Tanzania issues directive to curtail rampant use of US dollar

Dar es Salaam. The Tanzania’s Finance minister, Dr 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.

Additionally, the minister emphasised the importance of reducing reliance on imports and fostering domestic production to conserve foreign currency reserves and bolster economic growth.

The minister expressed concern over the practice of some institutions, including governmental bodies, requiring Tanzanians to pay fees, rent, work permits, licenses, and other charges in dollars.

He emphasised that this situation not only increased the unnecessary demand for foreign currency, but also deprived those in need of dollars for essential goods and services from outside the country.

Furthermore, Dr Nchemba reiterated the legal framework stipulated in Section 26 of the Bank of Tanzania Act of 2006, which designates the Tanzanian shilling as the sole legal tender for domestic payments.

Any transactions conducted domestically in foreign currency are deemed an offence under this act.

To address these challenges head-on, the minister issued a directive with effect from July 1, 2024, instructing all stakeholders, including public institutions, businesses, civil society organisations, international entities and individuals, to cease the practice of pricing goods and services in foreign currency.

It was mandated that all transactions must be conducted and advertised in Tanzanian shilling, aligning with the legal framework of the country.

Additionally, Dr Nchemba directed government institutions responsible for levying taxes, fees and charges to adjust their regulations accordingly.

“Henceforth, all such payments were to be made in shillings, promoting financial stability and compliance with the law,” he said.

The minister emphasised that even visitors to Tanzania are encouraged to exchange their foreign currency for Tanzanian shillings to facilitate transactions and support the local economy.

He cautioned against the detrimental practice of relying on foreign currency, which often led to depreciation of the Tanzanian shilling and hindered economic progress.

Dr Nchemba further highlighted the need for Tanzania to effectively utilize its resources and promote value addition to domestically produced goods.

He stressed the importance of reducing reliance on imports and fostering domestic production to meet the needs of the population, thereby conserving foreign currency reserves and promoting economic growth.