In a bold pivot to strengthen its financial defenses, Kenya is actively exploring a significant increase in gold reserves as part of a long-term plan to reduce dependence on the US dollar, Central Bank of Kenya (CBK) Governor Kamau Thugge has revealed.

Speaking during an interview with Bloomberg TV at the IMF and World Bank Spring Meetings in Washington, Thugge confirmed that the CBK has assembled a dedicated team to assess the practicality of adding gold to Kenya’s foreign exchange reserve portfolio.

“It’s something we’ve been considering for some time, and we are now actively exploring it,” said Thugge. “A team is assessing its practicality, but I wouldn’t want to commit to a specific timeframe.”

Currently, gold accounts for a minuscule portion of Kenya’s reserves just 0.02 tonnes or 20 kilograms making this proposed shift potentially transformative. The CBK’s strategy mirrors a growing global trend where central banks are increasing their gold holdings to guard against dollar volatility and geopolitical risk.

The timing of Kenya’s interest in gold is no coincidence. In 2024, gold prices surged by 29%, driven by investor demand for safe-haven assets amid mounting global tensions and economic uncertainty. The World Gold Council reports that total gold demand reached a record 4,974 tonnes in 2024, with central banks accounting for 1,045 tonnes marking the third consecutive year of purchases above the 1,000-tonne mark.

Nations like China, India, and Russia have been at the forefront of this diversification movement, seeking to buffer their economies from dollar-related shocks and potential sanctions. Now, Kenya appears poised to join this wave, signaling a strategic rethink of its reserve policy.

The central bank’s gold ambitions are also in step with domestic legislative reforms. A bill under review in Parliament seeks to establish a Gold Processing Corporation, a move that could tighten regulation, curb illicit trade, and streamline production. Analysts say this could not only boost domestic gold output but also create a reliable source for the CBK’s reserve buildup.

For Kenya, bolstering gold reserves is not just a symbolic move it’s a practical hedge. With foreign reserves heavily skewed toward the US dollar, the country remains vulnerable to global currency shifts. Gold, a historically stable asset, could offer a buffer against inflation and exchange rate volatility.

As the world’s economic dynamics shift and countries reassess their exposure to traditional reserve currencies, Kenya’s pursuit of gold represents both a defensive measure and a strategic investment in long-term financial sovereignty.