Tanzanian Banknote Changes: Timing Raises Disturbing Questions

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On January 22nd, 2025, the BOT governor Emmanuel Tutuba announced that new Tanzanian banknotes would be in circulation with only a replacement of the signatures of the previous governor and minister for finance with the signatures of the putative incumbents in the same portfolios justifying the changes! This move was not provoked by upgrading security features in the banknotes, nor had the notes outlived their lifespans. 

A mere change of signatures to warrant this exercise has raised concerns about its timing and intent, as well as whether such a colossal expenditure of public funds was authorized by Parliament and had national interests at heart. This article considers these concerns and more. 

The current BOT governor, Emmanuel Tutuba and the minister for finance, Mwigulu Lameck Nchemba, have replaced the signatures of Florens Luoga and Dr. Philip Isdor Mpango, respectively. The new banknotes are still based on the 2010 banknote series, which implies that security features, size, colour, and overall design remain unaltered. All banknotes have been affected by these cosmetic changes. These banknotes include 1,000, 2,000, 5,000 and 10,000 notes respectively. 

Still, since the changes were merely too minor to justify incurring such monumental printing, haulage, storage, and security costs, tongues have been wagging left and right. There is even a chain letter admonishing the move. The minister for finance, Mwigulu Lameck Nchemba, thanked President Dr. Samia for assenting those minor changes. He also applauded BOT governor Tutuba for overseeing the glitch-free and professional printing of the notes. 

One of the questions that was being raised was who printed the money and at what costs. The question was concerned that the whole caboodle could have been a gambit to raise sleaze money for the election. The timing of the printing and the fact that there was no budgetary allocation raised concerns. Looks like a decision was impromptu or more or less an oversight. Others were chafed by the lack of transparency and participation of the general public. This group of thinkers felt it was within the right of the general public to be involved and contribute their thoughts. 

This group said that had they been involved, they would have discouraged the move because there were no known statutory criteria for printing banknotes and coins. The lack of statutory criteria has emboldened the misuse and abuse of public coffers. Some of the criteria suggested for legislated printing include the life span of the notes. Banknotes have an estimated life span based on the expected number of foldings that would cause fatigue, leading to the motes’ breakage and becoming obsolete. Printing new cash without considering this criterion was and still is a splurging of public money. 

Another criterion that came into the spotlight was strengthening security features or symbols of national identity. When these features are not part of the reasons for printing new currencies, serious doubts arise about why the exercise was carried out. Some want to know whether the Procurement Act was followed to the letter before the banknotes were printed.

Others say banknote printers are another avenue for grand official corruption because currency printing companies are either based in the UK or Belgium. These currency printing companies demand long-term contracts and are paid annually regardless of whether they have done any work or not. Some called such fees professional retainers. Do we pay for professional retention against their will or what? I couldn’t verify the veracity of these claims. 

What is important is why, 63 years after independence, we cannot even print our own local currencies locally. What is stopping us today in the age of 3D printers? Equipment can be bought, and local companies can be hired to do it. What national interests are there that we have to cough up hard-earned foreign cash to pay these international currency printers while we can own the machine and do it ourselves? The real reason could be closing loopholes of snuffing public funds may alienate political allies. I beam for no other reason. 

Those who claim the real reason for printing banknotes is to flood the local currency market with election money that would help keep CCM in power find this difficult to accept unless they can show that cash hoarding has significantly reduced money circulation in the market. Therefore, having unlimited new money in the market will boost circulation and force cash hoarders to come out and play along. 

The weakness of this line of thinking is that it fails to acknowledge that new banknotes will operate at par with old currencies, and there are no caveats. Had there been any caveats, that argument could have held some water, implying at a certain specified date, old notes would cease to be accepted as legit fiat. That would have forced cash hoarders to launder their hidden cash in order to acquire legit fiat. This, blithely, is not the situation we are dealing with here. 

Politics aside, we cannot overrule completely this move may spur inflation if the insidious aims are election related. The Kenyan election of 1992 and beyond through the 1990s funded the Goldenberg scandal to keep the Moi regime in power. Fictitious gold exports fuelled the economy with inflationary pressures, raising the cost of living disproportionately. While fake gold sales may appear remotely connected to our printing banknotes, they carry one fundamental similarity: no wealth was created, but money changed hands. Money supply without wealth creation leads to only one output: stubborn inflation. 

In Tanzania, if colossal sums of printed cash find their way into our October elections, it means no goods and services were acquired to justify the expenditures that will be like buying nonexistent gold. The final outcome will be a spike of artificial inflation, hurting the very poor most. Inflation is also another form of taxation. 

Others saw corruption in the collection of old notes. Some see this as an opportunity to claim the money was destroyed but ended up in the bank accounts or homes of senior politicians and bureaucrats. The speculation suggests that only the BOT officials are involved in exchanging old notes for new ones, and there are no safeguards to ensure foul play is nipped in the bud. 

As a result, we may end up with reported collected notes and exchanged new notes that bear very little correlation. This is because printed cash and what is being slowly replaced is the BOT officials’ well-guarded secret laying powerful incentives to misinform, mislead and enrich themselves. It is a long shot but can conceivably occur.

Maybe all these speculations are hot air, but when the citizens are left in the dark as if they have no role to play, it creates a fertile ground for conspiracy theories to flourish and impress upon us as believable.

Read more analysis by Rutashubanyuma Nestory