Practical Implications of the Business Licensing (Prohibition of Business Activities for Non-Citizens) Order of 2025

On 28 July 2025, the Government of Tanzania published Government Notice No. 487A, introducing the Business Licensing (Prohibition of Business Activities for Non-Citizens) Order, 2025 (the Business Licensing Order).

This legislation follows recent amendments to the Business Licensing Act Cap 101 R.E. 2023 (the Business Act) introduced through the Finance Act, 2025, which granted powers to the Ministry of Industry and Trade (MIT) to designate specific business activities that may not be carried out by non-citizens. The Business Licensing Order marks a significant policy shift in the regulation of business activities in Tanzania, specifically aimed at reserving certain economic sectors for Tanzanian citizens. 

In this month’s legal update, we examine the legal and practical implications of the Business Licensing Order.

Legal Framework

The Business Licensing Order defines a “non-citizen” by reference to the Tanzania Citizenship Act, Cap. 357 R.E. 2023 (the Citizenship Act). The Citizenship Act does not define a non-citizen but rather provides definitions for the following categories of citizens:

“Citizen by birth” includes:

• a person born in the Republic of Tanganyika or People’s Republic of Zanzibar before Union Day, who was a citizen of either republic immediately before Union Day;
• a person born in the United Republic of Tanzania (URT) on or after Union Day, at least one (1) of whose parents is a Tanzanian citizen; and
• a person born in the URT on or after Union Day, provided that at least one (1) parent is or was a Tanzanian citizen at the time of birth; and excludes a person whose parents were non-citizens where the father had diplomatic immunity or where a parent was an enemy in an area under enemy occupation at the time of birth.

“Citizen by descent” includes:

• a person born outside the URT on or after Union Day, who is deemed a citizen of the URT if, at the time of birth, either parent was a citizen of the URT otherwise than by descent;
• a person born outside both Mainland Tanzania and Zanzibar before Union Day, who was immediately before Union Day a citizen by descent of the Republic of Tanganyika or the People’s Republic of Zanzibar, and who shall be deemed to have become, and continued to be, a citizen by descent of the URT from Union Day; and
• a person who is a citizen by virtue of the combined effect of his being a Zanzibar subject by descent in accordance with the former law of Tanzania Zanzibar, and had that law remained in force until immediately before Union Day.

“Citizen by naturalisation” means a person who acquires citizenship by virtue of an application made to the Minister of Home Affairs and has been granted a certificate of naturalisation.

Based on the above definitions, an individual who does not fall within any of the above categories would be regarded as a non-citizen by virtue of the Citizenship Act.

Prohibited Activities

Clause 3 of the Order provides a list of business activities which non-citizens are prohibited from undertaking. Furthermore, the MIT, being the licensing authority, is prohibited from issuing a business licence or renewing a business licence for a non-citizen to carry out the prohibited activities. We should flag that this provision applies prospectively, subject to a transitional clause permitting existing non-citizen licensees to continue operations until their current licences expire.

The following are specific business activities which non-citizens are prohibited from undertaking under the Business Licensing Order:

• retail and wholesale trade (excluding supermarkets and specialised product outlets);
• mobile money transfers;
• mobile phones and electronic devices repair services;
• salon business, unless the business is conducted in a hotel or for tourism purposes;
• home, office and environmental cleaning services;
• small-scale mining;
• postal activities and parcel delivery within the country;
• tour guiding within the country;
• establishment and operation of radio and television;
• operation of museums and curio shops;
• brokerage or agency in businesses and real estate;
• clearing & forwarding services;
• on-farm crop purchasing operations;
• ownership or operation of gambling machines or devices, except within casino premises; and
• ownership and operation of micro and small-scale industries.

Criminal Sanctions and Liability

Clause 3(3) of the Business Licensing Order introduces firm penalties to ensure compliance with its provisions. Upon conviction, non-citizens who engage in prohibited business activities shall be liable to a fine of not less than TZS 10,000,000 (approximately USD 3,940). In some instances, imprisonment for a term not exceeding six (6) months, and cancellation of the visa and residence permit of the relevant non-citizens, may be imposed.

On the other hand, Tanzanian citizens who assist or aid non-citizens to carry out prohibited activities, upon conviction, may be liable to a fine of TZS 5,000,000 (approximately USD 1,970) or imprisonment for a term not exceeding three (3) months. These sanctions reflect a firm position by the Government of Tanzania to curb circumvention through proxy arrangements and ensure that reserved business activities remain exclusively accessible to Tanzanian citizens.

Practical Implication

A strict interpretation of the Business Licensing Order suggests that its provisions only apply to natural persons and not companies. As such, in theory, this restriction would only apply to sole-proprietors, while foreign-owned companies may continue undertaking the activities listed as prohibited.

However, from a practical standpoint, regulatory practice in Tanzania typically treats companies owned or controlled by non-citizens as falling within the scope of restrictions imposed on natural non-citizens, particularly in the context of business licensing. Therefore, there is a risk that the licensing authority might take a view that majorly foreign owned companies are also subject to the restrictions set out in the Business Licensing Order. Given that the Business Licensing Order is a very recent piece of legislation, we presume that the relevant Ministry will issue guidelines to supplement its provisions with regards to its applicability.

Conclusion

The Business Licensing Order represents a decisive move towards economic indigenisation in Tanzania. While it aligns with policy objectives of empowering local entrepreneurs, it introduces complex legal, regulatory, and investment-related challenges. We are happy to advise foreign companies and sole proprietors on ways to navigate the current regime and ensure compliance with the legal requirements.