Dar es Salaam. While the government is still preparing for digital cryptocurrencies, economists have warned that the uniform adoption of modern means of monetary transactions is likely to shake up the country’s economy.
This is because the type of monetary transactions cannot be regulated by the government, as the law on banking and financial institutions does not apply to cryptocurrencies. In June of this year, President Samia Suluhu Hassan called on the Bank of Tanzania (BoT) to start the necessary preparations for virtual cryptocurrency and blockchain technologies.
But yesterday, the BoT’s director of economic research and policy, Dr Suleiman Missango, told the Citizen that they were still working on the guidelines. “The general public, including the media, will be informed of the progress made in due course,” he said by email.
Tanzania is ranked in the top 20 Global Crypto Adoption Index, with analysts attributing it to the president’s positive stance on cryptocurrency.
Speaking to The Citizen yesterday, economist and business expert Dr Donath Olomi said the trend was showing Tanzania to be among the early adopters of crypto.
“It can mean different things. Another Tanzanian maybe wanted to keep his wealth out of government sight, â€noted Dr Olomi.
He said that when a substantial part of the wealth is not in the control of the government, a country cannot use it to carry out monetary policy.
Also, Dr Olomi added, if people used Tanzanian shillings to buy dollars which they use to buy crypto, the local currency can depreciate.
Professor Haji Semboja from the Economics Department at Zanzibar State University said that despite cryptocurrency being the direction everyone is heading in, it is not high time for the country adopts it.
Tanzania, he explained, was a lower middle-income country with limited data, information and knowledge about monetary data, some of which made it difficult to participate in global trade.
“The development of our economies is a complete function of the development of international monetary and commodity markets,” noted Professor Semboja.
“I must not yet accept an instrument that will never benefit the majority of people. This is not just because of the limited knowledge, but also the level of economic development.
It is on this basis that few countries have adopted it by putting in place a political, regulatory and institutional framework to support cryptocurrency. “Many countries have taken a wait-and-see attitude because of these complications which we need to understand,” said Professor Semboja.
A prominent economist on condition of anonymity told The Citizen that cryptocurrency is a very risky business that countries scare off and instead let individuals operate at their own risk. He said given the nature of the country’s economy, it was too early to think about cryptocurrency.
“The majority of countries in the world have not officially adopted it because of the risks. The fluctuation in the value of the cryptocurrency is very high, â€the informed source said, noting that people were losing a lot in the business.
A credible source added, “Cryptocurrency is like a bet. A small mistake in income can lead us to poverty.
He was of the opinion that if the cryptocurrency was to become effective and efficient, it should get a backup from all the central banks in the world. “Currencies are stable globally because they are supported by central banks through strong monetary policies,†the source said.
The credible source said that if the country is to enter the digital economy, it is high time the government strengthens the Dar es Salaam Stock Exchange (DSE) by putting in place valuation standards and sufficient information.