In a significant shift in monetary policy, Tanzania has officially banned the use of foreign currencies, including the U.S. dollar, for all domestic transactions. The new regulations, effective from March 28, 2025, mandate that all goods and services within the country be priced and paid for exclusively in Tanzanian shillings (TZS). The Bank of Tanzania (BoT) announced the directive, emphasizing that quoting, advertising, or demanding payment in any foreign currency for local transactions is now an offense.
This move aims to bolster the value of the Tanzanian shilling and reduce the country's reliance on foreign currencies, which have been contributing to inflationary pressures and undermining the effectiveness of Tanzania's monetary policy. The BoT has instructed commercial banks to cease facilitating transactions involving foreign currencies, including payments for taxes, fees, goods, and services. Individuals and businesses are now required to conduct all transactions in Tanzanian shillings.
Certain exceptions to the ban exist, including transactions involving diplomatic missions, international organizations, and foreign currency loans issued by local banks. Additionally, purchases at duty-free shops are permitted to be conducted in foreign currencies.
Economists have largely supported the government's decision, viewing it as a step toward economic sovereignty. Professor Kitojo Wetengere from the University of Arusha stated that using foreign currencies domestically increases demand for those currencies, leading to a depreciation of the Tanzanian shilling. By mandating transactions in the national currency, the government aims to stabilize and strengthen the local economy.
However, the policy has raised concerns among some sectors. The tourism industry, which often operates in foreign currencies, may face challenges as foreign visitors may be deterred by the inability to transact in their preferred currencies. Additionally, foreign investors might hesitate to engage in business activities in Tanzania due to concerns about the ease of conducting international transactions.
The BoT has launched public awareness campaigns to educate businesses, banks, and citizens about the new regulations and encourage compliance. Authorities have urged the public to report any violations to the relevant authorities for appropriate action.
As Tanzania moves forward with this policy, the full impact on the economy and various sectors will become clearer in the coming months.
