Tanzania clarifies closure of forex shops during Magufuli era

By  The Citizen Reporter

Media/news company Mwananchi Communications Limited

What you need to know:

• Deputy Minister for Finance, Mr Hamad Chande said in the Parliament that during that period, when Tanzania was under President John Magufuli, some forex shops were closed due to a number of shortfalls in their operations.

Dar es Salaam. The Tanzanian government said on Tuesday that it was compelled to close forex shops towards the end of 2018 and early 2019 after realizing several shortfalls in the way they [the shops] conducted their businesses.

Deputy Minister for Finance, Mr Hamad Chande said in the Parliament that during that period, when Tanzania was under President John Magufuli, some forex shops were closed due to a number of shortfalls in their operations.During that time, officials from the Bank of Tanzania (BoT) and the Tanzania Revenue Authority (TRA) conducted raids on privately-owned bureaux de changes in Dar es Salaam, resulting in the closure of numerous shops.

A similar exercise had previously occurred in Arusha, where suspicious outlets were sealed off following a joint operation involving BoT and the military.

But responding to legislator’s questions on the matter during the first day of the 2024/25 budget sessions of Parliament on Tuesday, April 2, 2024, Mr Chande said the closure followed a special audit conducted by the government which revealed several shortcomings in their operations.

Read: Why government shut forex shops

These deficiencies included involvement in money laundering activities, conducting currency exchange without proper documentation, and failure to issue receipts for transactions.

Moreover, the shops were found to be non-compliant in providing accurate transaction reports to the BoT, thereby hindering the availability of essential economic data.

“Some shops were also discovered to be transferring money abroad without the necessary licenses or authorizations from the BoT,” Mr Chande said, responding to inquiries from Mr Ussi Salum Pondeza (Chumbuni - CCM), Mr Chande.

In his key question, Mr Pondeza wanted to know why the government decided to close the forex shops, leaving several Tanzanians jobless.

But in his response, Mr Chande said while a total of 68 forex shops were initially closed, the majority have since rectified their shortcomings and regained their licenses.

He reassured that only seven shops remain closed as of now, with plans for their reopening in the near future.

Read: Why Tanzania central bank stepped back from forex market

Expanding on the matter, Finance Minister Dr Mwigulu Nchemba emphasized that the government's intent was not to harm investors.

He clarified that among the assets seized during the closure, unpaid taxes were deducted, and the remaining funds were returned to the shop owners.

The government's actions, he said, underscore its commitment to ensuring compliance within the financial sector while facilitating a conducive environment for business operations in Tanzania.