On May 02, 2025, the Bank of Tanzania reiterated its call to the public on the prohibition of using foreign currency for local transactions in Tanzania. This time around, the Bank also shared a mechanism with which the public can use in reporting violations to the Bank through email, fx.regulations@bot.go.tz.
The call follows the adoption of the Regulations on the Use of Foreign Currency, 2025, which were published in the Government Gazette No. 198, dated March 28, 2025. The regulation stems from the tabling of the government budget in the financial year 2023/24, where, among other things, the government committed to initiating measures to reduce the dollar shortage challenge in the country.
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The regulation seeks to reduce dollarization in the country, which has been on an increasing pace, whereas between December 2020 and December 2024, the value of foreign currency deposits in the country has increased by 70 percent, from 6.8 trillion to 11.7 trillion, representing about 24 percent of the country’s extended broad money supply (M3). This signals the growing appetite of Tanzanians for holding foreign currencies. This has also been reflected in the depreciation of the shilling.
At the Arusha Economic Forum held on May 03, 2025, which was organized by the Arusha Regional Commissioner at the AICC, stakeholders have inquired about the regulation and implications for their businesses.
“There is so much at stake, our policy makers do not understand, the fluctuation of the shilling, and when we are dealing with [travel] agents who do not understand the Tanzanian shilling,” argued Lathifa Sykes, the Executive Director of the Tourism Confederation of Tanzania.
READ: Bank of Tanzania Responds to Report on Declining Performance of the Tanzanian Shilling
Responding to the question, the Minister of State, President’s Office, Planning and Investment, Prof. Kitila Alexander Mkumbo, reminded businesses that the regulation was one of the stakeholders’ pushes when they complained to the government and Central Bank about the requirement of settling payments in dollars.
“You complained a lot about the dollarization of the Tanzanian economy. The government took your concerns and acted on them, and now you’re starting to complain again,” Kitila said, responding to the question.
“You can’t eat your cake and have it at the same time. Which country in the world do you go to and use someone else’s currency? It’s not right, tell your clients who come to Tanzania that once they enter, they should do things the Tanzanian way,” he emphasized.
As per the regulation, only four types of transactions are allowed to be done in foreign currencies. This includes membership fees paid by the government to regional bodies in the country; transactions involving embassies and international institutions in the country, and loans issued in foreign currency by Banks and financial institutions in the country, and payment of goods in the duty-free shops.
