Pfizer
JF-Expert Member
- Mar 25, 2021
- 786
- 1,067
By Dr Kirimi Wanjagi
Recent disruptions at the Kenya–Tanzania border, where trucks have been forced to idle for hours amid political tensions, have revived a familiar concern within the business community: East African trade is far more fragile than it looks.
This comes only months after Tanzania’s Finance Act introduced excise duty on imports from fellow EAC member states, a move many initially viewed as a routine fiscal adjustment. After all, tax shifts are a normal part of national budget cycles.
Yet beneath this policy lies a much larger question: How firm are the foundations of East African integration? And is the EAC’s long-promised vision of seamless trade truly secure?
As the Kenya Association of Manufacturers has cautioned before, “when one East African country is burning, then it affects every one of us.” That is the deeper issue now coming to the surface.
The EAC promise has always been based on two foundations: free movement of goods, services, and persons; and non-discrimination. These two principles, which have been enshrined in the Treaty and anchored by the Customs Union and Common Market Protocols, are what make the notion of a single market meaningful. When one partner state places barriers which weigh the scale in favor of its nationals, then the integrity of such a promise begins to break down.
It is not the first time the issue has come about. Back in 2020, Kenya imposed a 25% excise tax on imported glass bottles. This led to a court challenge by Kioo Limited, a Tanzanian company, against the Government of Kenya (Kioo vs Attorney General of the Republic of Kenya 2020). Kioo, a Tanzanian glass manufacturer, challenged Kenya's imposition of a 25% excise duty on imported glass bottles. Kioo argued this tax violated the EAC Treaty, Customs Union Protocol, and Common Market Protocol by discriminating against products from partner states in favour of Kenyan-manufactured goods. The EACJ granted an interim order halting the tax, finding the case raised serious issues of irreparable harm and a potential violation of regional trade laws.
The ruling was historic. In standing firm as it did, the Court demonstrated that it would safeguard the sanctity of the common market and reinforce the primacy of regional law over harmful national actions. It sent the unmistakable message that national finance ministers cannot frame budgets in a manner that frustrates regional obligations.
Fast forward to 2025, and the parallels are not hard to identify. Tanzania's new excise duty shares the same discriminatory impact of Kenya's levy five years ago: it discriminates against a partner state's goods. In law, it is hard to reconcile with Article 75 of the Customs Union Protocol, which prohibits discrimination in taxation, or with Articles 6(d) and 7(2) of the EAC Treaty, which enshrine the equality and non-discrimination principles. It also violates Article 15 of the Common Market Protocol that assures free movement of goods under equal treatment. In summary, Tanzania risks nullifying the same regulations it helped to design and ratify.
If affected businesses take the case to the EACJ, the Court will almost certainly have the authority to hear it and based on past practice, is likely to act. The Court can stop illegal acts prior to irreparable harm being done to businesses and supply chains.
For entrepreneurs and investors, this judicial protection is priceless. Integration becomes a reality instead of electioneering propaganda, a system of rules underpinned by enforceable law.
But more than the settlement of disputes is at risk. The ultimate risk is Trust, the hidden infrastructure without which integration cannot occur. Firms will invest abroad only if they have confidence in safe rules. Citizens will embrace the EAC identity only if they believe partner states are treated equitably. Without enforcement, treaties are promises in vain; with enforcement, they are valuable and credible.
The test that Tanzania's Finance Act poses, therefore extends far beyond excise duty. It is a test of whether the EAC is really a rules-based community or whether protectionist instincts will continue to undermine the single market vision. If national interest causes all partner states to retreat, the integration project risks becoming stale under the burden of a splintered East Africa. This will make the whole region less attractive to citizens and investors in equal measure.
Resolution will not rest on diplomacy alone. Political negotiation may soften edges, but the EACJ remains the final guardian of the integration agenda. If its past conduct is any guide, the Court is willing to act decisively when politics falters. That is why this case matters: it is not just about revenue or tax design but about the integrity of the integration project itself.
