De-dollarisation: Positive economics or uniformity for own sake?

14Jan 2018
Editor
Guardian On Sunday
De-dollarisation: Positive economics or uniformity for own sake?

ENFORCING regulations requiring the use of the local currency in transactions taking place in the country is quickening, as it is the case with directives by the current authorities, that the orders don't just end up as the proverbial ink dries on the paper on which it is used.

In that case the various dollar-beholden stakeholders have problems with adapting to a new situation, and a spate of fears has been expressed in that regard.

For instance a chronicler was saying that foreign visitors taking boat to Zanzibar needed to have two things: passport (despite clearing at the Julius Nyerere International Airport) and dollars to pay for the trip.

There was a price differential attached to dollar use, which the chronicler though it would now disappear.

It is evident that the use of dollars enables local stakeholders to raise service pricing under the caveat of dollar use, which the chronicler was berating, seeing it as discrimination.

The campaign against dollarisation would in that sense be working to end such clear or apparent discriminations, but this is not how it is framed, as foreigners would still be allowed to use dollars, or service providers charge them in dollars, as the case may be.  

That they benefit is a game of 'dollars and ladders,' where using a dollar involves a price hike but one pays with a convenient currency, if a bit pricey.

Chances that more foreigners will complain that they are charged more in foreign currency are minimal, despite that there is a less than level playing field in service rendering.

At the same time locals also complain that foreigners are likely to obtain first hearing or more attentive handling in a demand situation, and this is all part of gains and losses in currency or status variation.

The tourists come from a multiple diversity of countries in terms of language and culture, and have no idea of pricing structure in the shilling, so it is convenient that they enter and leave seamlessly, in being able to use two 'languages,' English and the dollar? Thus the dollar can't be removed from their short stay here, but it may also carry a price tag.

While the wider restraint on the use of dollars is understandable, still it appears that there is something like uniformism, a radical sense of nationalism but which expresses itself in the currency rather than culture. 

There is also a feeling that the state loses when the dollar is in demand because it makes transactions too numerous and thus artificially changes the price of the shilling, as dollar demand is always on the rise when too many transactions even between nationals or long term residents is conducted in dollars. 

The trouble is that this window is also an attraction for conducting business, making our assets, opportunities, sellable.

With travel made easier by innovations like cut price airlines even on regional and longer routes, holding dollars becomes an everyday need. Where local residents or nationals have problems accessing the dollar, they also become weaker partners in dealings with foreign investors, which mars the climate of conducting partnerships, thus a preference for buyouts.

The idea that holding the dollar forces up the shilling unnecessarily is not altogether valid as needs for the dollar do not arise due to its market availability but commerce.

Taking measures against dollar use visibly raises the sense of insecurity and may spark hoarding dollars. It risks pushing the conversion oflocal savings into dollars to avoid inconveniences. The idea that we are defending the shilling is a bit flawed.