The East African Community’s (EAC) plan to introduce a single currency continues to face significant hurdles, with the latest budget documents showing that none of the bloc’s partner states has satisfied all the economic conditions required to join the proposed monetary union.
The FY2026/27 EAC Budget Speech, presented to the East African Legislative Assembly (EALA) by Council of Ministers Chairperson Rebecca Kadaga, indicates that progress towards meeting the convergence criteria remains uneven across the eight-member bloc.
According to the budget, only four partner states have achieved the protocol’s requirement of keeping headline inflation below 8 percent. Just two countries have maintained foreign exchange reserves equivalent to at least 4.5 months of import cover, while three have kept fiscal deficits, including grants, within 3 percent of GDP. Four countries also meet the public debt threshold of 50 percent of GDP on a net present value basis.
However, the budget does not identify which countries have met the various benchmarks, nor does it indicate that any single member has complied with all four conditions, a prerequisite for adopting the common currency.
The EAC is targeting 2031 for the launch of the monetary union after acknowledging in 2024 that its original implementation timeline had been missed.
For businesses anticipating a common currency to complement the Customs Union and Common Market, the figures highlight persistent disparities in the region’s macroeconomic performance despite ongoing efforts to strengthen the institutions needed for monetary integration.
Even as economic convergence lags, the bloc has continued to build the legal and institutional framework required for a monetary union.
During the reporting period, EALA reconsidered and approved the East African Community Statistics Bureau Bill and the East African Community Surveillance, Compliance and Enforcement Commission Bill. Both pieces of legislation are intended to improve oversight of member states’ compliance with convergence requirements.
The Community is also continuing preparations for the East African Monetary Institute, which has been identified as the institution that will eventually pave the way for the establishment of an East African Central Bank.
Despite these legislative advances, funding for monetary integration remains relatively modest.
The 2026/27 budget allocates just US$4.12 million towards harmonising fiscal and monetary policies, operationalising the East African Monetary Institute and advancing the East African Monetary Union roadmap. This represents only a small portion of the Community’s total budget of US$110.86 million.
Also Read: Former KPMG Manager Sues Firm for Sh45.8 Million Over Alleged Pregnancy Discrimination
The budget also highlights broader macroeconomic challenges facing the region.
Average headline inflation across the EAC climbed to 22.9 percent in 2025 from 13.5 percent a year earlier, underscoring the inflationary pressures that continue to complicate efforts to achieve monetary convergence.
At the same time, the Community reported progress in strengthening its statistical systems. Nine additional regional statistical guidelines were adopted during the year, bringing the total to 17 harmonised guidelines. The EAC also released seven sector-specific datasets, including monetary, financial and government finance statistics, improving its capacity to monitor convergence among member states.
Elsewhere, the bloc reported that the regional economy expanded by 5.8 percent in 2025, outperforming the global average growth rate of 3.4 percent as well as Sub-Saharan Africa’s 4.5 percent. Intra-EAC trade also increased by 28 percent to reach US$19.3 billion, reflecting continued growth in regional commerce despite delays in achieving monetary union.