The author is an accomplished academician and strategist passionate about the East Africa economy.
Recent disruptions at the Kenya–Tanzania border, where trucks have been forced to idle for hours amid political tensions, have revived a familiar concern within the business community: East African trade is far more fragile than it looks.
This comes only months after Tanzania’s Finance Act introduced excise duty on imports from fellow EAC member states, a move many initially viewed as a routine fiscal adjustment. After all, tax shifts are a normal part of national budget cycles.
Yet beneath this policy lies a much larger question: How firm are the foundations of East African integration? And is the EAC’s long-promised vision of seamless trade truly secure?
As the Kenya Association of Manufacturers has cautioned before, “when one East African country is burning, then it affects every one of us.” That is the deeper issue now coming to the surface.
The EAC promise has always been based on two foundations: free movement of goods, services, and persons; and non-discrimination. These two principles, which have been enshrined in the Treaty and anchored by the Customs Union and Common Market Protocols, are what make the notion of a single market meaningful. When one partner state places barriers which weigh the scale in favor of its nationals, then the integrity of such a promise begins to break down.
It is not the first time the issue has come about. Back in 2020, Kenya imposed a 25% excise tax on imported glass bottles. This led to a court challenge by Kioo Limited, a Tanzanian company, against the Government of Kenya (Kioo vs Attorney General of the Republic of Kenya 2020). Kioo, a Tanzanian glass manufacturer, challenged Kenya's imposition of a 25% excise duty on imported glass bottles. Kioo argued this tax violated the EAC Treaty, Customs Union Protocol, and Common Market Protocol by discriminating against products from partner states in favour of Kenyan-manufactured goods. The EACJ granted an interim order halting the tax, finding the case raised serious issues of irreparable harm and a potential violation of regional trade laws.
The ruling was historic. In standing firm as it did, the Court demonstrated that it would safeguard the sanctity of the common market and reinforce the primacy of regional law over harmful national actions. It sent the unmistakable message that national finance ministers cannot frame budgets in a manner that frustrates regional obligations.
Fast forward to 2025, and the parallels are not hard to identify. Tanzania's new excise duty shares the same discriminatory impact of Kenya's levy five years ago: it discriminates against a partner state's goods. In law, it is hard to reconcile with Article 75 of the Customs Union Protocol, which prohibits discrimination in taxation, or with Articles 6(d) and 7(2) of the EAC Treaty, which enshrine the equality and non-discrimination principles. It also violates Article 15 of the Common Market Protocol that assures free movement of goods under equal treatment. In summary, Tanzania risks nullifying the same regulations it helped to design and ratify.
If affected businesses take the case to the EACJ, the Court will almost certainly have the authority to hear it and based on past practice, is likely to act. The Court can stop illegal acts prior to irreparable harm being done to businesses and supply chains.
For entrepreneurs and investors, this judicial protection is priceless. Integration becomes a reality instead of electioneering propaganda, a system of rules underpinned by enforceable law.
But more than the settlement of disputes is at risk. The ultimate risk is Trust, the hidden infrastructure without which integration cannot occur. Firms will invest abroad only if they have confidence in safe rules. Citizens will embrace the EAC identity only if they believe partner states are treated equitably. Without enforcement, treaties are promises in vain; with enforcement, they are valuable and credible.
The test that Tanzania's Finance Act poses, therefore extends far beyond excise duty. It is a test of whether the EAC is really a rules-based community or whether protectionist instincts will continue to undermine the single market vision. If national interest causes all partner states to retreat, the integration project risks becoming stale under the burden of a splintered East Africa. This will make the whole region less attractive to citizens and investors in equal measure.
Resolution will not rest on diplomacy alone. Political negotiation may soften edges, but the EACJ remains the final guardian of the integration agenda. If its past conduct is any guide, the Court is willing to act decisively when politics falters. That is why this case matters: it is not just about revenue or tax design but about the integrity of the integration project itself.
The author is an accomplished academician and strategist passionate about the East Africa economy.
