Fears of a return to illegal foreign currency dealing have spread across Arusha after the Bank of Tanzania kept money-changing shops closed for a third day in 2018.
The shutdown has unsettled a city that depends heavily on tourism and daily currency exchange from visitors and traders. Business people say the move has slowed transactions and shaken confidence in Tanzania’s safari capital.
A publisher told The Citizen that forex shops are part of everyday commerce in Arusha and said the central bank’s operation had made the city feel as if it were under emergency conditions. He said the use of the military in the audit damaged business flow and investor confidence.
He also questioned why the Bank of Tanzania had not acted earlier if the outlets were already being monitored. In his view, licensed shops should have been checked before the situation escalated.
A forex operator along Sokoine Road, speaking anonymously, said it was unreasonable to shut all the outlets at once and bring currency trade to a halt. He said the central bank should be able to identify problems in individual licensed shops through its early warning systems.
He accepted that allegations of money laundering and capital flight could be serious, but said each outlet should have been investigated separately. He added that the sight of people in military uniform at the shops frightened customers and made the process look hostile to business.
Arusha Urban MP Godbless Lema also rejected the explanation given by Bank of Tanzania governor Florens Luoga for using the military. Speaking to journalists on Wednesday, Lema said soldiers should not be used in civilian matters.
He dismissed the claim that there were too few police officers because many had been assigned to guard Form Two examinations. Lema said government and private schools running examinations in Arusha were numerous enough to leave sufficient police available for the operation.
On Wednesday, a survey by The Citizen found long queues at commercial banks as people sought Tanzanian shillings and foreign currency services. Luoga had said in Arusha on Tuesday that customers should use commercial banks while investigations into the closed outlets continued.
The rush was especially visible at NMB Bank’s Clock Tower branch, where a special window was opened for people buying or selling local and foreign currency. The dollar was trading at about Sh2,300, close to the rates previously offered by the closed forex shops.
The Kenyan shilling was also among the most traded currencies because Arusha serves as a gateway for goods moving to and from Kenya.
Unlicensed dealers may be returning ¶
There were signs that unlicensed money changers were moving back into Arusha’s streets, where demand for both local and foreign currency remains high. Illegal dealers were common in the city decades ago before foreign exchange trade was liberalised in the early 1990s.
A merchandise seller along Goliondoi Road said money changing now happens in banks. Other business people urged the Bank of Tanzania and government agencies to finish the investigations quickly so that innocent bureaux de change operators can reopen.
Not everyone opposed the crackdown. A business consultant based in Arusha said the central bank’s action may have been necessary because some forex shops were involved in dubious transactions, including tax evasion.
He said some of the outlets had become known for breaking the rules under which they were licensed and registered. In his view, illegal transfers of money abroad and related transactions had weakened the shilling, pushed up inflation, reduced purchasing power and deepened hardship.
The closure continued to dominate discussion in Arusha, with traders warning that a return to unofficial money changing would mainly benefit speculators.
