Tanzania issues the Business Licensing (Prohibition of

**HEADLINE:** Tanzania Business Licensing Order 2025: What Foreign Investors Need to Know

**META_DESCRIPTION:** Tanzania's new Business Licensing Order restricts non-citizen business activities. Here's what foreign investors should do now.

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## ARTICLE

Tanzania has formally issued the Business Licensing (Prohibition of Business Activities for Non-Citizens) Order, 2025, a landmark regulatory shift that fundamentally reshapes the operating environment for foreign entrepreneurs and multinational enterprises across the East African nation. This executive order, drafted by the Tanzania Revenue Authority and supported by legal counsel at Dentons, marks an intensification of localization policies that prioritize Tanzanian nationals in key sectors and business ownership structures.

The new order introduces sweeping restrictions on non-citizen participation in specified business activities, requiring foreign investors to demonstrate clear local partnership, ownership thresholds, or operational licenses tied to Tanzanian nationals. While the government frames this as a measure to "protect domestic business interests" and "build local entrepreneurship," the directive carries significant implications for foreign direct investment (FDI) inflows, regional supply chains, and multinational operations already embedded in Tanzania's economy.

## What sectors are affected most heavily?

Retail trade, hospitality management, transportation services, and small-to-medium enterprise (SME) sectors face the strictest prohibitions. The order targets non-citizen sole proprietors and businesses where foreign nationals hold majority shareholding without substantial local partnership or board representation. However, sectors including manufacturing, extractive industries (mining), and technology services—critical to Tanzania's development agenda—retain more flexible pathways for foreign investment, provided they meet localization requirements such as technology transfer, local staff training, or joint venture structures.

## How does this compare to regional precedent?

Tanzania's approach mirrors similar protectionist policies implemented across East Africa. Kenya's Foreign Investment Protection Act includes sectoral restrictions on non-citizens, while Uganda has enforced localization mandates in retail and hospitality. Rwanda, by contrast, has maintained investor-friendly policies to attract FDI. Tanzania's 2025 order represents a deliberate policy choice to tighten rather than liberalize—a reversal of the 2010s trend toward ease-of-doing-business reforms.

## What are the immediate business implications?

Foreign investors with existing operations in prohibited sectors must restructure ownership or partnership agreements within a transition period (likely 6–12 months, pending clarification from Tanzania's Business Registrations and Licensing Agency). Multinational corporations with subsidiary operations in retail or hospitality face potential license revocation unless they establish majority Tanzanian ownership or appoint Tanzanian nationals to executive roles. This creates operational uncertainty and could trigger capital flight from lower-margin service sectors.

However, the order also reflects Tanzania's fiscal pressures and rising unemployment, particularly among youth. By reserving certain business activities for citizens, policymakers aim to redirect entrepreneurial capital and employment toward Tanzanians—a politically popular move ahead of 2025 elections, even if it dampens aggregate FDI.

## What about existing foreign investors?

The government has signaled that large-scale foreign investors (manufacturing, mining, energy) with established operations will face review on a case-by-case basis rather than blanket prohibition. This creates a two-tier system: high-value FDI remains welcome; low-margin foreign retail and service operations are progressively discouraged. Investors should prepare detailed compliance audits and engage with sector regulators immediately to clarify their licensing status and required modifications.

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