Tanzania has released a new regulation for the foreign exchange bureau in the country replacing the existing 2019 regulations. Published under Government Notice No 730, the regulation establishes three classes of bureau de change, Class A, Class B, and Class C.
Class A is licensed to deal with spot transactions, money transfers, and other financial services-related activities. The regulation set a capital requirement of not less than Tshs. 1 billion for Class A bureau de change with foreign majority shareholding and not less than Sh. 500 million for Class A bureau with local majority shareholding.
Security deposit for Class A bureau is reduced to USD 50,000 for those that have a local majority shareholding and maintained at USD 100,000 for those that have a foreign majority shareholding.
Class B is a bureau whose shareholding is supposed to be a hundred percent local shareholding and is licensed to deal with spot transactions, with a minimum capital requirement of Tshs. 200 million. Class C is bureau de change established in a hotel to deal with spot transactions to hotel customers only, and is provided to hotels that are three stars or above.
The two fundamental changes that come with the new regulation are the introduction of classes that respond to different needs in the market and also recognition of foreign shareholding ownership, a move that seems to attract new capital in the market.
The new regulation also provides that Class A or Class B Bureau de Change may carry out business as an agent of a bank, financial institution, insurance company, mobile money operator, or other financial services as may be approved by the Bank. Many bureaus were registering to provide these additional services to clients.
The new regulations have maintained documentation requirements for all transactions but also introduced a new requirement that a bureau shall not split transactions into smaller amounts to avoid reporting and documentation requirements. The regulation also allowed bureaus to trade among themselves in addition to buying currency from banks.
The new regulation comes as the country is facing a dollar shortage challenge, an outcome of global developments including the rising of interest rate by the US Federal Reserve and Tanzania’s high import bill due to the increase of fuel prices in the global market and an increased need for capital input goods in the country.
Some of the steps taken by government include issuing a new directive that aims at restricting outflows of dollars in the economy, Tanzania’s Central Bank has also started a gold purchasing program. Moreover, between March 2022 and August 2023, the Tanzania Central Bank sold over USD 500 Million in the market in an effort to reduce the dollar shortage.
In building trust in the market, the government has returned Shs.9 billion to Bureau de Change traders whose cash was confiscated in an operation undertaken by security forces in 2018, an exercise which registered many grievances from traders.
One Response
I commend the new regulation on the Bureau de Change amidst the current dollar crisis in the market! While also commending the refund of shs 9 billion unfairly confiscated from traders; I think the government should bear the price by paying the value of money at today’s rate using the future value calculator and also compensate traders for the big losses they endured due to the barbaric move by the then government; a move never seen in the world