Tanzania shifts to local shilling in bid against dollar dominance
Tanzania has introduced a ban on the use of foreign currencies, including the US dollar, in local transactions. This decision aims to strengthen the Tanzanian shilling and reduce the influence of external currencies on the country's economy.
Key information
- Ban on foreign currency use: Tanzania has prohibited the use of the dollar and other foreign currencies in local transactions.
- Mandatory currency exchange: Foreigners must exchange foreign currencies at banks or exchange offices.
- Strengthening of local currency: The decision aims to reinforce the Tanzanian shilling.
The Bank of Tanzania has announced a ban on the use of foreign currencies, including the US dollar, in local transactions. All goods and services must now be priced and paid for in Tanzanian shillings. However, tourists can still use bank cards.
Foreigners, including tourists, are required to exchange foreign currencies at commercial banks or exchange offices. The Bank of Tanzania encourages residents to report violations of the new regulations to the appropriate authorities.
Similar bans exist in many African countries, although, as the Polish Press Agency points out, there are exceptions to this rule. In Liberia, the dollar is recognised as a parallel currency. Most shops in the country offer a 10% discount for payment in US currency. In Zimbabwe, where the dollar is still widely used—at least for now—the authorities plan to phase out the dollar by 2030.
Why is the dollar so important?
Across the African continent, key imported commodities, such as oil or medications, are priced in dollars. Additionally, international loans and trade between African countries also depend on this currency.
Interest rate hikes by the US Federal Reserve affect African public debt, a significant portion of which is denominated in dollars. In Sub-Saharan Africa, about 40% of the debt is external, and over 60% is in dollars.
