Tanzania’s central bank bans foreign currency use in domestic transactions to protect the shilling, with exceptions for tourism and cross-border trade.
Dar es Salaam, Tanzania – June 2025
In a major move to reinforce monetary sovereignty, the Bank of Tanzania (BoT) has outlawed the use of foreign currencies in domestic pricing and payments. The policy—announced on Friday—now requires that all local transactions be conducted in Tanzanian shillings (TSh), with a few exceptions made for tourism and cross-border activities.
“All payments and pricing of goods and services in the United Republic of Tanzania shall be in Tanzanian shillings,” declared BoT Governor Emmanuel Tutuba in the official release.
The directive targets businesses and individuals engaging in informal dollar-based transactions, especially in tourism-heavy regions like Zanzibar and Serengeti. It’s part of a wider strategy to stabilize the national currency, improve transparency, and curb monetary policy leakage.
“This measure is aimed at strengthening our currency and ensuring transparency in commercial activities,” said Governor Tutuba.
Under the new policy, foreign visitors can still pay via international cards or digital wallets. However, cash payments must be made in Tanzanian shillings, with foreign currency first exchanged at licensed commercial banks or forex bureaus.
“This is not a ban on foreign money—it’s a call to respect the shilling,” said a BoT official. “Foreigners are welcome, but local transactions must reflect the law of the land.”
This policy shift is expected to affect Zanzibar’s hospitality sector, where up to 80% of revenue from high-end hotels and lodges comes from non-resident dollar payers.
According to Dr. Neema Lugangira, a senior economist at the University of Dar es Salaam, the trend of quoting goods and services in USD or EUR has undermined the Tanzanian shilling and complicated macroeconomic controls.
“Dollarization erodes confidence in our currency and complicates monetary policy,” she explained. “When businesses abandon the shilling, it sends a dangerous signal to investors and citizens alike.”
Sectors such as real estate, safaris, and luxury retail have been key drivers of this dual-currency environment.
To enforce the directive, the BoT is calling on citizens to report violators to:
- The Financial Intelligence Unit (FIU)
- Local law enforcement
- The central bank directly via designated hotlines
“Compliance is not optional,” Tutuba emphasized. “This is a matter of national economic stability.”
The move aligns with broader efforts to enhance fiscal accountability and regulate the underground forex market.
Tanzania’s currency has been under stress, with the Tanzanian shilling depreciating from TSh 2,360/USD to TSh 2,470/USD over the past year. The central bank has made several market interventions to protect reserves and curb inflation.
This crackdown is seen as a strategic step to:
- Improve liquidity in the interbank market
- Reduce informal forex trading
- Reinforce confidence in the local unit
“[BoT] is clearly trying to prevent a deeper currency slide and anchor public expectations,” said a regional analyst with EAC Monetary Policy Forum.
Businesses in Zanzibar, Kilimanjaro, and Arusha—heavily reliant on dollar-paying tourists—are now recalibrating their operations.
“About 60% of our clients used to pay in dollars,” said Said Mussa, general manager of a beach resort in Nungwi. “We’re now updating our booking systems to reflect local currency. It’s a challenge, but we understand the bigger goal.”
Fintech firms are also reporting a surge in onboarding.
“We’ve had a 25% uptick in sign-ups from travel operators in just 48 hours,” said Janet Makame, East Africa Director at a regional payment platform.
Experts say this policy could ripple across the East African Community (EAC), where countries like Kenya and Uganda face similar currency pressures and rising dollar preference in import and property markets.
“Tanzania is taking the lead on something many central banks in the region talk about but rarely enforce,” said an EAC policy analyst. “This may set a precedent for stricter forex regulations across East Africa.”
At its core, Tanzania’s directive is more than economic—it’s a political statement on self-reliance and monetary identity. By outlawing informal foreign currency use, BoT aims to foster long-term stability even if short-term friction is inevitable.
“The value of a nation’s currency is the value of the nation itself,” said Governor Tutuba.
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