The first case happened in Tanzania, where the government crackdown abovementioned forex shops, claiming that they were operating illegally which started several years ago that was, on the other hand, creating unique opportunities for the banks to contribute to their incomes. After several months of this action, the BoT reported that they had an increased number of businesses and collections of foreign currencies by commercial banks than it was prior to the crackdown.
In Tanzania, banks are having a major role in fostering the development of financial markets, by creating the proper environment for them. More specifically, the banks create special infrastructure for the financial market, creating appropriate legislation for operating and executing oversight on market instruments and tools.
Due to the fact that the foreign exchange shops were operating illegally and as a result, they were closed, it created the best opportunity for the banks to capitalize by opening windows for the service and in order to generate income. In the interviews after the actions, government officials announced that the move to uproot unlawful forex shops is commendable and it is not a surprise that it has created the stability of the foreign exchange business in the country. It was also noted that after the restrictions and actions, Tanzanian shilling has improved once the good system and monitor and control on the foreign exchange market was established, and as a result, Tanzanian shilling became stable for trading.
It is also said that if the country does not have control over foreign exchange markets, people might start buying foreign currency without any intention to make foreign transactions to import goods and services. If there is a control on the foreign exchange, people might buy foreign currency but not make foreign transactions. It means that they will be taking money out of the country which is affecting the country’s economy in a bad way.
Some forex shops or bureaus were creating a not fertile environment for the banking sector in the country to promote a big business because the competition was not fair and was unlawful. This was because the rates for buying and selling were completely different from what they were giving to the bank, there were a lot of speculations going around and this is why the government decided to intervene. The ways that they were getting dollars from suppliers are believed to be unfair and it is even thought that they were not paying taxes or they were given special conditions to buy at a lower price and sell at higher prices, thus to make good profits.
With the decision that was made by the government, now the officials are able to monitor and control trading as it properly shows the real nature of foreign exchange market, as it is very important for every dollar transaction to have a backup about its plan for the economic activity. It will play a major role in setting the value for money according to the high demand. It will increase the demand for the dollar, but this kind of activity is not hindering the country’s economic conditions. Trading with the dollar should support economic activities. The government involvement makes the currency trading stable and this is why they have seen the stability for some time already.
New Presidential Plan
Tanzania is undergoing a significant democratic transformation following the death of former President John Pombe Magufuli. Samia Suluhu Hassan, the current leader of the East African republic, is the country’s sixth president and the continent’s first female president. The political, social, and economic conditions are very tough in the country and the presidential plan is important for boosting economic conditions.
Tanzania’s economy has grown at an annual rate of about 7% over the past two decades. However, this declined even more significantly from 5.8% in 2019 to 2% in 2020. In the formal economy, there have been employment cuts, and hundreds of thousands of workers are likely to have dropped below the national poverty line. The response of Magufuli to the COVID-19 pandemic has been characterized as “distressing” and “baffling.” To control the dissemination of COVID-19, one decision was made not to enforce strict lockout measures. He admired his cost-cutting approach, saying that they’ve been infected with a variety of viruses, including Aids and measles. Their economy must take priority. In the coming years, countries from all over Africa will come to Tanzania to buy food… They will struggle as a result of their markets being shut down.
Many people now agree that COVID-19 has spread across Tanzania. The pandemic’s true economic effect will most likely be felt in 2021 and 2022 when companies take precautionary steps to prevent the outbreak from spreading. Output, demand, and exports are all projected to fall sharply. Magufuli declared Tanzania virus-free in May of 2020, but he didn’t take it seriously at the moment. COVID-19, he said, had returned with Tanzanians who had traveled abroad in search of vaccinations.
Summing It Up
Tanzania is often held up as an example of East African security and prosperity. It is not subjected to the same internal tensions and civil strife as many of its neighbors, such as the Democratic Republic of Congo, Mozambique, Rwanda, Kenya, and Uganda. The establishment of non-ethnic democratic institutions and civil service reflects the effort to create a united country.
The marginalization of chiefly authority and the dissemination of Kiswahili as a unifying non-colonial national language are examples of this. This is a tale that will be repeated in the 2020 election and demonstrates the country’s deep divisions. Mama Samia may turn out to be the right kind of politician to usher in a new age of bipartisan politics that is less nationalist, less bureaucratic, and more collegial.