The central banks of the United Arab Emirates and Kenya have signed two landmark agreements aimed at enhancing financial cooperation through the use of domestic currencies for trade and the integration of their payment and messaging systems.
The Memoranda of Understanding (MoUs), signed in Abu Dhabi on Tuesday, mark a major step towards reducing reliance on international reserve currencies in cross-border trade and harnessing financial technology to streamline payments between the two countries.
The agreements were signed by His Excellency Khaled Mohamed Balama, Governor of the Central Bank of the UAE (CBUAE), and His Excellency Dr Kamau Thugge, Governor of the Central Bank of Kenya (CBK), in the presence of senior officials and assistant governors from both institutions.
Under the first MoU, the two central banks committed to promoting the use of the Emirati dirham and the Kenyan shilling for the settlement of bilateral trade transactions. This initiative aims to deepen the financial linkages between the two countries, which have shared long-standing economic and cultural ties.
The second MoU focuses on the interlinking of instant payment systems and national card switches efforts that both regulators believe will drive greater efficiency, speed, and security in financial transactions. This collaboration also aligns with the broader global trend toward digital financial transformation, with Kenya in particular being internationally recognised for its fintech innovations.
“The signing of these two MoUs reflects strong economic ties between the UAE and the Republic of Kenya.” said CBUAE Governor Balama. “The use of local currencies in settling cross-border transactions, coupled with cooperation in linking instant payment systems, will broaden investment and commercial opportunities for both nations. This initiative paves the way for greater collaboration in the financial and banking sectors, and we look forward to working closely with our partners in Kenya to strengthen financial stability and achieve our mutual interests.”
His Kenyan counterpart, Dr Thugge, echoed those sentiments, describing the agreements as “a natural progression” in the long history of trade between the two countries.
“These two memoranda will not only bolster our bilateral relations but also create scalable and sustainable frameworks to accelerate trade,” Thugge said. “Settling transactions in our own currencies will reduce costs and delays, while linking our payment systems will improve cross-border efficiency and inclusivity.”
The move is seen as part of a wider global shift by emerging markets to reduce dependence on dominant international currencies such as the US dollar and euro. As geopolitical tensions and inflationary pressures continue to impact global trade flows, central banks around the world are exploring mechanisms to strengthen regional economic integration through local currency settlements.
Financial analysts have also pointed to the strategic importance of this development for the East African region. Kenya, as the region’s economic hub, could potentially act as a gateway for UAE investments into East Africa, particularly in fintech, infrastructure, and clean energy sectors.
“This is a smart step,” said Nairobi-based economist Judd Njeri. “By promoting domestic currency usage, the two countries can not only reduce forex risks but also catalyse deeper trade volumes and financial cooperation.”
Kenya’s global reputation for payment innovation, especially with the rise of mobile money platforms like M-Pesa, was also highlighted as a strength in the interlinking of payment systems. UAE-based fintech firms are increasingly eyeing Africa as a growth frontier, and smoother financial interoperability could open doors for joint ventures and cross-border innovation.
While the agreements are non-binding in nature, they set the stage for further technical cooperation, regulatory alignment, and potential pilot projects in the near future. The success of these initiatives could influence similar agreements between other African and Gulf Cooperation Council (GCC) countries.
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