East African central bank governors agreed to diversify foreign exchange reserves through domestic gold purchases and remittance inflows, responding to Middle East and Eastern European conflicts that threaten regional macroeconomic stability, weaken currencies, and accelerate inflation during their meeting in Kampala, Uganda. The decision was reached at the 29th Ordinary Meeting of the East African Community (EAC) Monetary Affairs Committee (MAC), chaired by Bank of Uganda Governor Michael Atingi-Ego at the Lake Victoria Serena Golf Resort in Kampala.
The meeting was attended by governors and senior officials from the central banks of Uganda, Kenya, Tanzania, Burundi, South Sudan and Somalia, while Rwanda was represented by Chief Economist Thierry Mihigo Kalisa. Also present were EAC Deputy Secretary General for Customs, Trade and Monetary Affairs Annette Mutaawe Ssemuwemba and senior EAC Secretariat officials. The Governor of the Central Bank of Congo, Andre Wanes Nkualoloki, sent apologies.
Geopolitical turbulence in the Middle East and Eastern Europe has landed directly on the balance sheets of East Africa’s monetary authorities. All seven governors of the central banks (minus DRC) decried the conflicts that export inflation to their economies and weaken their currencies and are threatening the economic growth prospects. In a communiqué, the committee said central banks faced growing challenges in maintaining macroeconomic stability while supporting infrastructure investment amid a volatile global economy and spillover effects from geopolitical conflicts. The governors agreed that partner states should strengthen external buffers by purchasing domestically produced gold.
While the region sustained an estimated average economic growth rate of 5.6 per cent in 2026—eclipsing the sub-Saharan African average—imported inflation and volatile crude oil prices have complicated monetary management across the seven partner states.
Spillover Shocks and Widening Current Account Deficits
The conflicts have exported inflation and drained foreign exchange reserves as import bills outpace export earnings. Bank of Uganda Governor Michael Atingi-Ego stressed the importance of being prudent when handling monetary policies, in the midst of the widening current account deficits. A country has a current account deficit when it spends more money on imports and transfers than it earns from selling its own exports abroad. The EAC countries have reversals in current account trends since the outbreak of the conflict in the Middle East, a region that has joined the top markets for the region. Atingi-Ego says this is also in turn affecting the foreign exchange reserves and calls for early warning systems and the need to build strong financial buffers, using avenues like the domestic purchase of gold. Annette Ssemuwemba Mutaawe, EAC Deputy Secretary General in Charge of Customs, Trade and Monetary Affairs, called for quick and strong interventions.
“The region has been affected by the costs of imported oil and fertilisers even as countries are rebuilding buffers following previous shocks. Our policy responses must remain flexible.”
Thierry Mihigo Kalisa, Chief Economist of the National Bank of Rwanda
Domestic Gold Purchases and Reserve Repatriation
To fortify external buffers against these shocks, EAC central bank governors agreed to step up domestic gold acquisition programs. The strategy mirrors a wider global movement detailed in the World Gold Council’s Central Bank Gold Reserves survey, which found that monetary authorities still see gold as a key hedge against inflation, geopolitical shocks and currency risk, despite a recent pullback in prices during the Iran conflict. Central banks have bought an average of 1,000 tonnes annually over the past four years — double the average over the previous decade, per the survey. Nearly nine in 10 central banks that responded said they expected global central bank gold reserves to increase over the next year, while 45% expect their own holdings to grow. Only 1% expect reserves to decline. The survey, conducted between February and May and based on responses from 74 central banks, also points to more central banks choosing to hold a larger share of their gold domestically, rather than in widely used locations, like the Bank of England or the Federal Reserve Bank of New York. A total of 9% of respondents said they increased domestic storage over the past 12 months, up from 5% a year earlier. Another 10% said they diversified their overseas storage location. Globally, UBS commodity analyst Giovanni Staunovo noted that sovereign institutions are increasingly repatriating physical bullion following the 2022 freezing of roughly $300 billion in Russian foreign assets.
“The fear that the assets cannot be accessed abroad is, since 2022, driving some central banks to repatriate gold held abroad.”
Giovanni Staunovo, Commodity Analyst at UBS, via CNBC
Payment Integration and the Road to a Single Currency
Annette Mutaawe Ssemuwemba, EAC Deputy Secretary General for Customs, Trade and Monetary Affairs, emphasized that intra-EAC trade has stagnated for 13 years due to persistent barriers that leave the trading bloc vulnerable to external economic shocks. Governors also evaluated the roadmap for the 2013 East African Monetary Union Protocol, committing to establish a peer-review mechanism to improve convergence tracking ahead of a planned single currency by 2031.
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