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Who is to blame on "Dollarisation"? Govt or BoT?

Discussion in 'Jukwaa la Siasa' started by BAK, Jun 13, 2010.

  1. BAK

    BAK JF-Expert Member

    Jun 13, 2010
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    `Dollarisation` hurts Tanzania economy

    By Adam Ihucha

    13th June 2010

    Extensive use of the US dollar in major and minor transactions in large urban centres in the country, especially in Arusha municipality is weakening the Tanzanian Shilling, the government has said.

    Finance and Economic Affairs Deputy Minister, Omar Yusuph Mzee, noted: "We are creating a high but unnecessary demand for the dollar; even in trivial matters such as shopping and settling bills…a negative trend."

    He likened the trend as "shooting ourselves in the foot." On-the-spot check by The Guardian on Sunday in the town has shown that Arusha is a 'dollar-ized territory.'

    Landlords demand rents in US dollar, Hotel rooms are charged in the American currency and most retail outlets accept the dollar, whose scarcity has created a stiff competition, among the bureaux de change in the town.

    The current exchange rate for the US dollar is between Sh1,490 and Sh1,510.
    "We are inflating the dollar's exchange rate as an incentive for those who possess them to sell," said Neema Sambo, a forex dealer in down-town Arusha.

    "The market has seen a swift depreciation of the shilling, which is likely to plunge further due to tight dollar supply," Barclays Bank Tanzania noted in a report on trading in the Inter-bank Foreign Exchange Market (IFEM) in May.

    The Bank of Tanzania (BoT)'s indicative exchange rate in the IFEM was Sh1, 353 compared with the weighted average rate of Sh1, 317 and Sh1,160 in February 2009 and 2008 respectively.

    According to BoT Governor Prof Benno Ndulu the soaring exchange rate is a universal market trend in response to international turbulence, beyond their control.

    Despite the dollar's shilling plunge by nearly 3.2 per cent against the US dollar in the past six months, it had made gains against the euro and the Sterling Pound, Prof Ndulu said.

    The dollar scarcity has hit hardest importers who need the American currency. Managing Director of the popular supermarket at the Arusha Regional CCM Block, Vonnesly Trading Co. Ltd, Joan Obeid said:

    "As US dollar becomes rarer the exchange rate rises, spiraling the prices of imports even higher, beyond the reaches of the most common folks."
    Majority of local people are speculating that the crisis caused by the Icelandic volcanic ashes could be a factor behind the US dollar scarcity.

    "The recent Iceland volcanic ash turbulent has badly hurt our horticulture, tourism and Tanzanite, the major foreign exchange earner, creating a critical shortage of American currency" says Ms Joan.

    The scarcity has become a blessing, particularly to tour operators, as they are apparently enjoying the US dollar exchange rates soaring.

  2. A

    Alpha JF-Expert Member

    Jun 13, 2010
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    Bubu posted this back in 2007. What progress have they made in the last three years? Obviously zero. Same old blah blah from CCM, plenty of talk but no action.

  3. B

    Bulesi JF-Expert Member

    Jun 13, 2010
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    If the the head of BOT is appointed by the head of government who happens to be the president then it is my opinion that as far as the governance issues are concerned in Tanzania , there is no difference between the govt and BOT!! In actual fact that is the reason during the Mkapa era Ballali used to double as advisor to the president as well as the head of BOT!!
  4. Da Womanizer

    Da Womanizer JF-Expert Member

    Jun 14, 2010
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    This government of Tz is full of crap. It never implements anything without some force from outside. Yaani it is so annoying
  5. M

    Mdondoaji JF-Expert Member

    Jun 14, 2010
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    Hivi mie naomba niulize nani msimamizi wa uchumi Tanzania? BOT wanafanya kazi gani? Nani ni kiongozi wa mamlaka ya biashara Tanzania. Mbona waliweza kuzuia kutumia kadi za simu kwa dola siku hizi ni shillingi washindwe kuzuia hii dollarisation culture katika biashara zengine Tanzania?
  6. Brooklyn

    Brooklyn JF-Expert Member

    Jun 14, 2010
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    nini tofauti kati ya BoT na serlikali??