Common currency by 2031? EAC revives single currency push as central banks turn to gold

Central Bank of Kenya Governor Dr Kamau Thugge at Bunge Towers, Parliament, Nairobi. July 21, 2026. [Elvis Ogina, Standard]

East African central bank governors have vowed to accelerate plans for a single regional currency by 2031 while pursuing aggressive diversification of foreign reserves through domestic gold purchases, as geopolitical conflicts and soaring energy costs threaten macroeconomic stability across the bloc.

At the 29th Ordinary Meeting of the East African Community (EAC) Monetary Affairs Committee in Kampala last week, governors from eight member states acknowledged that none of the partner countries is yet to meet all four primary economic criteria required to join the proposed monetary union. Despite the setbacks, they reaffirmed their commitment to the East African Monetary Union (EAMU) and the establishment of a single EAC currency by 2031.

The EAMU is the most ambitious pillar of East African integration. Under a protocol signed in November 2013, the EAC’s eight member states - Kenya, Tanzania, Uganda, Rwanda, Burundi, South Sudan, the Democratic Republic of Congo and Somalia - agreed to progressively converge their national currencies into a single regional currency. This was to be achieved by 2024, but the deadline was pushed back to 2031 after delays caused by the COVID-19 pandemic, uneven economic performance and political gridlock.

To join the monetary union, each partner state must meet four primary convergence criteria. They must keep headline inflation below eight per cent, maintain foreign exchange reserves equivalent to at least 4.5 months of imports, limit the fiscal deficit to three per cent of GDP and keep public debt below 50 per cent of GDP. Under the revised roadmap, countries must achieve these targets by 2028 and sustain them for three consecutive years before the currency can be launched.

For ordinary East Africans, a single currency would eliminate the need for costly currency conversions when trading or travelling across borders.

Currently, sending money across the region remains expensive; cross-border payments average seven per cent of transaction value, far above the global target of one to three per cent. A monetary union would reduce these transaction costs, eliminate exchange rate risks for businesses and create price stability across borders. Regional trade within the EAC has already grown 28 per cent to $19.3 billion (Sh2.5 trillion) and a common currency could boost that further by making cross-border commerce seamless.

The governors acknowledged that progress toward the convergence criteria has been uneven, with no partner state having attained all four benchmarks. The committee attributed the slow progress to the challenge of maintaining macroeconomic stability while financing critical infrastructure investments amid a volatile global economic environment and adverse spillover effects from ongoing geopolitical conflicts.

“The meeting noted that although Partner States have undertaken significant macroeconomic reforms and implemented policies to meet the convergence criteria, the progress has remained uneven, with no Partner State having attained all four primary convergence criteria,” the committee said in a communiqué.

Beyond economic indicators, political disagreements have also stalled progress. A protracted dispute over which country should host the East African Monetary Institute, the precursor to a future regional central bank, has further delayed implementation. The EAC’s recent expansion to include the DRC and Somalia has also complicated the process, as new members must align with existing standards while managing domestic economic challenges.

To strengthen external buffers against global shocks, the governors agreed that central banks should diversify their international reserves through domestic gold purchases and increased remittance inflows. The Bank of Tanzania has already purchased 19.38 tonnes of gold valued at $3.07 billion since launching its gold procurement program, and other regional central banks are expected to follow suit.

“The Committee therefore noted the need for Partner States Central Banks to build resilience, diversify the sources of international reserves through domestic gold purchase and attracting remittances, and coordinate regional policy responses,” the communiqué stated.

The push for gold diversification aligns with a broader global trend. The International Monetary Fund (IMF) has noted that gold has reemerged as a prominent component of central bank reserves, with its share rising sharply in recent years. A record 45 per cent of central banks globally plan to buy more gold than they did previously, according to a 2026 survey.

The Kampala meeting was held against a backdrop of heightened global risks. The IMF has warned that the conflict in the Middle East—particularly the closure of the Strait of Hormuz, which affects about 20 per cent of seaborne oil and LNG shipments—has already disrupted energy and fertiliser supplies, pushing oil above $100 a barrel. Global growth is expected to slow to 3.0 per cent in 2026 from 3.5 per cent in 2025, while inflation is expected to rise on account of higher energy prices.

IMF Managing Director Kristalina Georgieva has urged governments to build fiscal buffers to weather the crisis, warning that the global economy’s “resilience” is being tested again. The IMF has also cautioned that oil markets have exhausted their “shock absorbers” if all-out war breaks out again with Iran.

Despite the elevated global risks, the EAC region is expected to remain resilient. The committee noted that economic growth in the EAC is projected at 5.2 per cent in 2026, well above the Sub-Saharan Africa average of 4.3 per cent. Average headline inflation in the region moderated to 6.7 per cent in the fiscal year 2025/26 from 9.6 per cent the previous year. Regional currencies are also expected to remain broadly stable, supported by diversified foreign exchange inflows and domestic foreign exchange market reforms.

The meeting was chaired by Mr Michael Atingi-Ego, Governor of the Bank of Uganda. Attendees included Dr Kamau Thugge, Governor of the Central Bank of Kenya; Ms Irene Kabura Murihano, Deputy Governor of the Bank of the Republic of Burundi; Emmanuel M. Tutuba, Governor of the Bank of Tanzania; Weituy Luony Babouth, Deputy Governor of the Bank of South Sudan; Mr Abdirahman Mohamed Abdullahi, Governor of the Central Bank of Somalia; and Dr Thierry Mihigo Kalisa, Chief Economist representing the Governor of the National Bank of Rwanda. Ms Annette Mutawew Semuwemba, EAC Deputy Secretary General for Customs, Trade and Monetary Affairs, also attended.

The committee also reviewed progress on the EAC Cross-Border Payment System Masterplan, approved at its previous meeting, which seeks to address high transaction costs, lengthy settlement times, limited interoperability and fragmented payment infrastructure. Implementation has commenced, with annual work plans developed and resources being mobilised.

“The East African Monetary Union remains a strategic objective that demands sustained commitment, policy harmonisation and strong regional institutions,” Atingi-Ego said. “While our commitment to the Monetary Union is unwavering, we must accelerate implementation, strengthen peer review mechanisms and reinforce national action plans to ensure we remain on course towards a single East African currency by 2031.”