Kenya's appropriate response to President Suluhu's prohibition of international merchants
In a move aimed at fostering economic nationalism and grassroots empowerment, President Samia Suluhu of Tanzania has barred foreigners from operating small and medium-sized businesses within the country. This decision, formalized under Government Notice No. 487A, prohibits foreigners from engaging in 15 key business sectors, including retail and wholesale trade, mobile money services, and small-scale manufacturing.
The rationale for the decision is rooted in economic nationalism, similar to a previous policy led by President Julius Nyerere in the 1960s and 1970s. Proponents argue the move strengthens local economic participation by protecting domestic entrepreneurs from foreign competition in grassroots sectors. It encourages reinvestment of profits within Tanzania, boosting local job creation and tax revenues.
However, the economic consequences of this ban are far-reaching. Economists warn the ban may damage foreign investor confidence temporarily due to concerns about abrupt regulatory changes and increased business risks, possibly reducing some foreign investment inflows. Thousands of foreign-owned small businesses, especially those run by neighbouring nationals often operating informally, face closure or forced asset sales, which would result in immediate loss of income and employment opportunities for some workers.
The decision cuts deeply into the lives of border communities due to shared history, language, customs, bloodlines, and daily trade. Foreigners engaged in SME level trade tend to bring stronger cash flows, capital with higher currency value, and linkages to wider markets. They are seen as a vital part of Tanzanian enterprise, not a threat, and many are long-standing neighbours, trading partners, and extended family to local communities.
The ban has provoked concerns about retaliatory measures from neighbouring countries, which could strain regional cooperation and cross-border economic activities important to the East African Community’s integrated market. Offering incentives for imports from Tanzania's competitors could be seen as payback for the ban, but it may undermine the cohesion of the East African Community.
History shows that Tanzania's economy slowed significantly when it pursued a similar path of economic nationalism, leading to the need to welcome back external capital and cross-border trade in the early 1980s. It is crucial for Tanzania to learn from past experiences and avoid repeating the pain of economic experiments.
As the border communities' economic future depends on openness, not hostility, it is essential for Tanzania to tread carefully. Let Tanzania not repeat the pain of economic experiments past. Let Kenya choose a wiser path. If one member of the EAC begins closing economic doors, others must open windows lest the whole house suffocates. This issue is not just a local issue, but an East African issue.
- The epaper headlines reveal concerns about potential retaliatory measures from neighboring countries, worrying that such moves could strain regional cooperation and cross-border economic activities within the East African Community's integrated market.
- Understanding the impact of economic nationalism on local job creation and tax revenues, proponents argue that the ban on foreigners in small and medium-sized businesses strengthens general-news sector participants by protecting domestic entrepreneurs from foreign competition, particularly in grassroots sectors like retail and wholesale trade.
