Africa continues to fight against the use of the dollar as Tanzania bans pricing in dollars
CHINEDU OKAFOR
June 22, 2023 3:35 PM
- Bank of Tanzania instructs firms to comply with regulations and cease pricing products and services in dollars to relieve pressure on the local currency.
- The recent surge in foreign exchange demand prompts Tanzania to reinforce the ban on US currency usage and warns against unregulated foreign currency markets.
- Tanzania explores alternatives to reduce reliance on the dollar, considering business transactions in local currencies and joining the call for de-dollarization in Africa.
The Bank of Tanzania (BoT) has instructed firms in the country to stop pricing products and services in dollars, stressing that doing so is against regulatory requirements and will relieve pressure on the local currency.
The Tanzanian shilling continues to be the only legal money in the nation, according to central bank governor Emmanuel Tutuba. In August 2007 and again in December 2017, the Tanzanian government outlawed the usage of the US currency.
“The government’s directives issued are still valid and should be adhered to at all times,” the central bank said in a notice dated June 20. “Tourists and non-residents who pay in foreign currencies must provide their identification documents such as passport and certificate of incorporation for companies for proper capturing and classification of statistics,” as seen in the notice.
Recent months have seen an upsurge in the demand for foreign exchange, particularly in the real estate, healthcare, transportation, and educational sectors as companies seek to protect themselves against a depreciating local currency.
The head of the central bank also issued a warning on unregulated foreign currency markets. “It should be noted that institutions registered to determine exchange rates are commercial banks and bureaux de change only,” he said.
Back in May, Tanzania and India considered doing business in their respective local currencies in a bid to reduce their dependence on the American dollar. By encouraging commerce in local currencies, stakeholders claimed that Tanzania and India would lessen their dependency on important global currencies and promote a stable and effective trading environment.
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Many African nations are grappling with declining foreign exchange reserves as a result of tightening monetary policies worldwide. Low reserves have forced countries to rethink their plans for surviving future trends while balancing trade.
Recently, Nigeria unified its dollar rates, in order to increase trade revenue in its local currency. Additionally, the president of Kenya has been adamant on the subject, calling for African leaders to seriously consider the prospect of a continent-wide de-dollarisation in order to reduce its reliance on the dollar.
“Although there has been the introduction of several regional payment infrastructures in the continent, we lack a single system that seamlessly facilitates trade among our nations, eliminating the obstacles posed by varying currencies,” Ruto said at the third Kenya International Investment Conference in Nairobi, a few weeks ago. “It is imperative that we proactively seek a resolution to the disparities in currencies and the consequential impediments it poses.”
Source: Africa Business Insider
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