AN initiative taken by the Bank of Tanzania (BoT) to control operations of bureaux de change in the country has improved collection of foreign currencies in commercial banks.
BoT Governor, Prof Florens Luoga, said this yesterday when responding to various issues raised by the business community during a meeting convened by President John Magufuli at the State House in Dar es Salaam.
According to Prof Luoga, after a crackdown targeting forex shops, which were operating illegally, commercial banks are now collecting more foreign currencies than before.
“Through commercial banks we are now collecting more than $10m a day ... our banks have the capacity to service imports and exports ... for the past three weeks they have not come to BoT for foreign currencies, instead the central bank can now buy foreign currencies from them,”
Prof Luoga ex- Biggest E.A tourism fair starts with a bang plained. He said the history of having foreign exchange reserves dropping had changed for “our reserves have risen and will continue increasing through setting up systems to monitor transactions.”
Prof Luoga assured commercial banks that BoT would buy foreign currencies so that they could be spent on various projects in the country.
He, however, noted that BoT had come up with forex shops regulations to control the operations so that they didn’t affect the financial sector.
Prof Luoga dismissed claims that BoT had confiscated funds of some forex shops during the operation to crack down on those, which were operating illegally. “There were no funds collected during the crackdown.
The money taken was for exhibits and it had started giving them feedback since last week after completing investigation,” he said.He further said that the commercial banks needed to be strengthened and BoT was taking measures to ensure the commercial banks had the staff certified by the central bank.
“We are finalising a programme and we will meet with Tanzania Bankers Association (TBA) to see the certification programme needed by the BoT,” he said.
He added that as BoT they would not like to see such things like non-performing loans (NPLs) because they expected banks to have the competent staff capable of monitoring and evaluating projects.
“Therefore, there is no reason to provide loans to a person, whose house used as collateral, is situated in risk-prone areas because when commercial banks are not stable they also affect the country’s economy.”
For his part, President Magufuli said the bureaux de change were also part of money laundering activities.
He noted that in other developed nations foreign exchange businesses were only done by commercial banks.
“Most of these forex shops were operating illegally. We must stabilise the country’s economy, but this business went further to control the exchange rate. We could not allow this to continue,” he insisted.
In April this year Minister for Finance and Planning, Dr Philip Mpango, said the country had adequate foreign exchange reserves of up to $4.67bn (about 10.8tri/-) that could import products from outside the country for almost five months.