By Dr Goodluck Temu

Background

The Bank of Tanzania Act vests the Bank of Tanzania with the exclusive authority to issue currency in Tanzania. Section 26(1) of the Act states:

“The Bank shall have the sole right to issue bank notes and coins in and for Tanzania, which shall be the only legal tender in Tanzania.”

Despite this exclusivity, foreign currencies have over the years increasingly been used in domestic transactions—particularly in sectors such as hospitality, real estate, private healthcare, and education. This informal dollarisation posed significant risks to monetary policy control, currency stability, and legal clarity.

In response to these challenges, the Finance Act, 2024 amended the Bank of Tanzania Act by inserting a new subsection:

“Save as otherwise prescribed by the Minister in the regulations, a person who transacts using any currency other than the legal tender issued by the Bank commits an offence.” (Section 26(2))

This amendment provided the statutory basis for the enactment of implementing regulations. Consequently, the Foreign Currency Use Regulations, 2025 were issued under Government Notice No. 198 dated 28 March 2025, pursuant to section 70 of the Bank of Tanzania Act.

Key Highlights of the Regulations

General Principle

  • All prices for goods and services within Tanzania must be quoted in Tanzanian Shillings (TZS).
  • All payments for transactions conducted within Tanzania must be made in Tanzanian Shillings.

Prohibited Conduct

Pursuant to Regulation 3(2), the following acts constitute offences:

  • Quoting, advertising, or publishing the price of goods or services in foreign currency;
  • Demanding or facilitating payment in foreign currency for goods or services within Tanzania;
  • Refusing to accept Tanzanian Shillings as a mode of payment;
  • Receiving payment in foreign currency within Tanzania.

The term “transaction” is broadly defined under Regulation 3(3) to include quoting, advertising, publishing, receiving, or paying for goods and services within Tanzania.

Permitted Transactions

Regulation 4 and its Schedule enumerate the types of transactions that may be conducted in foreign currency:

  • Government membership contributions to regional organisations headquartered in Tanzania;
  • Transactions involving embassies and international organisations;
  • Foreign currency loans issued by local banks and financial institutions;
  • Payments made in duty-free shops.

The Minister for Finance may, in consultation with the Governor of the Bank of Tanzania, amend the list of permitted transactions.

Contractual Restrictions

Regulation 5 prohibits the execution of contracts for domestic goods or services where payment is stipulated in foreign currency, except where such payments fall within the permitted categories.

Contracts entered into prior to the commencement of the Regulations must be amended within twelve months (by March 2026). Any contract that remains unamended within the prescribed period will be rendered void, unless the Minister grants an extension, not exceeding the duration of the original contract.

Consequences of Violation

Violations of the Regulations are considered offences under Section 26(2) of the amended Bank of Tanzania Act. The consequences include:

  • Nullification of non-compliant contracts pursuant to Regulation 5(2)(b);
  • Criminal liability, where such penalties are further provided for under the Act or related legislation. Assessment of the Regulations’ Impact on Transactions

Positive Impacts

  • Reinforces the legal tender status of the Tanzanian Shilling and preserves monetary sovereignty;
  • Enhances transparency and uniformity in pricing and payments;
  • Strengthens the Bank of Tanzania’s monetary and fiscal policy controls;
  • Discourages capital flight and currency speculation;
  • Promotes consumer protection by preventing dual pricing;
  • Strengthens the Tanzanian Shilling against foreign currencies. Challenges
  • May necessitate restructuring of existing contracts, especially in sectors that traditionally rely on foreign currency payments;
  • Creates transactional difficulties for businesses serving foreign clients, including hotels, international schools, and expatriate housing services;
  • May affect foreign investment, particularly where revenue or cost structures are foreign currency-based;
  • Requires robust enforcement and compliance oversight to ensure full implementation. Strategic Recommendations
  • Businesses should audit and revise their standard contract templates to ensure compliance;
  • Regulatory authorities must conduct awareness campaigns and stakeholder engagement to facilitate smooth enforcement; Conclusion

The Foreign Currency Use Regulations, 2025 represent a significant regulatory advancement aimed at preserving the integrity of the Tanzanian Shilling as the exclusive legal tender. While the Regulations are vital in addressing informal dollarisation and enhancing policy control, their effectiveness will ultimately depend on a careful balance of enforcement, compliance support, and stakeholder collaboration to ensure both legal certainty and economic stability.


Disclaimer

This article is not intended to replace professional advice. No one should rely exclusively on the information provided as a substitute for seeking professional advice. The writers or the Firm are not liable for any use of the information contained herein and do not guarantee the accuracy of its contents from the date of publication to the date of usage. For contact: temu@africorp.co.tz or info@africorp.co.tz

AfriCorp Attorneys

Phone Number: +255 22 211 0660
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Dar es Salaam, Tanzania