Kenya expects its exports to Tanzania to more than double following the abolition of Tanzania’s Industrial Development Levy (IDL) on goods from East African Community (EAC) member states, a move expected to unlock trade valued at more than Sh130 billion.
The levy, which had imposed charges of between five and 15 per cent of the Cost, Insurance and Freight (CIF) value on imports, was removed under Tanzania’s Finance Act, 2026 after months of bilateral negotiations. The tax had affected 49 Kenyan export products, making them less competitive in the Tanzanian market.
Products expected to benefit include iron and steel goods, road tractors, cement, furniture and ceramic tiles.
The policy change follows directives from the 25th EAC Heads of State Summit, which called on partner states to eliminate outstanding non-tariff barriers by June 30, 2026, to promote regional trade.
East African Community Affairs and Acting Principal Secretary in the State Department for ASALs and Regional Development, Caroline Karugu, said the removal of the levy creates an opportunity for Kenya to significantly expand exports to one of its largest regional markets.
She noted that Tanzania has a larger market than Uganda but remains underutilised by Kenyan exporters, expressing confidence that exports could increase by more than 100 per cent as trade barriers are dismantled. Karugu also highlighted Kenya’s open market policy for Tanzanian goods and investors, noting growing Tanzanian investments in sectors such as cement manufacturing and media.
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Data from the Kenya National Bureau of Statistics (KNBS) shows Kenya’s exports to Tanzania declined to Sh63.6 billion in 2025 from Sh67.2 billion in 2024, mainly due to reduced exports of soap, flat-rolled iron and non-alloy steel products. In contrast, exports to Uganda rose to Sh162.3 billion, cementing its position as Kenya’s largest export market.
Kenya believes the removal of the levy will restore the competitiveness of local manufacturers and lift exports to Tanzania beyond Sh130 billion over the coming years.
Trade analysts say the development coincides with major investments by both countries in transport infrastructure aimed at lowering the cost of cross-border trade. Kenya and Tanzania are linked through four One-Stop Border Posts (OSBPs) at Namanga, Taveta-Holili, Isebania-Sirari, and Lungalunga-Horohoro, where integrated customs and immigration procedures have improved cargo clearance. Namanga remains the busiest crossing for trade and tourism.
Additional improvements are underway through regional transport projects, including the Malindi-Lunga Lunga-Tanga road, expanded road networks and enhanced maritime transport on Lake Victoria, all intended to strengthen connectivity between producers and markets.
The removal of the Industrial Development Levy is widely viewed as one of the most significant trade facilitation measures between Kenya and Tanzania in recent years. It is expected to boost manufacturing, attract investment, strengthen regional supply chains and help Kenyan exporters regain market share in Tanzania’s consumer market of more than 70 million people.
