Tanzania preparing regulations to ban foreign currency for domestic transactions

Dar es Salaam. The Bank of Tanzania (BoT), in partnership with the Ministry of Finance, is working on new regulations to enforce a ban on using foreign currencies for domestic transactions. This follows amendments made to the Bank of Tanzania Act under Section 26(2), which now prohibits the use of foreign currency for transactions within the country.

Set to take effect from July 1, 2024, the law aims to protect Tanzania’s monetary policy by ensuring that the Tanzanian Shilling remains the primary currency in use.

Manager of International Economics and the Real Sector at BoT, Villela Waane, said yesterday that once the drafting process is completed, the regulations will be gazetted and made available to the public.

She said that the use of foreign currency undermines the effectiveness of Tanzania’s monetary policy and contributes to inflationary pressures. “Using foreign currencies domestically limits the supply of foreign currency needed for importing essential goods,” she said.

The BoT, said, has instructed commercial banks to cease facilitating transactions involving foreign currencies, including payments for taxes, fees, goods, and services.

“The aim is to strengthen the Tanzanian Shilling’s value and ensure foreign currencies are reserved solely for essential imports,” she added.

The Director of Financial Markets at BoT, Mr Emmanuel Akaro, said that certain individuals have been paying for goods, including property rentals and school fees, using foreign currencies, an act that is now deemed illegal.

BoT is actively educating the public, businesses, banks, and schools about the new regulations, Akaro noted. He encouraged the public to report any violations of the law to BoT or other authorities.

“These changes are part of a broader effort to stabilise Tanzania’s financial system and maintain the integrity of our monetary policy,” he concluded.