The Central Bank of Kenya (CBK) and the Central Bank of UAE (CBUAE) have signed two agreements to strengthen financial ties between the two countries.
The agreements between the two nations will facilitate the use of local currencies, including the Kenyan shilling, in settling cross-border transactions, while also interlinking instant payment systems and messaging frameworks.
“Under the first MoU, the CBUAE and the CBK will strengthen cooperation between the United Arab Emirates and the Republic of Kenya to support the sustainable development of both financial markets. This agreement will also encourage the use of local currencies in settling cross-border commercial transactions,” the statement by the CBUAE read in part.
The deal was reached after a meeting between the Governor of CBUAE Khaled Mohamed Balama and his CBK counterpart, Kamau Thugge, alongside senior officials from both institutions during a ceremony on June 3, in Abu Dhabi.
CBK Governor Kamau Thugge speaking at the Africa Climate Business Forum on November 2, 2023
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CBK
The collaboration marks a significant step toward enhancing bilateral trade and financial integration between Kenya and the UAE.
The use of local currencies in border trade is expected to reduce reliance on third-party currencies such as the US dollar to lower transaction costs, speed up settlements, and create a more seamless trade environment for businesses.
The second MoU focuses on deepening cooperation in payment systems, including interlinking instant payment networks and national card switches. This will allow businesses and individuals to conduct transactions more efficiently while adhering to regulatory and supervisory frameworks.
Speaking during the signing, CBUAE hailed the agreements, terming them as game-changers in economic cooperation.
“The signing of these two MoUs reflects strong economic ties between the UAE and the Republic of Kenya. 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,” Balama said.
Dr Thugge said the MoUs will strengthen the cooperation these two nations have enjoyed for decades. He said the agreements will yield notable benefits not just for Kenya but also for the UAE.
“The rapid evolution of payment technology, in which Kenya has been a global leader, will also be enhanced by the interlinking of our two countries’ payment systems. This cooperation will yield tangible benefits for both our citizens and investors in the two countries,” Thugge said.
The move comes barely a month after Kenya’s neighbors, Tanzania prohibited the use of foreign currencies for local transactions.
The Central Bank of Kenya.
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CBK
