How Ban on Foreign Currency Will Affect International Transactions in Tanzania

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The Bank of Tanzania (BoT) imposed a ban on the use of foreign currencies for local transactions in Tanzania, effective May 2025.

The directive mandates that all goods and services within the country must now be priced and paid for exclusively in Tanzanian shillings.

The new rules, part of government regulations that took effect on March 28, 2025, prohibits businesses from quoting, advertising, or demanding payment in foreign currencies such as the US dollar or euro.

Tanzanian businesses are also barred from rejecting payments made in the national currency.

“It is an offence to quote, advertise, or indicate prices in foreign currency, to compel, facilitate, or accept payment in foreign currency, or to refuse payment made in Tanzanian Shillings,” the statement read in parts.

The BoT clarified that the restrictions extend beyond retail transactions, significantly impacting contractual agreements. From March 28 onward, companies are no longer permitted to sign or renew contracts that stipulate payment in foreign currencies.

Also Read: Tanzania Imposes Embargo on South Africa, Malawi Produce

However, pre-existing agreements denominated in foreign currencies will be honored within a transitional period defined by the authorities.

While the regulations tighten controls on domestic currency use, exceptions remain for foreign visitors. Tourists and non-residents can still use foreign currencies but only through formal channels such as licensed banks, foreign exchange bureaus, and digital payment systems like credit cards or mobile money platforms.

The policy shift comes at a time of volatility for the Tanzanian shilling. After gaining 9.51% between July and December 2024 ranking as the world’s best-performing currency during that stretch the shilling has since experienced a 3.6% decline against the US dollar between April 2024 and April 2025.

The BoT attributes the recent depreciation to seasonal fluctuations in foreign exchange inflows and Tanzania’s flexible exchange rate regime, which allows the currency’s value to be shaped by market forces. The central bank intervenes only when necessary to avoid excessive volatility.
Despite the currency’s recent dip, Tanzania’s external position remains strong.

Foreign exchange reserves stood at over $5.6 billion at the end of Q1 2025, sufficient to cover 4.5 months of imports. The BoT projects that this cushion will remain stable into the second quarter.

To reinforce long-term reserve levels, the central bank plans to ramp up purchases of gold and foreign exchange on the open market. Broader policy strategies also include expanding exports and encouraging import substitution by boosting domestic production.

According to the International Monetary Fund (IMF), the country’s economy grew by 5.5% in 2024, supported by strong fiscal and external balances. Inflation remained low, averaging 3.1% for the year—well beneath the BoT’s 5% target. The IMF expects continued economic growth in 2025.

As Tanzania tightens its monetary framework, authorities are optimistic that the move will strengthen the local currency, bolster investor confidence, and enhance macroeconomic stability.

May 6, 2025

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Collins Ogutu

Nairobi based Digital Journalist, Corporate Communication Expert and Digital Marketer with a wealth of experience in multimedia. Accredited member of the Media Council of Kenya.