Forex traders oppose pact on free use of currencies

Tunduma and Dar es Salaam. Foreign exchange dealers in Tunduma have expressed their concern over the decision by Tanzania and Zambia to allow free use of their respective currencies in making transactions on both sides of the border.

The agreement, which was revealed in a statement by the Bank of Tanzania (BoT) on Wednesday, will allow the shilling to be recognised as the legal tender for payments in Nakonde, Zambia, while the kwacha will be recognised in Tunduma, Tanzania.

However, foreign exchange dealers in the area are worried that their multimillion businesses will collapse when the agreement between the two nations comes into effect. The agreement will be signed today at the Tunduma border between the Zambia central bank governor, Dr Denny Kalyalya and his counterpart, Prof Florens Luoga, and witnessed by Songwe Regional Commissioner Nicodemus Mwangela.

One of the dealers, Mr Steven Rupia, was not happy with the move, saying it will automatically kill foreign exchange business on both sides of the border, affecting the lives of thousands of Tanzanians and Zambians who depend on it.

“If this will be signed, many jobs will be lost and the forex business will face a natural death,” he said.

However, non-forex traders appreciate the decision saying it will reduce the cost of doing business they were incurring when exchanging currencies to obtain goods and services.

Retail business owner Robert Silambwa said this is the right decision and will not affect business transactions. Instead, it will stimulate trade because unstable forex trend was among the business challenges.

“The agreement will remove all drawbacks we were experiencing when we wanted to purchase goods from Nakonde because they did not recognise our shilling,” he said. Another trader at Vwawa, Mbozi District, Mr Godfrey Mwakitwange, said the decision was good, but both governments should provide education to the public on how the new arrangement is going to work.

According to the BoT statement, the agreement will enable the acceptance of the two countries’ currencies in all spheres of businesses, including banking services.

“The aim of this agreement is to strengthen business ties between the two countries, stamp out the illegal foreign exchange market and facilitate tax collection in all business activities conducted in both Tanzania and Zambia,” says the statement.

The statement further says that the two central banks decided to reach an agreement following a dialogue that started last year, which aimed at curbing the illegal foreign exchange business.