how both governments balance national interests with the broader vision of an integrated East African economy. For Kenya, this is not just a bilateral challenge—it is a diplomatic stress test of the very principles that underpin the region’s collective future.