Dar es Salaam. The amount of foreign currency deposits in commercial banks rose during the past year as companies sought to shield themselves against exchange risks.
The Bank of Tanzania (BoT) says in its October 2024 report that private sector deposits in banks amounted to Sh38.75 trillion (about 20 percent of gross domestic product) at the end of August 2024, compared to Sh37.95 trillion at the end of June 2024.
However, around 30 percent of the money was held in foreign currency, a rise from 26 percent in September 2023.
In addition, BoT revealed that the ratio of foreign currency deposits to broad money supply (M3) climbed to 25.2 percent in September 2024 from 22.8 percent a year earlier.
“The two ratios indicate an increase in the degree of financial dollarisation in the economy, which reduces the effectiveness of monetary policy,” the report says in part.
The BoT attributed the rising dollarisation to businesses hedging against foreign exchange risks, following a shortage of foreign currency liquidity in 2022-2023 and ongoing exchange rate speculation.
In a bid to curb the trend, the Bank of Tanzania Act was amended in June 2024, criminalising the use of foreign currency in domestic transactions.
Furthermore Finance minister Mwigulu Nchemba issued a decisive directive on June 13, 2024, aimed at curbing the widespread use of the US dollar within the country in a bid to address a critical challenge impacting the economy.
In his budget speech to the national assembly, Dr Nchemba highlighted the detrimental effects of dollarisation, where both public and private institutions demand payments in foreign currency for goods and services provided domestically, exacerbating the shortage of dollars and hindering economic progress.
The directive mandates that all transactions be conducted and advertised in Tanzanian shillings, aligning with the legal framework of the country and promoting financial stability.
Speaking to The Citizen, economists offer differing views on the drivers and implications of this shift toward dollarisation.
Dr Daudi Ndaki of Mzumbe University explained that businesses open foreign currency accounts to facilitate smoother cross-border transactions.
“Many businesses maintain these accounts to swiftly make or receive payments without the inconvenience of currency conversion. This is especially useful for businesses dealing with foreign currencies, as a stronger dollar enables them to buy more goods,” he said.
Dr Ndaki said however that quoting prices for domestic products or services in foreign currency is not ideal, as it increases the demand for foreign currency over the local currency.
“When foreign currency supply becomes tight, businesses operating in domestic markets face significant challenges,” he said.
Dr Ndaki’s view aligns with the notion that while holding foreign currency can mitigate certain risks for businesses, it could inadvertently destabilise the local economy if misused.
Prof Humphrey Moshi of the University of Dar es Salaam, highlighted that the dollar’s strength is largely influenced by the United States monetary policy, which has raised inflation and import costs globally.
“The strong dollar has made production costs and import expenses soar, and this has forced countries to rethink their trade strategies. Some major economies, like China, are now opting to trade in their own currencies,” he said
Prof Moshi suggested that Tanzania should explore local currency trading arrangements to reduce its dependence on the US dollar.
“This is an opportune time for countries like Tanzania to enter trading treaties based on local currencies. Joining frameworks such as BRICS, which already promotes local currency trade among its members, would be advantageous. With members like Saudi Arabia, it could also ease the burden of fuel costs,” he said.
BRICS is a group of 10 states including Brazil, China, Egypt, Ethiopia, India, Iran, Russian Federation, Saudi Arabia, South Africa, and United Arab Emirates. Saudi Arabia, too, has been invited to join.
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Tanzania Confirms Outbreak of Marburg Virus Disease
Dodoma — Tanzania today confirmed an outbreak of Marburg virus disease in the northwestern Kagera region after one case tested positive for the virus following investigations and laboratory analysis of suspected cases of the disease.
President of the Republic of Tanzania, Her Excellency Samia Suluhu Hassan, made the announcement during a press briefing alongside World Health Organization (WHO) Director-General, Dr Tedros Adhanom Ghebreyesus, in the country’s administrative capital Dodoma.
“Laboratory tests conducted in Kabaile Mobile Laboratory in Kagera and later confirmed in Dar es Salaam identified one patient as being infected with the Marburg virus. Fortunately, the remaining suspected patients tested negative,” the president said. “We have demonstrated in the past our ability to contain a similar outbreak and are determined to do the same this time around.”
A total of 25 suspected cases have been reported as of 20 January 2025, all of whom have tested negative and are currently under close follow-up, the president said. The cases have been reported in Biharamulo and Muleba districts in Kagera.
“We have resolved to reassure the general public in Tanzania and the international community as a whole of our collective determination to address the global health challenges, including the Marburg virus disease,” said H.E President Hassan.
WHO is supporting Tanzanian health authorities to enhance key outbreak control measures including disease surveillance, testing, treatment, infection prevention and control, case management, as well as increasing public awareness among communities to prevent further spread of the virus.
“WHO, working with its partners, is committed to supporting the government of Tanzania to bring the outbreak under control as soon as possible, and to build a healthier, safer, fairer future for all the people of Tanzania,” said Dr Tedros. “Now is a time for collaboration, and commitment, to protecting the health of all people in Tanzania, and the region, from the risks posed by this disease.”
Marburg virus disease is highly virulent and causes haemorrhagic fever. It belongs to the same family as the virus that causes Ebola virus disease. Illness caused by Marburg virus begins abruptly. Patients present with high fever, severe headache and severe malaise. They may develop severe haemorrhagic symptoms within seven days.
“The declaration by the president and the measures being taken by the government are crucial in addressing the threat of this disease at the local and national levels as well as preventing potential cross-border spread,” said Dr Matshidiso Moeti, WHO Regional Director for Africa. “Our priority is to support the government to rapidly scale up measures to effectively respond to this outbreak and safeguard the health of the population,”
Tanzania previously reported an outbreak of Marburg in March 2023 – the country’s first – in Kagera region, in which a total of nine cases (eight confirmed and one probable) and six deaths were reported, with a case fatality ratio of 67%.
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In the African region, previous outbreaks and sporadic cases have been reported in Angola, the Democratic Republic of the Congo, Ghana, Kenya, Equatorial Guinea, Rwanda, South Africa and Uganda.
Marburg virus is transmitted to people from fruit bats and spreads among humans through direct contact with the bodily fluids of infected people, surfaces and materials. Although several promising candidate medical countermeasures are currently undergoing clinical trials, there is no licensed treatment or vaccine for effective management or prevention of Marburg virus disease. However, early access to treatment and supportive care – rehydration with oral or intravenous fluids – and treatment of specific symptoms, improve survival.
Source: allafrica.com
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