Delving into the history of Tanzania Money reveals a fascinating period dominated by the East African Currency Board (EACB). Established in 1919, the EACB played a pivotal role in shaping the monetary landscape of not only Tanzania, but also Kenya and Uganda, during a significant era of British colonial influence. Understanding the EACB is crucial to grasping the foundations of Tanzania’s modern financial systems.
The Genesis of the East African Currency Board
Following the aftermath of World War I, Britain’s expanded control over East Africa, including mainland Tanganyika (present-day Tanzania), necessitated a centralized approach to currency management. The EACB was thus formed to standardize and oversee the currency within the East African Protectorate, the Uganda Protectorate, and other British dependencies in the region. Its core mandate, as defined by its constitution, was to ensure a stable and well-regulated Tanzania money supply, maintain its quality, and safeguard the monetary interests of these territories. Initially, the EACB’s operations encompassed Tanzania Mainland, Kenya, and Uganda, with Zanzibar adopting its currency framework later in 1936.
EACB’s Function and Impact on Tanzania’s Currency
The EACB was empowered to issue its own banknotes and mint coins, with designs approved by the Secretary of State, for circulation within its operational area. A critical aspect of its function was maintaining the local shilling’s exchange rate at par with the British pound sterling. This peg was achieved by backing the local currency with sterling securities, ensuring stability and confidence in Tanzania money during this period. By June 1923, the East African shilling, managed by the EACB, had become firmly established as the official currency across Kenya, Uganda, and Tanganyika, facilitating trade and economic activity within these regions. This system provided a consistent and reliable monetary framework for what is now Tanzania money.
The Transition Beyond the EACB
The East African Currency Board’s era concluded in 1966, marking a significant shift in the region’s monetary history. As Tanzania, Kenya, and Uganda gained independence, the need for national monetary autonomy grew. This led to the establishment of independent Central Banks in each of these nations, including the Bank of Tanzania. The dissolution of the EACB in 1966 paved the way for these countries to manage their own currencies and monetary policies, reflecting their newfound sovereignty and setting the stage for the development of modern Tanzania money and financial systems. The legacy of the EACB, however, remains a crucial chapter in understanding the evolution of currency in Tanzania and East Africa.
