The Bank of Tanzania (BOT) has called upon all tourist hotels in the county, ranked three-stars and above, to open up bureau de change or foreign exchange windows to bring the services closer to their visitors and minimize black -market business.
BoT Governor Emanuel Tutuba made this week during a one- day engagement/meeting with hoteliers and high-class tourists' owners, on foreign exchange operations in the country, urging them to open up the business by July 1st this year.
"The aim is also to track the foreign money not in proper channel, which normally end in black market so that it can enter into proper channel to meet the current demand of foreign currency, particularly the US dollars," he said at the meeting held at the BoT sub-headquarters in Zanzibar City.
He said the green light given to the bureau de change follows the recent review and implementation of the Foreign Exchange (Bureau De Change) Regulations of 2019, and that the central bank identified several challenges that affected the provision of foreign exchange services in the country.
Mr Tutuba said among the challenges included many investors failing to meet the regulatory requirements, especially the minimum capital requirement of 1bn/-, resulting in presence of few foreign exchange service providers, which led to the lack of the services in some important areas with high demand of the service.
"This challenge also led to the growing of illegal foreign exchange business (i.e. black market), and now we have relaxed some of the requirements so that more investors can be encouraged to commence or resume foreign exchange business," he explained.
The governor told the hotel people "I am pleased to inform you that the bank has published the revised Foreign Exchange (Bureau De Change) Regulations, 2023 in the Government Gazette number 729 dated 6th October 2023."
He said the regulations have several changes including the reduction of the minimum capital requirement, which was a challenge to many Tanzanian investors to open bureau de change.
In addition, the new regulations have established provisions that allow tourist hotels with ratings of three-stars and above to provide foreign exchange services to their customers.
He warned people who are still owning the US dollars illegally or hide them, that they will experience great loss in the future because by opening up doors for the business means soon the availability of the foreign currency is going to stabilise as the government gets more money from tourists and Tanzania records admirable economic growth.
He said that the minimum capital to start a bureau de change is now: Category A is 1bn/- for foreigners, while 500m/- for Tanzanians, then categories which include 3-Star hotels and above, the capital is 200m/- and below, requirements to enable hotels with the above-mentioned criteria to obtain a license to operate bureaux de change.
"The Bank of Tanzania continues to encourage banks and financial institutions to improve the provision of foreign exchange services. As of February, this year, 37 commercial banks with a network of more than 900 branches spread throughout the country were providing these services. In addition, a total of 18 bureaux de change has been licensed, and they have a total of more than 96 branches across the country," he said.
But the governor said, despite this improvement, there is still a challenge that foreign exchange services are not available when people are in need especially in the evenings, weekends and holidays.
This also contributes to the existence of illegal foreign currency exchange services, the governor said, "Thus, the Bank of Tanzania calls upon stakeholders of this business to look at this issue in order to further improve the availability of foreign exchange services in the country."
He said BoT will continue to provide financial education to the public on the impact of obtaining foreign exchange services through non-authorized service providers and that in addition, the bank will continue to cooperate with relevant authorities in the country in combating all those who are involved in foreign exchange business without having a license.
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"The Bank recognizes hotels as important trackers of foreign money and calls upon the stakeholders to cooperate, including providing information when they find out the existence of illegal foreign exchange business," he said.
The Deputy BoT Governor Ms Sauda Kassim Msemo, cleared worries about the economy, saying that the economic situation in the country is good and that BOT is making efforts to have enough reserve of the US dollars and other foreign currency.
"BOT is aware that the tourism sector is the key driver of the economy of Zanzibar and its stability depends on the availability of a lot of foreign currency. We ask you to increase cooperation and when you see signs of some people doing illegal business, do not hesitate to contact us," she emphasized.
