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Will more forex shops curb illegal currency exchange in Arusha?
What you need to know:
- Illicit exchanges have become a common sight in Arusha, where individuals in tinted vehicles conduct transactions with seemingly inconspicuous traders masquerading as sellers of mobile phone vouchers or tourist souvenirs
Arusha. In a bid to tackle the prevalent issue of illegal currency exchange, particularly in the bustling Clock Tower zone of Arusha city, the government has announced plans to expand the presence of authorised forex shops in the area.
Illicit exchanges have become a common sight in Arusha, where individuals in tinted vehicles conduct transactions with seemingly inconspicuous traders masquerading as sellers of mobile phone vouchers or tourist souvenirs.
Despite the availability of licenced forex bureaus and banks nearby, these unauthorised exchanges continue to thrive, fueled by the resurgence of tourism and conferences in the region.
Recognising the inadequacy of existing legal avenues for currency exchange, the Bank of Tanzania (BoT) has taken decisive action.
Governor Emmanuel Tutuba announced during a recent meeting with hoteliers that three- to five-star hotels would soon be permitted to operate forex shops starting in July of this year.
This move aims to meet the growing demand for currency exchange services, particularly among tourists arriving at odd hours when traditional outlets are closed.
However, the road to expanding legal currency exchange services hasn’t been without its challenges.
Strict licencing requirements have hindered the establishment of new forex bureaus, leaving gaps in the market that illegal operators readily exploit.
Many potential traders have struggled to meet the substantial capital thresholds set by regulatory authorities, further exacerbating the issue.
Wilbard Chamburo, Chairman of the Tanzania Association of Tour Operators (TATO), emphasised the need to address the root causes of illicit currency trading.
“Hard cash is the problem. It is the source of the black market,” said Wilbard Chamburo, the chairman of the Tanzania Association of Tour Operators (Tato).
“Where is the cash (dollars) in the streets coming from? Many tourists hate travelling with cash,” he asked, drawing the attention of 50 plus hoteliers in attendance.
Despite the optimism surrounding the government’s initiative, concerns persist regarding the security implications of establishing forex shops outside the city center.
Titus Munuve, owner of Runaro Lodge, voiced apprehensions about the safety of operating such establishments in more remote locations.
“It is a great risk to me and my employees to run a forex bureau away from the secure city centre,” said Mr Munuve.
The BoT director of Financial Sector Supervision, Ms Suzanne Katabi, said hotels will be allowed to open forex shops from July 1 this year and that a licence would be processed within two weeks.
The government’s efforts to combat illegal currency exchange underscore its commitment to safeguarding the integrity of Tanzania’s financial system.
By expanding the presence of authorised forex shops, officials aim to not only clamp down on illicit activities but also streamline currency exchange services to better serve the needs of residents and visitors alike.
As the July deadline approaches, stakeholders eagerly await further developments, hopeful that these measures will mark a significant step towards eradicating the scourge of illegal currency exchange in Arusha.
