The East African Community’s ambition to launch a single currency remains constrained by a widening gap between institutional preparations and economic reality, after the bloc’s own budget disclosure showed no evidence that any partner state has met all the conditions required to join the monetary union.
- •The EAC’s FY2026/27 Budget Speech, delivered by Council of Ministers Chairperson Rebecca Kadaga to the East African Legislative Assembly (EALA), shows that only four of the bloc’s eight partner states have achieved the protocol’s 8% headline inflation ceiling.
- •Two have met the requirement to hold foreign exchange reserves equivalent to at least 4.5 months of imports; three have kept fiscal deficits, including grants, within 3% of GDP; and four partner states comply with the ‘50% of GDP’ public debt threshold, measured in net value terms.
- •The Community is working toward a single currency by 2031, a target set after the bloc’s Secretary General disclosed in August 2024 that the original deadline had been missed.
The speech did not identify which countries satisfy each benchmark, or that any single country simultaneously meets all four criteria, the prerequisite for entry into the monetary union.
For businesses in the region that have long viewed a common currency as the logical culmination of the Customs Union and Common Market, the figures underscore how the bloc’s macroeconomic foundations remain uneven despite renewed efforts to build the institutions that would eventually underpin monetary integration.
The disclosure is notable because the Community has accelerated work on the legal architecture of the monetary union even as its economic prerequisites lag.
During the reporting period, EALA re-considered and passed the East African Community Statistics Bureau Bill and the East African Community Surveillance, Compliance and Enforcement Commission Bill, both flagged for reconsideration before final passage.
Both are intended to strengthen monitoring of convergence commitments, while the bloc continues preparations for the East African Monetary Institute, the institution the EAC has separately described as the precursor to a future East African Central Bank.
Yet the same budget that celebrates those legislative milestones dedicates just US$4.12 million in the 2026/27 financial year to harmonising fiscal and monetary policies, operationalising the East African Monetary Institute, and advancing the East African Monetary Union roadmap. The allocation represents a small share of the Community’s US$110.86 million total budget.
Elsewhere in the budget speech, the EAC reports that average regional headline inflation rose to 22.9% in 2025 from 13.5% in 2024, highlighting inflationary pressures that continue to buffet the region even as monetary integration remains an official objective.
The Community also disclosed it had adopted nine additional regional statistical guidelines during the year, bringing the total number of harmonised statistical guidelines to seventeen, and disseminated seven sectoral datasets, including monetary and financial statistics and government finance statistics, evidence that the measurement infrastructure for tracking convergence is advancing even as the underlying convergence itself lags.
The EAC also reported GDP growth of 5.8% in 2025, ahead of both the 3.4% global average and Sub-Saharan Africa’s 4.5%, while intra-EAC trade rose 28% to US$19.3 billion.
SOURCE: kenyanwallstreet.com