Tanzania imposes new taxes on Kenyan milk sparking trade concerns

TANZANIA – Tanzania has introduced fresh taxes on Kenyan milk and other products, raising concerns among traders and threatening the fragile trade relationship between the two East African neighbors. 

The new levies target dairy products such as milk, yoghurt, and butter, as well as eggs, sausages, and confectionery such as biscuits. 

This move has disrupted the East African Community (EAC) Customs Union rules, which aim to promote free trade among member states, and has led to a significant drop in Kenya’s export earnings.

According to the Kenya Association of Manufacturers (KAM), Tanzanian authorities are charging a levy of Tsh1,000 per litre (about Ksh50) on Kenyan-made dairy products, a rate 19 times higher than the Tsh50 applied to similar locally produced goods. 

This tax has made Kenyan milk more expensive in Tanzania, hurting its competitiveness in a market with a population of over 60 million. 

A report by Business Daily Africa highlighted that Kenya’s export earnings to Tanzania fell by Ksh4.2 billion last year, marking the first decline in eight years outside the Covid-19 period in 2020. 

Kenyan manufacturers blame these “discriminatory taxes” for the loss, accusing Tanzania of undermining regional trade agreements.

The trade barriers come at a time when relations between Nairobi and Dodoma had shown signs of improvement after years of on-and-off disputes. 

“We are seeing a return of protectionism that hurts businesses on both sides,” said a Kenyan trader who exports dairy products to Tanzania. 

The trader, speaking anonymously, added that the higher costs could force many to scale back operations or exit the Tanzanian market entirely. 

Tanzania’s decision to impose these levies follows a pattern of similar measures, including a temporary ban on Kenyan tea imports in 2024 over quality concerns, which was later resolved through talks.

Tanzanian officials have not publicly explained the new taxes, but past actions suggest a desire to protect local industries. 

A senior KAM official told reporters, “This goes against the spirit of the EAC Customs Union, and we need urgent talks to resolve it.” 

Kenya’s dairy sector, a key part of its economy, relies heavily on regional markets, with smallholder farmers producing over 80% of the country’s 5.2 billion litres of milk annually. 

The latest taxes could reignite tensions, with Kenyan manufacturers urging their government to act swiftly. 

Analysts warn that without a resolution, the trade rift may deepen, affecting not just milk but the broader economic ties between these EAC partners.