On 28 July 2025, the government, through Government Notice No. 487A, banned non-citizens from operating in 15 business sectors deemed entry-level. This decision follows amendments to the Finance Act 2025, which granted the authority for such restrictions. While the move has been applauded domestically, it has faced criticism abroad, particularly from a neighbouring country.
In today’s discussion, I wish to explore the pros and cons of this order.
Let us begin with the advantages. By reserving sectors such as retail trade, mobile money kiosks, phone repairs, salon services, and restaurants, the government aims to empower its citizens by shielding them from foreign competition. Local industry bodies argue that small-scale businesses now have a greater chance of developing from start-ups into scaled enterprises, with reinvestment and job creation remaining in Tanzanian hands.
Another benefit is the retention of economic returns. Foreign-owned microbusinesses often repatriate profits. With Tanzanian citizens in control, profits are more likely to circulate within the local economy – through taxation, domestic consumption, and reinvestment – thus magnifying economic multipliers.
A further advantage is alignment with industrial policy. This directive reinforces the government’s strategy to prioritise citizen-led growth and to encourage formal, large-scale foreign investment through official channels such as the Tanzania Investment and Special Economic Zones Authority (TISEZA, formerly TIC), rather than low-capital foreign ventures into low-margin microenterprises.
On the other hand, there are notable downsides. The move may contravene the EAC Common Market Protocol, which allows citizens of member states the right to establish businesses across borders. Neighbouring countries, especially Kenya, have condemned the move. With approximately 40,000 Kenyans working in Tanzania’s informal economy, the policy risks diplomatic tensions and may provoke reciprocal restrictions.
Several of the prohibited sectors – such as mobile money services, electronics repair, delivery services, and small-scale media – are crucial for the digital economy. Foreign actors often bring technical expertise, capital, and innovation that help to bridge service gaps. Excluding them may slow down modernisation, reduce competition and result in lower service quality.
The policy may also deter foreign entrepreneurs from considering Tanzania, given the sharply limited access unless they invest through formal channels. This introduces uncertainty in business planning and could be perceived as xenophobic – reminiscent of the incidents in South Africa a few years ago, where even Tanzanians operating small businesses became victims.
The government maintains that the Order is necessary to rebalance the economy – to reclaim spaces once dominated by foreigners for local entrepreneurs, foster inclusive local growth, and retain economic value within Tanzanian hands. It does not constitute an outright ban on foreign investment, but rather redirects it towards structured, capital-intensive, and formally regulated avenues.
In conclusion, the directive offers significant opportunities for citizen-driven entrepreneurship and economic inclusion. Nevertheless, the drawbacks are real: Potential harm to regional relations, reduced service quality, curtailed innovation, and investor reluctance. In the long run, success will depend on whether local operators can effectively fill the gap left by foreign businesses – and whether Tanzanians resist the temptation to front businesses on behalf of non-citizens.
