Interview with Dr. Bravious Kahyoza, Economist & Economic Researcher
The latest Bank of Tanzania (BoT) report reveals a surprising fact: over 85% of all cash circulating outside the banking system in Tanzania is made up of TZS 10,000 notes, totaling a massive TZS 7.1 trillion.
In comparison, TZS 5,000 notes account for TZS 674 billion, TZS 2,000 notes for TZS 279 billion, TZS 1,000 for TZS 199 billion, and the humble TZS 500 for just TZS 60 billion.
But what does this all mean for the average Tanzanian — and the country’s economy as a whole? To make sense of it, Clouds FM sat down with Dr. Bravious Kahyoza, a respected economist and researcher who broke it all down today (May 15).
Q1. What does it mean when cash is said to be “in circulation outside the banking system”?
Dr. Kahyoza: In simple terms, it means the money people are using in their daily lives is not passing through official banking or digital systems. It’s physical cash — in wallets, shops, homes, buses — used hand-to-hand.
Q2. Economically, what’s the difference between a cash-oriented and a cashless economy?
Dr. Kahyoza: A cash-oriented economy is where most transactions are done in physical cash. This makes tracking money movement difficult and often keeps it out of formal economic records.
A cashless economy, on the other hand, enables better monitoring, reduces corruption, and supports planning.
Tanzania once studied this — for every TZS 10 in the economy, TZS 6 couldn’t be tracked. That’s huge! But we’re not alone. Even countries like India and Singapore had to take drastic measures to control excessive cash use.
Q3. What determines whether a country leans toward cash or digital transactions?
Dr. Kahyoza: It depends on how the economy is structured. In Tanzania, much of the population spends on basic needs — food, drinks, clothes — in informal settings.
This year, consumer spending is expected to reach TZS 121 trillion, and about 73% of that will be cash-based. During COVID-19, spending dropped sharply.
But after restrictions eased, people rushed into what we call "revenge spending" — buying things they’d delayed — mostly in cash.
Also, Foreign Direct Investments (FDIs) have been rising, fueling economic activities, especially in urban areas. Government employment has quadrupled from 2018 to 2024, raising people's spending power — again, mostly in cash.
Q4. Why is the TZS 10,000 note used so much more than smaller denominations?
Dr. Kahyoza: This isn't unique to Tanzania. In Kenya, KSH 1,000 dominates; Uganda relies heavily on its UGX 50,000. In Tanzania, back in 2018, BoT reported TZS 3.6 trillion of 10,000 notes in circulation. Now we’re at TZS 7.1 trillion. That shows how fast usage has grown.
Why? First, our urban-rural divide. For every TZS 10,000 circulating in rural areas, around TZS 290,000 circulates in Dar es Salaam. That’s a huge gap! Most spending is in cities, and people there prefer higher denomination notes for convenience.
Second, most Tanzanians spend on food, averaging TZS 2.4 million per person annually, mostly paid in cash. The second-largest expense is non-alcoholic beverages (TZS 1.6 million), followed by clothing. Young people, especially those under 28, rarely use TZS 1,000 notes for such purchases. They spend in chunks — and the TZS 10,000 note fits that behavior.
Also, consider dependents. A public worker in a village may support up to nine direct dependents, meaning they spend in cycles — mainly around payday. But in cities, private sector jobs dominate, salaries are higher, and money moves constantly.
Q5. Does this mean BoT prints more TZS 10,000 notes to match the demand?
Dr. Kahyoza: Not exactly. BoT doesn’t just hit “print.”
Printing depends on macroeconomic indicators — growth, inflation, spending patterns.
Currency has two values: its production cost and its purchasing power. The TZS 10,000 note was introduced in 1995.
Every major economic shift — like liberalization in the 2000s — has increased its use. It peaks when the economy is active and dips when it slows.
Q6. What are the benefits of moving toward a cashless system?
Dr. Kahyoza: There are many. First, security. Less physical cash means less risk of theft and loss. Second, it helps tackle the black economy where money isn’t taxed or traced.
Africa loses an estimated USD 600 billion annually due to untracked transactions.
For individuals, it reduces transaction costs and makes doing business easier.
For governments, it improves tax collection, policy planning, and financial inclusion.
TAKEAWAY
The dominance of the TZS 10,000 note is more than just a quirky statistic, it's a mirror reflecting Tanzania’s economic behavior, structure, and culture.
As Dr. Kahyoza explains, the future lies in building stronger digital infrastructure and encouraging everyday users from market traders to salaried workers to embrace cashless transactions.
Until then, cash remains king… with TZS 10,000 wearing the crown.