Kenya and Tanzania are embroiled in a brewing diplomatic and trade dispute following Tanzania’s decision to amend its Business Licensing Act, a move that could force thousands of Kenyans operating in the country to shut down.

Tanzania’s Trade and Industry Minister Selemani Saidi Jafo announced the amendments on Tuesday, mandating that all small and medium-sized businesses be ceded to Tanzanian natives. This directive affects sectors including retail shops, mobile money transfer services, mobile phone repairs, salons, real estate brokering, and clearing and forwarding services. Additionally, roles such as home managers, curio shop owners, and gambling machine operators are now exclusively reserved for Tanzanians.

Kenya’s Foreign Affairs CS Musalia Mudavadi confirmed that President William Ruto has engaged President Samia Suluhu in diplomatic talks to resolve the matter. “President Ruto has talked with President Samia on how to resolve this matter diplomatically,” said Mudavadi.

However, Trade CS Lee Kinyanjui issued a stern warning, urging Tanzania to withdraw the directive. “On whether Kenya will retaliate… Yes, that is one of the cards on the table, but we first want to exhaust the diplomatic channels,” Kinyanjui stated.

The move has sparked accusations against Tanzania of violating East African Community (EAC) agreements, which promote free trade and open business across member states. With many Kenyans residing and working in Tanzania, the directive is expected to cause widespread disruption.

The situation remains tense as both nations weigh diplomatic and retaliatory options to address the standoff.