No More US Dollar: African Country Bans Use of Foreign Currencies for Domestic Use

• Tanzania has officially banned the use of foreign currencies, including the US dollar, for all domestic transactions, with the Tanzanian shilling now required for payments within the country.
• This move follows a significant devaluation of the shilling, which has lost over 10% of its value against the US dollar, and aims to strengthen the national currency and improve control over monetary policy
• Exemptions include payments by foreign visitors, diplomatic posts, and certain international loans, while businesses have until 2026 to convert existing foreign currency contracts to Tanzanian shillings

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

Tanzania has officially banned the use of foreign currencies, including the US dollar, for all domestic transactions. This means that the Tanzanian shilling (TZS) must be used exclusively to pay for products and services within the country.

This comes after the Tanzanian shilling lost more than 10% of its value in relation to the US dollar, making it Africa's worst-performing currency in 2024, according to Bloomberg data.

On March 28, the new regulations went into effect, making it illegal for companies to quote, set, or advertise prices in foreign currencies such as the US dollar or euro, Business Insider reported.

Currency weakens

Rising government debt linked to significant infrastructure projects, such as a $5 billion oil pipeline carrying crude from neighbouring Uganda and a deep-water container port run by India's Adani Ports and Special Economic Zone Ltd., has put pressure on the Tanzanian shilling.

Increased imports for these significant projects, as well as more general global challenges, such as former US President Donald Trump's tariff policies, have also had an effect on the currency.

The program specifically targets industries such as high-value commerce, real estate, and tourism. The change, according to authorities, will strengthen the value of the national currency, enhance control over monetary policy, and protect foreign reserves.

Businesses are no longer able to provide price quotes or take payments in foreign currencies under the new regulations. Unless the Minister of Finance extends the deadline, all current contracts denominated in foreign currencies must be converted to TZS by March 27, 2026.

Enforcement will be handled by the Bank of Tanzania. Operating licence suspension and fines are two consequences of non-compliance.

For services like hotels and excursions, foreign visitors and non-residents can still pay in foreign currency, but only through authorised channels and at official exchange rates.

Additionally exempt are diplomatic posts, international organisations, and certain loans associated with foreign currencies that are connected to commerce or outside funding.

The government intends to sustain the shilling in the future by promoting exports, implementing import substitution measures, and continuing to buy gold and foreign currencies.

Tanzania's change in currency policy is similar to recent actions taken by other African countries, such as Zambia and Zimbabwe, which have also taken daring steps to fortify and stabilise their currencies.

Platform set to launch currency market

Legit.ng reported that to boost cross-border trade throughout the continent, the Pan-African Payments and Settlement System (PAPSS) has announced plans to launch a currency market for African currencies this year.

With the name tag, "The Africa Currency Marketplace," the platform will allow traders to exchange currencies directly, doing away with the need for third-party intermediary currencies like the USD, according to Mike Ogbalu, CEO of PAPSS.

Reuters reported that the inefficiency of currency systems, which makes smooth transactions more difficult, has been a significant obstacle to the establishment of the African Continental Free Trade Area (AfCFTA).

Source: Legit.ng