TCT Advocacy Update on Dual Currency for Tourism – Aligning with Global Industry Dynamics
Following the Fourth Dialogue Meeting in Dodoma, the Bank of Tanzania (BoT) confirmed that tourism operators may invoice foreign agents/clients in USD for services rendered outside Tanzania, while domestic transactions must be in TZS.
While this offers partial flexibility, TCT continues to advocate for full dual-currency (USD/TZS) adoption across Tourism, Aviation, and Travel Agencies—not only because tourism is an export trade, but due to the unique dynamics of the global tourism industry:
Why Dual Currency is Critical for Tourism: A Global Perspective
- Tourism Operates in a Dollarized Ecosystem
- International bookings, payments, and contracts are predominantly denominated in USD, the global currency of tourism trade.
- From global distribution systems (GDS) like Amadeus and Sabre to online travel agencies (OTAs) like Expedia and Booking.com, transactions are processed in USD. Forcing conversions to TZS adds unnecessary complexity and costs.
- Foreign Tourists Pay in Advance – Often in USD
- Most tour packages from abroad are sold 12–18 months in advance, with payments collected in USD.
- If operators must convert these funds to TZS immediately, they face exchange rate volatility risks, which can erode profitability and destabilize pricing.
- Regional & Global Competitiveness
- Competing destinations (Kenya, Rwanda, South Africa, Egypt) allow dual-currency transactions, certainly for export sectors, ensuring smoother operations for international buyers.
- Restricting USD usage puts Tanzania at a disadvantage, as tour operators and travel agents may face reluctance from foreign partners unwilling to manage TZS transactions.
- Supply Chain Realities
- Many tourism suppliers (hotels, airlines, activity providers) price in USD to hedge against inflation and currency fluctuations.
- Forcing TZS-only domestic payments disrupts this ecosystem, creating mismatches between revenue (TZS) and costs (USD), particularly for:
- Safari operators (paying USD for park fees, vehicle imports, and fuel).
- Hotels (importing furnishings, paying foreign staff, or servicing dollar-linked loans).
- Aviation (leasing aircraft, maintenance, and fuel in USD).
- Tourism SMEs Bear the Brunt
- Large multinationals can navigate forex challenges through offshore accounts and hedging.
- Local Tanzanian Tourism Businesses, however, face:
- Higher banking fees for frequent conversions.
- Exchange rate losses when converting USD earnings to TZS.
- Reduced competitiveness against regional rivals operating in USD.
Source: Tim Henshall for Tanzania Confederation of Tourism