In what appears to be a sudden fit of economic housekeeping, the Tanzanian government has decided to reserve some of its most bustling sectors for citizens only. A new directive, which took effect immediately on Monday, has put foreign-owned and-operated fintechs in the mobile money space on an unavoidable path to exiting the market.
On July 28, 2025, the government published Government Notice №487A, a surprisingly frank document that prohibits non-citizens from engaging in 15 specific business activities. Tucked in between “salon business” and “small-scale mining” is the multi-billion-dollar sector of “mobile money transfers.”
For the rapidly growing class of international startups who saw Tanzania as a key node in the pan-African fintech dream, the message is clear, if not particularly welcoming.
What’s New?
The order, issued under the Business Licensing Act, is quite direct. It states that licensing authorities shall no longer “issue or renew a licence for a non-citizen to carry out any of the business activities prohibited.”
For those currently operating with a valid licence, the government has offered a sliver of consolation: they can continue until their licence expires. After that, no renewals will be granted. It’s less of a sudden eviction and more of a graceful, if firm, push towards the exit.
The list of newly protected businesses is a diverse collection, including:
- Retail and wholesale trade
- Mobile money transfers
- Tour guiding
- Parcel delivery
- Brokerage in business and real estate
Penalties for non-compliance are severe, ranging from fines up to TZS 10 million (approx. USD 3,800) to imprisonment and the revocation of visas and residence permits. The government is also taking aim at local enablers, threatening Tanzanian citizens who “assist or aid a non-citizen” with hefty fines and potential jail time.
Why It Matters: The Fintech Dilemma
The move throws a massive wrench into the expansion plans of numerous cross-border payment companies. Just as fintechs were perfecting their pitches about “banking the unbanked” and “unlocking pan-African corridors,” the Tanzanian government appears to have decided it would rather unlock those corridors itself, thank you very much.
The timing is particularly ironic when considering a homegrown, yet globally-minded, success story like Nala. The remittance startup, founded by Tanzanian Benjamin Fernandes, just last year announced a $40 million Series A round led by prominent VCs including Acrew Capital and DST Global Partners.
Nala’s model allows users in the EU, UK, and US to send money directly to over 200 banks and 26 mobile money services across Africa, including Tanzania’s M-Pesa. While founded by a Tanzanian, its heavy foreign investment and international operational structure place it in a precarious grey area under the new rules, which focus on the citizenship of the business operator, not just its founder.
The Big Picture: Protectionism or Empowerment?
From Dodoma’s perspective, this is a straightforward move to empower Tanzanian citizens. The official rationale is to ensure that the profits generated from local, service-based economies stay within the country and to prevent small Tanzanian entrepreneurs from being out-muscled by slick, venture-backed outsiders. It’s a classic economic nationalist playbook, aimed at reserving the ground floor of the economy for locals.
From the glass-walled offices of VCs in San Francisco and London, however, this looks like classic protectionism that could chill investment. Forcing out foreign operators, they would argue, reduces competition, which could lead to higher fees and poorer service for the very Tanzanian consumers the law purports to protect. It also signals a level of regulatory volatility that makes investors nervous.
The central irony is that a company like Nala, which successfully attracted significant foreign capital into the African tech ecosystem, now faces being restricted in its own home market by a law designed to curb foreign influence.
What’s Next? A Mad Dash for Clarity
The immediate future will be defined by a scramble for legal interpretation and strategic restructuring.
- Loopholes and Lawyers: Lawyers across Dar es Salaam are likely brewing extra coffee. Fintechs will be dissecting the term “mobile money transfers.” Does this cover international remittances coming in? Does it affect B2B infrastructure providers that offer payment rails but don’t face consumers directly?
- A Rush for Local Partners: The most likely outcome for foreign firms wanting to remain is a series of “shotgun weddings.” Companies will be forced to find Tanzanian majority partners, ceding significant ownership and control. This will create a seller’s market for qualified local partners, who will suddenly find themselves in a powerful negotiating position.
- The Investor Signal: For now, the global investment community is watching. This move, while perhaps well-intentioned from a nationalist standpoint, sends a signal of unpredictability. Tanzania may have just made itself a much harder sell for the next wave of foreign startup investment looking for stable and open markets.