Tanzania Moves to Strengthen Shilling in Local Transactions

 The Tanzanian government is finalizing new guidelines to reinforce the exclusive use of the Tanzanian Shilling (TSh) in domestic transactions, a move aimed at stabilizing the economy and strengthening the local currency.

The Bank of Tanzania (BoT) has been working on these regulations to ensure compliance with Section 26 of the Bank of Tanzania Act, 2006, which states that the Tanzanian Shilling is the only legal tender for payments within the country.

Dominic Mwita, an economist at BoT’s Directorate of Economic Research and Policy, emphasized the importance of this regulation. “It is illegal to use foreign currency for domestic payments. All transactions and pricing within Tanzania must be in Tanzanian Shillings,” he explained.

The new guidelines, which are in their final stages, are expected to be announced by March once they receive full approval from relevant authorities. Some government institutions have already started enforcing the rule. For instance, the Tanzania National Parks Authority (Tanapa) now requires that all payments be made exclusively in Tanzanian Shillings.

Why Is This Change Important?

The government believes that limiting the use of foreign currencies in local transactions will help stabilize the economy. When businesses and individuals rely too much on foreign currency, it can weaken Tanzania’s ability to control inflation and influence economic policies.

Mwita explained that using foreign currency in domestic transactions could make the country vulnerable to external economic pressures. “An excessive reliance on foreign currency weakens monetary policies designed to control inflation and gives other countries economic influence over Tanzania,” he said.

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By ensuring that all local transactions are conducted in Tanzanian Shillings, the government aims to give the central bank greater control over the economy, stabilize prices, and promote national economic independence.

What This Means for Businesses and Individuals

With these regulations coming into effect soon, businesses will need to adjust their pricing, contracts, and payment systems to align with the policy. While foreign visitors will still be able to pay for certain services like hotels and tourism-related activities in international currencies, most domestic transactions will require the use of Tanzanian Shillings.

The government has assured the public that commercial banks and financial institutions will facilitate the transition, ensuring that currency exchange services remain accessible where necessary. Public education campaigns will also be launched to help businesses and individuals understand the new regulations and adapt accordingly.

Enforcing the Rule

The BoT, along with other financial regulatory bodies, will oversee the implementation of these regulations. Businesses that fail to comply could face penalties, though officials emphasize that the main goal is to encourage a smooth transition rather than punish violations.

The move to reinforce the use of the Tanzanian Shilling is part of a broader effort to build a stronger and more resilient economy. By reducing dependency on foreign currencies, Tanzania hopes to create a stable financial system that benefits both businesses and ordinary citizens.

The success of this initiative will depend on how well the country adapts to the changes, with the hope that a stronger Tanzanian Shilling will contribute to long-term economic stability.