East African Community to Establish Single Currency by 2031
Governors and senior officials from central banks of the East African Community (EAC) partner states convened for the 28th Ordinary Meeting of the Monetary Affairs Committee (MAC) on Friday, May 9, in Mombasa, Kenya. The meeting was chaired by Dr. Kamau Thugge, Governor of the Central Bank of Kenya (CBK), who also heads the MAC.
In an official statement, the committee reaffirmed the commitment of EAC member states to introduce a single regional currency by the year 2031. The announcement follows ongoing efforts to advance the East African Monetary Union (EAMU), an initiative aimed at enhancing economic integration within the region.
The committee reviewed the implementation status of the revised EAMU roadmap. It noted significant progress in the harmonisation of monetary and exchange rate policies across the partner states. The alignment of these policies is a critical prerequisite to achieving a unified monetary system.
Central banks in the region are also working to harmonise regulatory and supervisory frameworks governing the financial sector. This harmonisation is expected to promote transparency, improve efficiency, and enhance the stability of the regional financial system.
A major focus of the committee’s work is the integration of information technology infrastructure among EAC member states. Improved IT systems will facilitate secure and efficient financial transactions, risk management, and monitoring of cross-border operations.
The MAC further emphasised the importance of enhancing risk management practices to ensure financial sector resilience. Aligning these practices is essential for sustaining financial stability and building investor confidence across the region.
The adoption of climate risk awareness in financial regulation also featured prominently in the discussions. Member states are encouraged to incorporate climate-related financial risks into their regulatory frameworks, ensuring long-term sustainability of financial systems.
Additionally, the committee is promoting the regional East African Payment System (EAPS). This system is designed to facilitate real-time cross-border payments within the EAC, reducing transaction costs and improving trade efficiency.
The meeting also focused on harmonising payment systems, legal frameworks, governance structures, and financial standards. These efforts are geared toward creating a seamless financial environment across all EAC countries.
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Progress has been made in implementing the EAC Macroeconomic Convergence Criteria. The criteria include targets for inflation rates, fiscal deficits, public debt levels, and foreign exchange reserves. Compliance with these criteria is essential for establishing a sustainable monetary union.
Governors at the meeting reaffirmed their commitment to accelerating the implementation of the EAMU roadmap. They pledged continued collaboration in addressing outstanding policy, technical, and institutional gaps.
The MAC approved the EAC Cross-Border Payment System Masterplan during the session. This strategic document outlines a detailed framework for modernising and integrating payment systems across the region.
According to Dr. Thugge and fellow officials, the adoption of the masterplan represents a pivotal milestone in the development of regional payment infrastructure. The upgraded system is expected to enhance the speed, safety, cost-effectiveness, transparency, and inclusiveness of cross-border transactions.
The meeting occurred amid heightened global uncertainty, marked by trade tensions and geopolitical instability. These external shocks continue to influence the economic landscape of EAC partner states.
Despite these global challenges, the committee observed that the EAC region has demonstrated strong economic resilience. In 2024, the region experienced varied levels of GDP growth, with some member states recording robust performance, particularly in the agriculture sector. This growth has contributed to overall economic stability in the region.
The committee noted that sufficient capital and liquidity buffers have enabled the banking sector in the EAC to remain strong and stable. These financial cushions are vital for absorbing external shocks and maintaining public confidence in the financial system.
Turning to Kenya, the CBK reported that the Kenyan shilling has remained relatively stable and strong against both regional and international currencies. Data from the CBK indicated that the shilling recently reached a four-month high against the United States dollar.
As of Friday, May 9, the Kenyan shilling was trading at KSh 129.26 per US dollar. This performance has been supported by adequate foreign exchange reserves. At the beginning of the month, Kenya’s forex reserves stood at approximately KSh 1.3 trillion. These reserves are crucial for safeguarding the currency and ensuring the country’s ability to meet external obligations.
The 28th MAC meeting marks a significant step in the EAC’s pursuit of a unified monetary framework. With tangible progress in policy harmonisation, regulatory alignment, and infrastructure integration, the region remains on course to introduce a single currency by 2031. Continued cooperation among EAC member states will be essential to meeting this goal and fostering long-term economic integration and stability.
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East African Community to Establish Single Currency by 2031
