As part of a global trend to lessen reliance on the US dollar and act as a buffer against external shocks, East African central banks are increasingly using gold as a strategic component of their foreign currency (FX) reserves.
Rising geopolitical tensions, continuous currency instability, and the desire to protect home economies from crises like the ongoing conflict in the Middle East, the confrontation between Russia and Ukraine, and the COVID-19 pandemic’s aftereffects are all contributing factors to this trend.
To stabilise markets and safeguard their currencies, nations in the region are increasing their foreign exchange reserves. Kenya had US$10.9 billion in usable foreign exchange reserves as of June 19, 2025, which is enough to finance 4.8 months’ worth of imports and supports a slight +0.43% annual decline in the USD/KES exchange rate.
Tanzania reported having US$5.3 billion in reserves, which would cover 4.3 months’ worth of anticipated imports while keeping the Tanzanian shilling’s depreciation at a similarly low 0.64%.
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With reserves of US$3.8 billion in April, Uganda saw a startling 3.66% year-over-year increase in the value of the Ugandan shilling while having a reduced import cover of 3.3 months.
The Democratic Republic of Congo (DRC), on the other hand, is still vulnerable, with only 2.6 months of import coverage and US$6.7 billion in reserves, which has caused the Congolese franc to depreciate by 1.51%.
Although several nations establish higher limits, the international standard for foreign exchange reserves is three months’ worth of import cover. The East African Community (EAC) establishes a macroeconomic convergence criterion of 4.5 months, whilst Kenya sets a target of four months.
The six-month goal set by the South African Development Community (SADC) is even more ambitious. Because they are more vulnerable to external price shocks, economies that rely heavily on commodities like oil frequently aim for seven months of protection.
A number of central banks in East Africa are actively increasing their gold reserves. Geita Gold Mine, Shanta, Buckreef, and GGR are among the local miners with whom the Bank of Tanzania has collaborated to buy 20% of their output. By June 13, 2025, the bank will have acquired 5 tonnes valued at US$554.28 million.
