Tanzania’s TZS Mandate: The Regulation Every Business Needs to Understand
In March 2025, the Bank of Tanzania issued sweeping new foreign currency regulations that fundamentally change how businesses price, invoice, and contract within Tanzania. The core requirement is simple but far-reaching: all domestic commercial transactions in Tanzania must now be denominated and settled in Tanzanian shillings (TZS). Existing foreign-currency contracts must be renegotiated to conform to the new requirement by March 2026.
For businesses that have operated in US dollars or other foreign currencies — which includes the vast majority of mining companies, real estate developers, logistics firms, agribusinesses, and international investors operating in Tanzania — this is not a minor administrative adjustment. It is a structural change that affects contracts, banking arrangements, financial modelling, and M&A deal structuring.
What Exactly Do the Tanzania Foreign Currency Regulations Require?
The Bank of Tanzania regulations mandate that all transactions between parties operating domestically within Tanzania — covering the sale of goods, supply of services, lease agreements, consultancy contracts, and other commercial arrangements — must be denominated and settled in TZS. This applies to:
New contracts: All commercial agreements entered into after March 2025 must be in TZS from the outset.
Existing contracts: All foreign-currency contracts currently in operation must be renegotiated and converted to TZS by March 2026. This is a hard deadline — not a target.
Banking: Mining and other extractive sector financial transactions must be conducted through Tanzanian-registered financial institutions, with international banks only permitted to participate in syndication where a local bank leads.
Which Businesses Are Most Affected by the TZS Mandate?
| Sectors Most Exposed to the Tanzania TZS Regulations |
| ✔ Mining and extractives — USD-denominated supply, service, and equipment contracts |
| ✔ Commercial real estate — lease agreements and property transactions in foreign currency |
| ✔ Agribusiness and food processing — procurement and offtake agreements |
| ✔ Construction and infrastructure — contractor and subcontractor payment structures |
| ✔ Financial services — loan facilities, letters of credit, and trade finance |
| ✔ Professional services — consultancy retainers and advisory agreements in USD |
The mining sector is particularly exposed. Drilling contracts, camp management, security, logistics, and equipment maintenance agreements in Tanzania have historically been denominated in US dollars. The conversion to TZS introduces currency risk where none previously existed — particularly where revenues from mineral export sales are partly received in foreign currency while operational costs are now required to be in TZS.
Exemptions: What Is NOT Covered by the TZS Requirement?
The regulations do provide exemptions in certain categories. Foreign loans from international lenders, cross-border transactions between a Tanzanian party and a genuinely foreign counterparty, and certain international trade arrangements retain the ability to use foreign currency. However, these exemptions are narrower than many businesses assume.
The critical mistake is to assume that any transaction with an ‘international dimension’ is automatically exempt. The test is whether the transaction is fundamentally domestic in nature — and for most service contracts, lease agreements, and supply arrangements between two Tanzania-based entities, the answer will be yes, regardless of the currency previously used. Legal advice on the specific structure of each contract is essential before assuming an exemption applies.
Do not assume: The presence of a foreign parent company, a USD bank account, or an internationally drafted contract does not automatically exempt a transaction from the TZS requirement.
Impact on M&A Transactions and Investment Structuring in Tanzania
For mergers, acquisitions, and inbound investment transactions in Tanzania, the TZS mandate introduces complexity at multiple levels. Where a purchase price is denominated in USD, the target business now generates TZS revenues — creating valuation mismatches that must be addressed in financial modelling and deal documentation. Representations and warranties regarding regulatory compliance must specifically address the foreign currency regulations.
Existing shareholders agreements, joint venture agreements, and partnership arrangements that specify USD distributions, capital call obligations, or exit mechanisms will need to be reviewed and potentially renegotiated. Where JV partners have different risk tolerances for TZS exposure, reaching agreed revised terms may require careful legal structuring — and early engagement is strongly advisable given the March 2026 transition deadline.
Practical Steps: What Businesses in Tanzania Should Do Before March 2026
| TZS Compliance Action Plan |
| ✔ Audit all existing contracts to identify those denominated in foreign currency |
| ✔ Assess each contract against the exemption categories in the regulations |
| ✔ Prioritise renegotiation of high-value and long-term USD contracts before March 2026 |
| ✔ Engage counterparties early — TZS conversion will require mutual agreement |
| ✔ Review banking arrangements and transition operational accounts to TZS-compliant banks |
| ✔ Update financial models and investment projections to reflect TZS currency risk |
| ✔ Amend M&A transaction documents to address the regulatory environment |
| ✔ Obtain legal confirmation on the compliance status of each contract category |
The March 2026 deadline for existing contracts is now just months away. Businesses that have not yet begun their compliance review are behind schedule. The regulatory environment in Tanzania is moving quickly, and the consequences of non-compliance — including contract invalidity and regulatory penalties — are material. Early legal advice, systematic contract review, and proactive counterparty engagement are the three pillars of a sound TZS compliance strategy.
Our team advises on Tanzania banking regulations, contract renegotiation, and business law compliance. Contact us for a consultation on your TZS exposure.
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