20 Shilingi (Independence) – Tanzania

In 1981, Tanzania's currency situation was defined by severe economic strain and the legacy of the Arusha Declaration's socialist policies. The Tanzanian Shilling (TZS) was under a fixed exchange rate regime, pegged to a basket of currencies but effectively controlled by the Bank of Tanzania. This official rate, however, bore little resemblance to reality as a massive parallel (black) market for foreign exchange flourished. Driven by a critical shortage of hard currency due to declining export revenues, costly interventions in Uganda, and widespread price controls, the parallel market premium was extraordinarily high, with the shilling trading at a fraction of its official value.

The root causes were structural. The state-controlled economy, with its emphasis on ujamaa (villagization) and large-scale nationalization, had led to agricultural decline and inefficient industrial output. Tanzania's main exports, like coffee and cotton, suffered from both low global prices and domestic production issues, leading to a chronic trade deficit. Consequently, the government lacked the foreign reserves to support its currency peg or to import essential goods, including spare parts, medicines, and petroleum, causing widespread shortages and further fueling inflationary pressures.

This currency crisis was a central factor prompting the government, under President Julius Nyerere, to begin engaging with the International Monetary Fund (IMF) for support. The negotiations in 1981 were contentious, as the IMF's conditions for financial assistance—including devaluation, subsidy cuts, and trade liberalization—directly challenged Nyerere's socialist principles. The inability to reach an agreement that year meant the currency distortions and economic hardships persisted, setting the stage for the deeper crises and eventual structural adjustment programs that would follow later in the decade.