Introduction

The Government of Tanzania has implemented new Foreign Currency Usage Regulations through Government Notice (GN) 198 of 2025 (the Foreign Currency Regulations), which became effective on 28 March 2025. These regulations stem from the amendments to the Bank of Tanzania Act, 2006 as introduced by the Finance Act, 2024 which explicitly prohibit the use of foreign currency for transactions within the country.

The Foreign Currency Regulations

The Foreign Currency Regulations place a requirement for all goods and services within Tanzania to be priced and paid for in Tanzanian shillings (TZS). All local contracts for goods and services must be denominated in local currency, unless they fall under the excepted transactions that are specified under the schedule to the Foreign Currency Regulations. The exempted transactions are government contributions to regional organisations; transactions involving embassies and international organisations; foreign currency loans that have been advanced to borrowers by local banks and financial institutions; and payments made in duty-free shops.

The Foreign Currency Regulations require any existing contracts that are denominated in foreign currency to be amended and denominated in local currency within 12 months from the date that the Foreign Currency Regulations became effective. This means that parties to existing contracts that are denominated in foreign currency and do not fall within the exempted categories specified under the schedule to the Foreign Currency Regulations have until 27 March 2026 to amend such contracts so that the contracts are denominated in TZS. Failure to do so will result in the contracts becoming void, unless an extension is granted by the Minister of Finance.

Additionally, the Foreign Currency Regulations prohibit setting prices in foreign currency; receiving or demanding payments in foreign currency for local transactions; or refusing payments made in TZS.

Notably, the Foreign Currency Regulations empower the Minister of Finance in consultation with the Governor of the Bank of Tanzania to make changes to the list of exempted transactions which can be made in foreign currency.

Impact on businesses

To ensure compliance, many businesses will be required to take several critical steps to adjust their financial and operational practices. These measures will help mitigate legal risks, maintain financial stability and ensure a smooth transition under the updated regulatory framework. It will be imperative for businesses to review and amend any existing contracts that involve foreign currency payments. Existing agreements with suppliers, customers, service providers and other parties that operate within a business's ecosystem should be carefully examined and, where necessary, modified in order to reflect transactions exclusively in local currency. It will be necessary for businesses to also consider their existing pricing structures and ensure that these are denominated in local currency. This may call for reworking and/or adjusting pricing models and communicating any changes to the affected parties. Businesses will also need to ensure that all marketing and sales materials indicate the pricing in TZS.

To mitigate financial risks, businesses should actively monitor exchange rate fluctuations and assess their potential impact. Foreign exchange risks can significantly affect businesses engaged in international trade. It will therefore be important for businesses to develop robust risk management strategies to minimise exposure to currency volatility.

By implementing these measures, businesses can smoothly transition to the new regulatory landscape while minimising operational disruptions and legal risks. A proactive approach to compliance will not only ensure adherence to the law, but also enhance financial planning and stability in Tanzania's evolving economic environment.