Tanzania finalises guidelines for exclusive shilling use
What you need to know:
- The guidelines are in their final stages and are expected to be announced by March, pending approval from the relevant authorities
Mtwara. The government is finalising new guidelines to regulate the use of foreign currency in domestic transactions, reinforcing the legal requirement that the Tanzanian Shilling remains the sole legal tender.
An economist at the Bank of Tanzania (BoT)’s Directorate of Economic Research and Policy, Dominic Mwita, said the guidelines align with Section 26 of the Bank of Tanzania Act, 2006.
“It is illegal to use foreign currency for domestic payments. All transactions and pricing within Tanzania must be in Tanzanian Shillings,” Mwita said.
He added that the guidelines are in their final stages and are expected to be announced by March, pending approval from the relevant authorities.
Some government institutions have already begun enforcing these regulations. The Tanzania National Parks Authority (Tanapa), for instance, now requires all payments to be made exclusively in Tanzanian Shillings.
Mwita emphasised that the central bank aims to regulate foreign currency circulation to maintain price stability.
“An excessive reliance on foreign currency weakens monetary policies designed to control inflation and gives other countries economic influence over Tanzania,” he said.
He further noted that using the national currency benefits the country through seigniorage—a principle whereby domestic currency circulation directly supports economic stability.
Reducing dependence on foreign currency, he explained, also helps ease pressure on Tanzania’s foreign reserves, ensuring adequate funds remain available for essential imports.
“The strength of the Tanzanian Shilling is influenced by factors such as export revenues, import costs, inflation, and interest rate differentials,” Mwita noted.
While a weaker Shilling can enhance export competitiveness by making Tanzanian goods more affordable in global markets, it also raises the cost of imports, which may benefit local manufacturers.
Conversely, an overly strong Shilling can make imports cheaper, reducing demand for locally produced goods.
The government expects the new guidelines to reinforce the use of the Tanzanian Shilling in all domestic transactions, ultimately promoting broader economic stability.
