Cross-boarder use of Kwacha, shilling to boost trade at border
Tunduma. Traders at the Tunduma-Nakonde one stop boarder post can now use Tanzanian and Zambian currencies on each side of the border without having to convert them, thanks to a new arrangement to cut inconveniencies and boost trading activities.
Tanzania and Zambia have signed a Memorandum of Understanding (MoU) for convertibility and repatriation of their currencies at the border towards the end of 2018.
The conversion and repatriation of the Tanzanian shilling and the Zambian Kwacha is set to stimulate trading between people of the two neighbouring countries and curb informal foreign exchange, a senior Bank of Tanzania (BoT) official said yesterday.
Currency convertibility refers to the case with which a country’s currency can be converted into gold or another currency.
Likewise, repatriation refers to converting any foreign currency into one’s local currency.
Both convertibility and repatriation are necessary due to business transactions, foreign investments, or international travel. Official launch of the exercise will be held today (Friday) Bank of Tanzania (BoT) governor Prof Florens Luoga and his Bank of Zambia counterpart, Dr Denny Kalyalya.
BoT’s Mbeya branch director, Mr Ibrahim Malogoi said the move will allow traders from Tanzania and Zambia to use each nation’s currency to buy goods and service.
“What we have been doing during the past two weeks is to sensitise traders on what the arrangement means and why it matters to them. We have also been educating them on how to identify genuine currencies of the two countries,” he said.
He said the agreement was in line with an agreement by member states of the Southern African Development Community (Sadc) on how to simplify trading in borders. He said it was encouraging that even before its official launch, people in the two countries were already making use of the initiative.
“Banks from either side of the border are already receiving both currencies.
This means that when a Tanzanian trader goes to Nakonde, he will not be compelled to change his/her money into Kwacha to make a transaction. Similarly, when a Zambian comes to Tunduma, he/she will not be obliged to change his/her Kwacha into Shilling to make a transaction,” he said.
A manager at NMB Bank at Tunduma, Mr Fadhili Masanga said financial institutions were ready for the currency convertibility and repatriation, insisting that the benefits of the exercise will be felt to traders. CRDB Bank manager at Tunduma branch Crispin Kombo said the exercise will boost money circulation at the border point
The Tunduma-Nakonde is Tanzania’s busiest border point, linking Dar es Salaam, Lusaka (Zambia), Lubumbashi (DRC) and to some extent, Harare in Zimbabwe.
It is estimated that over 70 percent of goods in transit from the Dar es Salaam pass through the Tunduma-Nakonde border.
On average, the value of cargo passing through the border to a number of destinations in Zambia, DRC and Zimbabwe is estimated at $1.5 billion per annum.
Between 2012 and 2017, the total value of trade between Tanzania and Zambia going through the border averaged about $180 million per annum.