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Arusha`s `dollarised` economy turns bitter
2008-10-06 10:53:09
By Adam Ihucha, Arusha
Tanzania`s safari capital, Arusha, is reeling under the impact of renewed pressure caused by the unrelenting depreciation of the US dollar.
The main reason is that the city and its environs have become overwhelmingly `dollarised` territories in recent years, most transactions of consequence being done through the US currency.
Landlords insist that tenants pay their house rents in dollars, while hotels charge for their services in dollars and all retail business outlets accept payments in dollars, some preferring the dollar to the Tanzanian shilling.
But the last two weeks have seen foreign exchange dealers, tour operators and landlords seriously contemplating a shift away from the dollar in part of an effort to ensure their assets do not lose value.
The US dollar now exchanges at 1,150/-, down from 1,170/- only a fortnight ago.
``It`s no longer a secret that the once mighty US dollar is slowly but surely losing value. Most forex dealers here, particularly tour operators, are considering ditching it in preference for the Tanzanian shilling and other currencies,`` noted Leons Stevens, an accountant with Hotels and Lodges Tanzania Ltd.
He said tour operators and landlords whose businesses are based on the American currency but who do not have US dollar accounts are the hardest hit.
Zainabu Ansel, managing director of the Moshi-based Zara Tours, admitted being one of those already feeling the pinch caused by the dollar`s depreciation.
She said the storm that had hit the US currency was a serious blow to Tanzanian businesspersons charging tourists in dollars while their operations were done using the Tanzanian currency.
``The Tanzanian currency is used in most purchases, salary payments and other operations so when the US dollar fluctuates a little bit, we are the ones suffering most,`` she said.
According to Mathew Massawe, director of down town Arusha`s Camel Bureau de Change, purchasing large amounts US dollars ``will be a hugely risky venture at the moment``.
``I cannot tell how much we have lost so far due to this depreciation by the US dollar. I wish I could tell. I will not purchase it again until its value stabilizes,`` a visibly frustrated Massawe said, adding that the price of the dollar had plunged by as much as 20/- in a matter of weeks ``which is terrible``.
``Only a few weeks ago we would buy one US dollar at 1,170/- and sell it at 1180/-. But now we buy it 1,150/- and are obliged to resell it at the same rate if we are lucky or at a lower rate in order to keep our businesses going,`` he noted.
Siha Bureau de Change MD Geoffrey Orio, who operates from just next to the Sheikh Amri Abeid Stadium, described the fall on the value of the dollar as ``crazy, very crazy``.
``I bought US dollars in bulk at the rate of 1,167/- but the current rate is a lowly 1,150/-, which means that I will lose heavily in the course of the trading,`` observed Orio, adding that he was in a dilemma over what to do in order to safeguard his reserves.
However, the problems facing the dollar are cause for jubilation to most importers because they gain buy buying the currency at a low price.
``This situation is beneficial to importers because the US dollar will be traded cheap and when we import products they will be sold cheaper,`` said Vonnesly Trading Co. Ltd MD Joan Obeid, who runs a popular supermarket located at the Arusha regional CCM complex.
Economic analysts interviewed here observed that the depreciation of the dollar had nothing to do with the US economic crisis.
``The economic catastrophe in the US has no direct effect on the Tanzanian economy. The depreciation of the dollar might have been caused by declines in the volume of traditional exports that are common at this time of year,`` said one.
Arusha is one of the places in Tanzania where business transactions create spectacularly high but unnecessary demand of the US dollar common even in routine activities like shopping and settling bills.
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