Faith Nyasuguta
Tanzania is set to enforce strict regulations banning the use of foreign currencies for local transactions, making the Tanzanian Shilling the sole legal tender within its borders. This move, spearheaded by the Bank of Tanzania (BoT) in collaboration with the Ministry of Finance, aims to strengthen the national currency and safeguard the country’s monetary policies.
Authorities have announced that the new regulations will take effect on July 1, 2025, prohibiting businesses and individuals from using foreign currencies for domestic transactions, including payments for goods and services, taxes, and other financial obligations. This decision follows amendments to the central bank’s policies, ensuring that only the Tanzanian Shilling is used in financial dealings within the country.
Protecting the Shilling
Villela Waane, Manager of International Economics and Real Sector at the Bank of Tanzania, explained that the regulation seeks to address economic challenges caused by the widespread use of foreign currencies in local transactions.
She highlighted that allowing foreign currencies to circulate domestically reduces the supply of foreign reserves needed for essential imports, weakens the local currency, and contributes to inflation.
“Using foreign currencies domestically limits the supply of foreign reserves needed for importing essential goods. It also undermines our monetary policies and adds to inflationary pressures,” Waane stated.
The BoT has already directed all commercial banks to cease the use of foreign currencies in their services. Emmanuel Akaro, the Director of Financial Markets at the central bank, emphasized that paying for goods and services in foreign currencies is now considered illegal.
“These changes are part of a broader effort to stabilize Tanzania’s financial system and maintain the integrity of our monetary policies,” Akaro stated.
Growing Trend
Tanzania’s shift towards prioritizing its national currency aligns with a broader trend across Africa and other global economies seeking to reduce reliance on the U.S. dollar.
In a related development, Tanzania and Russia are actively working to boost bilateral trade using their respective national currencies. Last year, Tanzania’s ambassador to Russia, Andrey Avetisyan, revealed that banks from both nations have been negotiating a framework to conduct transactions in local currencies.
Speaking to Sputnik during the Valdai Discussion Club conference in Tanzania, Avetisyan explained that discussions on transitioning to national currency trade extend beyond Russia, also involving China, India, and other BRICS nations.
“The prospects of transition to trade in national currencies are being discussed between our banks,” Avetisyan noted.
He further pointed out that Tanzania stands to benefit from this shift, especially given its strong trade ties with India and China.
“If Tanzanians see that Russia’s trade with China and India is almost entirely in national currencies, and India and China are Tanzania’s largest trading partners, then there are opportunities here. Indian rupees, Chinese yuan, and Russian rubles can be used by Tanzanians for offset schemes,” he added.
Impact on Tanzania’s Finances
Tanzania’s decision to phase out foreign currencies in domestic transactions marks a major step toward economic independence and monetary stability. By strengthening the Shilling, the country aims to reduce inflation, secure foreign reserves for essential imports, and reinforce control over its financial policies.
With the globe shifting toward de-dollarization, Tanzania’s policy shift aligns with an emerging economic strategy among African nations and BRICS economies—one that prioritizes national currencies and reduces dependence on the U.S. dollar.
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