BoT to carry out survey on use of US dollar in local market

By Felix Andrew

 

Bank of Tanzania (BoT)

The Bank of Tanzania (BoT) plans to conduct a survey in some sectors to establish whether there is high use of US dollar instead of the shilling in the local market, the deputy governor, Juma Reli has said.

 

Reli was briefing lawmakers here at the weekend during a seminar on national payment systems which was organised by the Ministry of Finance.

He said at the moment, the use of US dollar in the Tanzanian economy is below 5 percent, saying it was not bad. He said the sectors which accept dollar transactions include real estate, education and tourism.

 

“We are planning to conduct a survey to see other sectors which accept dollars instead of the shillings and come up with recommendations,” he said.

 

Speaking during the seminar, Mji Mkongwe legislator Ibrahim Sanya urged the government to ensure that all sectors of the economy accept the shillings during transactions.

 

“I ask the government to repeal the 2008 law which allows foreign currency usage locally in a bid to prevent dollarisation from taking root in the country,” he said.

 

Sanya said the use of the US Dollar, in the said sectors was weakening the Tanzanian shilling in the international market.

 

“Local bureau de change are losing market, the government is losing revenue, and the Tanzania Shilling is losing the international recognition it deserves, as visitors come and go with their currencies,” he said.

 

For his part, Kilwa North legislator Murtaza Mangungu, urged the government to check transactions by visitors by means of visa card payments since it loses a lot of money.

 

He said more money is lost particularly in transactions which are done with foreign companies operating in the country.

 

“I ask the government to come up with tough laws which would ensure that all the money transacted by foreign companies is not lost,” he said.

Moses Machali (Kasulu Urban, NCCR) asked the government to see that artists benefit from the caller tunes used by mobile phone companies.

 

He called on artists to register their songs with the Copyright Society of Tanzania (Cosota) so as to have fair claim of their call tunes which are used by the firms.

 

Winding up the seminar, the Minister for Finance, Saada Mkuya Salum, said the government has started noting the challenges facing Tanzanians in all electronic money transactions.

 

“We have come up with the National Payments Bill, which once enacted would help check various challenges facing electronic money payments,” she said.

Mkuya also urged Members of Parliament to pass the proposed Tax Administration Bill for the improvement of the economy.

 

Meanwhile, the government recently declared illegal the growing trend of pricing goods and services such as real estate for Tanzanians in US dollars.

 

Stern measures are to be taken against those who continue with such practice.

 

Speaking to East African Business Week on the sidelines of the Azam Media launch event in Dar es Salaam recnetly, the Deputy Minister for Finance and Economic Affairs, Mwigulu Nchemba said that all commercial transactions should be contracted on the local currency.

 

"Any person who comes across with any transaction through dollar they should report the incident to the required authorities and all are aware that dollarisation of the local economy had contributed heavily to the steady weakening of the shilling," he said.

 

The Deputy Minister directed the business community to display prices of goods and services in Tanzanian shillings, and where the aim is to attract foreign customers, then prices in both local and foreign currencies can be indicated.

 

"No Tanzanian should be forced to pay for goods or services in foreign currency the legal tender in Tanzania is the Tanzanian shilling only because they are in Tanzania mainland," he emphasized.

 

Nchemba underscored that the government sometimes needs to have enough foreign currency for the purpose of importing foreign goods once the local industry failed to produce enough goods for local consumers.

He warned against businesses that peg prices in US dollars and convert them into local currency using their own exchange rates.

 

"In Tanzania, only the bureaux de change and commercial banks are allowed to trade in currency exchange according to the financial and banking act," he noted.

 

He pushed for increased production of goods and services for export, to earn more foreign currency and subsequently strengthen the shilling.

“Our shilling could gain strength through increased exports and trimmed imports," he lamented

 

The tendency of charging local goods and services in US dollars has been gaining momentum lately, with financial experts warning that this is likely to soon render the shilling more or less irrelevant.

 

Sectors most notorious for charging in dollars are air travel, the hospitality industry, housing and even education where some schools have been discovered to be charging their school fees in dollars.

 

Some businesses go to the extent of inventing their own exchange rates for customers looking to pay for the goods and services in local currency.

 

Recently, Tanzanian law makers told the House that the use of foreign currencies in the economy was a threat to the shilling calling the government to table a bill on foreign currency use.

 

In June, last year the Parliamentary Standing Committee on Economy, Industry and Trade strongly criticized the use of the dollars in local transactions calling the government to revoke the 2008 decree and strictly enforce the Foreign Exchange Act, 1992.

 

Committee chairperson Luhanga Mpina (Kisese-CCM) said the use of the shilling parallel to foreign currencies makes the country lose her international market competitiveness; diverts business from local bureau de change and leads to revenue loss to the government.

SOURCE: THE GUARDIAN