Tanzania Bans Foreign Currency in Transactions

Finance Minister, Dr. Mwigulu Nchemba, has announced that all domestic transactions must be conducted in Tanzanian Shillings starting from July 1, 2024.

This directive targets all local stakeholders, including public institutions, businesses, civil society organizations, international bodies, and individuals operating within Tanzania.

Presenting the 2024/2025 fiscal budget to the Parliament in Dodoma, Dr. Nchemba emphasized that pricing and payment for goods and services should be exclusively in Tanzanian Shillings.

He stated, “If you possess foreign currency, you are required to exchange it through banks or authorized forex bureaus before making any payments in Tanzanian Shillings. The Bank of Tanzania and other relevant agencies are directed to closely monitor this practice and take appropriate legal action against offenders.”

This move aims to curb the widespread practice of “dollarization,” where various sectors in Tanzania demand payments in foreign currencies, particularly the US dollar. Such practices have been blamed for contributing to the depreciation of the Tanzanian Shilling by increasing unnecessary demand for foreign currency.

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Dr. Nchemba highlighted that this issue exacerbates the scarcity of dollars as Tanzanian citizens are forced to obtain foreign currency for domestic transactions. He cited examples of institutions requiring fees, rent, and other payments in dollars, thereby placing an undue burden on local residents. “This practice is illegal and must stop immediately,” he reiterated.

The Finance Minister also instructed all government agencies that collect fees, taxes, and other charges in foreign currency to amend their regulations to ensure these payments are made in Tanzanian Shillings. He added that even foreign nationals seeking services within Tanzania should convert their currency to the local Shilling to facilitate transactions.

This directive forms part of broader efforts by the Tanzanian government to stabilize and strengthen the national economy. The policy is expected to reduce the pressure on foreign currency reserves and enhance the stability of the Tanzanian Shilling. Additionally, the government aims to promote the use of local currency, thereby boosting national economic sovereignty and reducing dependency on foreign currencies.

The enforcement of this policy will be closely monitored by the Bank of Tanzania and other financial regulatory bodies to ensure compliance and to take corrective actions where necessary. This initiative aligns with Tanzania’s broader economic goals of fostering a robust, self-reliant economy that minimizes external vulnerabilities