Tanzania bans dollar payments
Transactions using the dollar have been declared illegal in Tanzania in favor of the Tanzania shilling
DAR ES SALAAM, Tanzania – The government last week declared illegal the growing trend of pricing goods and services such as real estate for Tanzanians in US dollars.
Stern measures are to be taken against those who continue with such practice.
Speaking to East African Business Week on the sidelines of the Azam Media launch event last week in Dar es Salaam, the Deputy Minister for Finance and Economic Affairs, Mwigulu Nchemba said that all commercial transactions should be contracted on the local currency.
“Any person who had comes across with any transaction through dollar he or she should report the incident to the required authorities and all are aware that dollarisation of the local economy had contributed heavily to the steady weakening of the shilling,” he said.
The Deputy Minister directed the business community to display prices of goods and services in Tanzanian shillings, and where the aim is to attract foreign customers, then prices in both local and foreign currencies can be indicated.
’’No Tanzanian should be forced to pay for goods or services in foreign currency the legal tender in Tanzania is the Tanzanian shilling only because they are in Tanzania mainland,’’ he emphasized.
Nchemba underscored that the government sometimes needs to have enough foreign currency for the purpose of importing foreign goods once the local industry failed to produce enough goods for local consumers.
He warned against businesses that peg prices in US dollars and convert them into local currency using their own exchange rates.
’’In Tanzania, only the bureaux de change and commercial banks are allowed to trade in currency exchange according to the financial and banking act,’’ he noted.
He pushed for increased production of goods and services for export, to earn more foreign currency and subsequently strengthen the shilling.
’’Our shilling could gain strength through increased exports and trimmed imports,’’ he lamented
The tendency of charging local goods and services in US dollars has been gaining momentum lately, with financial experts warning that this is likely to soon render the shilling more or less irrelevant.
Sectors most notorious for charging in dollars are air travel, the hospitality industry, housing and even education where some schools have been discovered to be charging their school fees in dollars.
Some businesses go to the extent of inventing their own exchange rates for customers looking to pay for the goods and services in local currency.
Recently, Tanzanian law makers told the House that the use of foreign currencies in the economy was a threat to the shilling calling the government to table a bill on foreign currency use.
In June, last year the Parliamentary Standing Committee on Economy, Industry and Trade strongly criticized the use of the dollars in local transactions calling the government to revoke the 2008 decree and strictly enforce the Foreign Exchange Act, 1992.
Committee chairperson Luhanga Mpina (Kisese-CCM) said the use of shilling parallel to foreign currencies makes the country lose her international market competitiveness; diverts business from local bureau de change and leads to revenue loss to the government.
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