East Africa Loses Hundreds of Millions Annually Due to Currency Convertibility Bottlenecks

The East African Community (EAC) partner states are facing significant losses due to persistent bottlenecks in currency convertibility, forcing traders and banks to rely on the US dollar for regional transactions. According to a study by the Mo Ibrahim Foundation, trade among African countries is being hampered by high costs of currency conversion, with an estimated $5 billion lost annually.

The EAC central bank governors acknowledged that implementation of the regional framework for currency convertibility and repatriation remains uneven, causing operational challenges. They approved a Banking & Currency Technical Working Group (TWG) to convene a workshop by December 2026 to deliberate on strategic issues affecting currency convertibility and repatriation in the region.

The East African Payment System (EAPS), developed in 2014 to facilitate regional trade, has remained underutilized. The system links the real-time gross settlement systems of participating central banks within the EAC and facilitates cross-border payments in the currencies of participating member states. However, its use remains low, with most transactions processed through it denominated in Kenyan currency.