The Tanzanian government has officially prohibited the use of foreign currencies in local transactions, a decisive step aimed at strengthening the national currency and ensuring tighter oversight of the country’s financial system.
The Bank of Tanzania (BoT) announced on May 2 that all payments for goods and services within the country must now be made exclusively in Tanzanian shillings. This policy, which came into force on March 28, also bars businesses from quoting or advertising prices in currencies like the US dollar or euro.
“No one is allowed to reject payments made in Tanzanian shillings,” the central bank stated, emphasising that contracts involving foreign currencies will now face tighter regulations.
Under the new guidelines, agreements signed after March 28 must be denominated in the local currency, while existing contracts that involve foreign currencies may only remain valid during a limited transitional window, though the specific timeline was not provided.
While the rule applies to all domestic transactions, exceptions are made for tourists and non-residents. These groups must, however, convert foreign currencies through licensed banks or forex bureaux. They are also permitted to use digital payment options such as credit cards and mobile platforms.
The policy shift comes amid currency volatility. After appreciating by 9.5% against the US dollar in the latter half of 2024, the Tanzanian shilling depreciated by 3.6% between April 2024 and April 2025. The BoT attributed the decline to seasonal variations in foreign exchange availability, maintaining that the bank will continue to operate under a flexible exchange rate system and intervene only to stabilise market conditions.
Tanzania’s foreign exchange
Despite recent fluctuations, Tanzania’s foreign exchange reserves remain strong, standing at over $5.6 billion at the end of Q1 2025—sufficient to cover 4.5 months of imports. The BoT expects this buffer to hold steady in the coming months.
To further support the shilling, the government plans to boost foreign reserves by purchasing gold and hard currencies, promoting exports, and advancing import substitution efforts.
According to the International Monetary Fund (IMF), Tanzania’s economy grew by 5.5% in 2024. With inflation kept in check and fiscal conditions improving, the IMF projects continued economic growth through 2025, bolstering confidence in the country’s long-term financial stability.
