Kenya’s central bank plans to begin purchasing gold as part of its foreign exchange reserves strategy, its governor said on Wednesday, joining a growing number of African countries seeking to diversify reserve assets amid global economic uncertainty and currency volatility.
Central Bank of Kenya (CBK) Governor Kamau Thugge said the move would provide an additional buffer for the country’s reserves and reduce reliance on traditional reserve currencies such as the U.S. dollar and the euro.
“We anticipate going into the purchase of gold as an extra buffer. This is something that we have indicated before. It is one of the ways of diversifying our holding of reserves,” Thugge told a news conference in Nairobi.
Kenya would follow several African peers that have recently added gold to their reserves, including the Democratic Republic of Congo, Rwanda and Namibia, as central banks across emerging markets reassess reserve management strategies in response to geopolitical tensions, inflation risks and tighter global financial conditions.
Gold has regained prominence as a reserve asset globally, benefiting from its status as a hedge against inflation, currency depreciation and financial market shocks. Central banks worldwide have been net buyers of gold in recent years, with emerging and frontier economies accounting for a growing share of demand.
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Kenya’s move comes at a time when many African economies are under pressure from high external debt servicing costs, volatile capital flows and exposure to shifts in global monetary policy, particularly in the United States.
While the CBK did not provide details on the timing, scale or sourcing of the proposed gold purchases, analysts said the decision signals a cautious but strategic shift in Kenya’s reserve policy.
“Gold purchases are unlikely to be large initially, but they reflect a broader effort to strengthen resilience and reduce concentration risk in reserves,” said an economist at a Nairobi-based investment firm.
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As of February 9, Kenya’s foreign exchange reserves stood at US$12.46 billion, equivalent to 5.4 months of import cover, according to central bank data released on Wednesday. This level remains above the statutory minimum of four months of import cover, providing some buffer against external shocks.
The announcement comes a day after the CBK cut its benchmark lending rate by 25 basis points to 8.75%, marking a continuation of its easing cycle as inflation pressures moderate and the bank seeks to stimulate private sector credit growth.
Kenya’s inflation rate has eased in recent months, helped by lower food prices, a stabilising currency and tighter monetary policy earlier in the year. The rate cut was widely expected by markets and was seen as a signal of growing confidence in macroeconomic stability.
The Kenyan shilling, which suffered sharp depreciation in 2023 amid dollar shortages and rising debt repayments, has shown signs of stabilisation following external financing inflows and policy adjustments.
Analysts said the decision to explore gold purchases aligns with broader efforts by the authorities to rebuild confidence in macroeconomic management and strengthen buffers against future shocks.
“Combining prudent monetary easing with reserve diversification sends a positive signal to investors,” said a regional economist. “It shows the central bank is thinking beyond short-term pressures and focusing on long-term stability.”
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Across Africa, interest in gold reserves has been supported by rising domestic gold production in several countries and efforts to retain more value from natural resources. Some governments have also explored buying gold from local artisanal and industrial miners, reducing reliance on imports while supporting domestic value chains.
Kenya itself is not a major gold producer compared with countries such as Ghana, South Africa or Mali, but officials have previously indicated openness to sourcing gold through regional or international markets if purchases proceed.
The CBK did not comment on whether gold acquisitions would be financed through existing reserves or additional inflows, nor did it provide a target allocation for gold within its overall reserve portfolio.
For now, officials say the focus remains on maintaining adequate reserve levels, supporting currency stability and ensuring smooth functioning of financial markets as global conditions remain uncertain.
