Protective Levies Emerge Across the Region

A wave of new domestic taxes and non-tariff barriers (NTBs) introduced by several member states in 2025 is creating significant hurdles for regional trade within the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA). Businesses and trade bodies have cited these measures as discriminatory policies designed to protect local markets, directly challenging the foundational principles of the economic blocs' common market protocols.

In a move that sparked significant regional concern, Tanzania enacted its Finance Act 2025, which introduced an industrial development levy of 15% and new excise duties of 10% on various goods. According to the Kenya Association of Manufacturers (KAM), these measures specifically targeted key Kenyan exports. Compounding the issue, on July 28, 2025, Dar es Salaam gazetted a 'Business Licensing (Prohibition of Business Activities for Non-Citizens) Order, 2025,' barring foreigners from 15 sectors, including small-scale retail and mobile money services.

Uganda also adjusted its fiscal policy with the Tax Amendment Acts of 2025, which took effect on July 1, 2025. A key measure was the introduction of a 1.5% infrastructure levy on all goods imported for home use. However, in a crucial clarification for regional trade, the Ugandan government specified that this levy does not apply to goods originating from EAC partner states, exempting them under the EAC Customs Management Act.

Similarly, Rwanda's 2025/2026 budget included several adjustments to its customs duties, diverging from the EAC's Common External Tariff (CET). The Rwandan government has defended these changes, which include reducing duties on items like rice and sugar while increasing them on others like used clothing, as a legal and necessary strategy to protect local industries and manage the cost of living. Officials from the Rwanda Revenue Authority clarified that these adjustments are made under the EAC's 'stay of application' provisions, which allow member states flexibility.

The Impact on Kenyan Businesses and Regional Trade

The imposition of these barriers has had a tangible impact on regional commerce, which remains stubbornly low. Intra-EAC trade has stagnated at approximately 15% of the total trade volume, a figure the EAC Secretariat attributes largely to the proliferation of NTBs. A report discussed by the EAC Council of Ministers in mid-2025 noted a sharp increase in NTBs, from 10 in November 2024 to 48 by May 2025, affecting goods like milk, sugar, cement, and beer.

For Kenya, the EAC remains its most significant export market. The measures imposed by Tanzania, its second-largest trading partner in the bloc, were particularly concerning. The Kenya National Bureau of Statistics (KNBS) data for the first quarter of 2025, ending March 31, 2025, showed Kenya's trade volume with the EAC at KSh 101.2 billion. Data for the second quarter, ending June 30, 2025, showed total exports at KSh 280 billion, though specific breakdowns reflecting the initial impact of the new taxes are not yet fully analyzed.

Beyond the EAC, similar challenges persist within the wider COMESA bloc. In June 2025, Zambia and Zimbabwe initiated high-level talks to address NTBs, including surtaxes, that have hindered trade between them. In a more protectionist move, Malawi announced a ban on the importation of a range of products on March 14, 2025, including fresh milk, fruits, and vegetables, in an effort to preserve foreign exchange reserves.

Diplomacy Yields Progress, But Challenges Remain

In response to the escalating trade tensions, diplomatic efforts have been underway. Kenya formally protested Tanzania's measures, citing violations of the EAC Common Market Protocol, which guarantees the right of establishment and non-discriminatory treatment for citizens of member states. The EAC Secretariat, led by Secretary-General Veronica Nduva, issued a formal warning to partner states against unilaterally backtracking on regional commitments.

These diplomatic pressures yielded a significant breakthrough. Following a Ninth Meeting of the Joint Trade Committee (JTC) in Dar es Salaam, it was announced on Friday, October 3, 2025, that Tanzania had officially exempted Kenyan business owners from the controversial business ban. Dr. Hashil Abdallah, Permanent Secretary in Tanzania's Ministry of Industry and Trade, confirmed that four outstanding NTBs had been resolved, including the removal of excise duties on Tanzanian beer exported to Kenya. Officials from both nations committed to resolving the 10 remaining barriers by March 31, 2026.

While the resolution of the business ban is a major step forward, the status of the 15% industrial development levy and 10% excise duties from Tanzania's Finance Act 2025 on goods entering from Kenya remains a subject for the ongoing bilateral negotiations. The East African Business Council (EABC) continues to advocate for the complete harmonization of domestic taxes and the uniform application of the EAC's Common External Tariff to remove such barriers permanently. As member states navigate the balance between national economic interests and regional integration commitments, the resilience of the EAC and COMESA frameworks continues to be tested.