Tanzania central bank tells hotels to obtain foreign currency exchange license

Dar es Salaam. The Governor of the Bank of Tanzania (BoT), Mr Emmanuel Tutuba, has urged owners and operators of tourist hotels to acquire a licence for exchanging foreign currency in an attempt to curb the black market.

Last October, the central bank issued new foreign exchange regulations that allowed hotels to engage in currency exchange businesses to increase the availability of the service.

However, as of March this year, only one hotel had applied for the licence, while others are allegedly exchanging or pegging the services in foreign currency.

Mr Tutuba, who met hotel owners and operators receiving tourists on Thursday, March 14, 2024, said the licence would enable the central bank to obtain crucial statistics and information to strengthen the financial sector.

"In October last year, we made amendments to the Foreign Exchange Bureaus Regulations, creating an official window to allow hotels ranging from three to five stars to start providing foreign exchange bureau services," said Mr Tutuba.

According to him, only one hotel has applied for the licence so far, highlighting that the remaining hotels continue to charge customers in foreign currency without proper authorisation, leading to an unregulated market.

"The amendment of the regulations was based on our research, which found that the foreign exchange bureaus that were operational had not yet reached hotels, yet some hotels were receiving foreign currency illegally," he said.

The meeting was attended by owners of 27 hotels to discuss the amendment of the regulations.

"As supervisors of the financial sector, this step will be an opportunity for us to obtain direct statistics because hotels will be responsible for setting up a reporting system that will help us improve the business environment in the country," Mr Tutuba elaborated.

The Finance and Administration Manager of Onomo Hotel in Dar es Salaam, Mr Gosberth Kamugisha, said that the changes in foreign currency exchange regulations present an opportunity for increased revenue.

“That window will also contribute to strengthening the country's economy,” he said.

Businesspeople have recently voiced concern about what they say is a booming black market caused by the dollar crisis in Tanzania.

The country has been grappling with a shortage of dollars since last year, largely attributed to external factors such as the impact of the global Covid-19 pandemic, the war between Russia and Ukraine, the US Federal Reserve’s decision to raise interest rates, and climate change.

These crises disrupted supply chains, leading to higher commodity prices in the world market and increased demand for dollars.

The black market foreign exchange transactions are now said to be commonplace in Tanzania, with financial institutions being accused of taking advantage of the crisis to sell dollars at higher prices than those officially quoted by the banks.