The Bank of Tanzania (BOT) has issued a stern reminder that demanding or quoting prices in foreign currency is illegal in the country. According to the Bank of Tanzania Act 2006, individuals or businesses refusing to accept payment in Tanzanian shillings violate the law. In a press release issued recently, the central bank also emphasized that only commercial banks and Bureaux de Change are authorized to determine exchange rates.
Tanzania prohibits foreign pricing
This recent warning from the financial institution follows a previous directive issued just a month ago, which instructed authorized foreign exchange dealers in the country to only engage with licensed international foreign currency brokers. The central bank views these forex restrictions as essential steps to promote macroeconomic stability and safeguard the financial system’s integrity.
In an apparent effort to discourage the dollarization of the economy, the bank reiterated that the prohibition on foreign currency payments between citizens, introduced in August 2007 and reaffirmed in December 2017, is still in effect. However, the press release outlined a few exceptions where quoting or payment in foreign currency is permissible.
According to the central bank, prices quoted and paid by tourists or non-resident customers may be denominated in foreign currency. This includes services such as accommodation, travel expenses, airport and visa fees, transit trade, and cargo handling. In such cases, tourists and non-residents who choose to pay in foreign currencies must provide proper identification documents, such as passports or certificates of incorporation for companies, to ensure accurate statistical tracking and classification.
Nevertheless, the central bank emphasized that for goods and services like rentals, education fees, and medical expenses, prices must be quoted in Tanzanian shillings, as it remains the only legal tender in the country. This requirement also applies to transport services, electronic products, and telecommunication services.
The bank plans to check destabilization
By reiterating these regulations, the central bank aims to maintain control over the country’s monetary system and prevent potential destabilization caused by the use of foreign currencies. It underscores the importance of using the national currency, the Tanzanian shilling, for domestic transactions and maintaining price stability within the local economy.
The Tanzanian government’s approach aligns with its efforts to foster a robust and self-sustaining economy. By encouraging the use of the national currency, the authorities aim to strengthen the Tanzanian shilling, promote financial inclusion, and ensure a healthy and stable financial system that benefits the country’s citizens.
While the Bank of Tanzania’s directive restricts the use of foreign currencies in most domestic transactions, it also recognizes the importance of the tourism sector. Allowing tourists and non-resident customers to pay in foreign currencies for tourism-related services enables a seamless experience for visitors while supporting the growth of the tourism industry, a vital contributor to Tanzania’s economy.
Except for certain tourism-related services, all other goods and services should be quoted and paid for in Tanzanian shillings, the country’s sole legal tender. By upholding these regulations, the central bank aims to promote economic stability, safeguard the financial system, and encourage the use of the national currency within the Tanzanian economy.