As the government is still preparing for digital cryptocurrencies, economists have cautioned that uniformed adoption of the modern ways of monetary transactions was likely to shake the country’s economy.
This is because the kind of monetary transactions cannot be regulated by the government because the Banking and Financial Institutions Act does not apply to cryptocurrencies. In June this year, President Samia Suluhu Hassan called for the Bank of Tanzania (BoT) to begin the necessary preparations for virtual-cum-cryptocurrencies and blockchain technologies.
But yesterday the BoT Director of Economic Research and Policy, Dr Suleiman Missango, told The Citizen that they were still working on the directives. “The general public, including the media, will be updated on the progress made in a due course,’ he said via an email.
Tanzania is ranked in the top 20 Global Crypto Adoption Index, with analysts attributing it to the President’s positive position in regard to cryptocurrency.
Speaking to The Citizen yesterday an economist and business expert, Dr Donath Olomi, said the trend showed that Tanzania was among early adopters of crypto.
“It can mean different things. One maybe more Tanzanians wanted to keep their wealth out of sight of the government,” noted Dr Olomi
He said when a substantial part of wealth is not in control of the government, a country cannot use it to effect monetary policy.
Also, Dr Olomi added, if people used Tanzanian shillings to buy dollars which they use to buy crypto, local currency can depreciate.
Prof Haji Semboja of the State University of Zanzibar’s economics department said despite the fact that cryptocurrency is the direction where everybody is moving, it was not high time the country adopted it.
Tanzania, he explained, was a lower middle income country with limited data, information and knowledge about monetary data, elements of which make it difficult to participate in worldwide trade.
“The development of our economies are a complete function of the development of global international monetary and commodity markets,” noted Prof Semboja.
“I am not yet to accept an instrument that will never benefit the majority of people. It is not simply because of limited knowledge, but also the level of economic development.”
It is on that ground that not many countries have adopted it by putting in place policy, regulatory and institutional framework to cater for cryptocurrency. “Many nations have been adopting the attitude of wait and see because of these complications we have to understand,” said Prof Semboja.
A renowned economist in condition of anonymity told The Citizen that cryptocurrency was a very risky business that countries are scaring away, and instead let individuals operate at their own risks. He said considering the nature of the country’s economy, it was too early to think about cryptocurrency.
“Majority of countries globally have not officially adopted it because of risks. The fluctuation of cryptocurrency value is very high,” the source with knowledge said, noting that people were losing a lot out of the business.
A credible source added: “Cryptocurrency is like betting. A small mistake with income can land us in poverty.”
He was of the view that if the cryptocurrency was to become effective and efficient, it should get a backup from all Central Banks globally. “Currencies are stable globally because they are supported by Central Banks through strong monetary policies,” the source said.
The credible source said if the country was to enter the digital economy, it was high time the government strengthened the Dar es Salaam Stock Exchange (DSE) by putting in place well valuation standards and enough information.