Kenya’s official foreign ex- change reserves held by the Central Bank of Kenya (CBK) have surged to a historic high of $10.1bn, buoyed by surplus funds remaining after international investors declined to fully participate in the govern- ment’s $900m Eurobond buyback offer.

Data released by the CBK reveals that the country’s forex reserves rose by $913m in a single week in March, pushing the total above the $10bn mark for the first time in the nation’s history. The reserves had stood at $9.1bn the previous week.

The unexpected windfall comes after Kenya floated a new $1.5bn Eurobond in March, aimed at refinancing part of its 2024 debt obligations through a buyback of an older $2bn Eurobond initially issued in 2014.

Out of the $900m the National Treasury had earmarked for the buy- back, investors only agreed to sell back 64.4% – amounting to $579.6m – leaving the government with an unplanned balance.

Initially, the Treasury had expected to retain only $597m after the buy- back. The higher-than-anticipated balance is now sitting in the CBK reserves and, according to Treasury officials, will be used to settle upcom- ing syndicated loan obligations falling due in April.

With the latest reserve boost, Kenya’s forex cushion now represents 5.1 months of import cover, significantly above both the Central Bank’s internal minimum threshold of four months and the East African Community’s statutory require- ment of 4.5 months.

This marks a dramatic turnaround from 2023, when the CBK’s foreign reserves came under considerable strain. During that period, the apex bank frequently in- tervened in the currency markets, offload- ing dollars from its reserves to contain extreme volatility in the exchange rate, which had been driven by global economic pressures and rising demand for foreign currency to service external debts.

Analysts say the sharp rise in reserves could ease short-term pressure on the Kenyan shilling and help rebuild inves- tor confidence, especially as the country navigates a difficult fiscal environment marked by high debt servicing costs and growing current account deficits.

Tanzania’s ATM transactions down while digital surges

The total value of transactions conduct- ed through Automated Teller Machines (ATMs) in Tanzania fell slightly in 2024, reflecting a steady shift by consumers and businesses towards more convenient and cost-effective digital payment channels.

According to the Bank of Tanzania’s (BoT) National Payment Systems Annual Re- port for 2024, ATM transactions dropped by 0.77% to $5.1bn, down from the $5.2bn recorded in 2023. The volume of ATM transactions also fell by 5.63% to 70.8m, from 75.01m the previous year.

This decline occurred despite a notable increase in the number of ATMs installed across the country. The total number of machines rose by 9.74% to 2,174 in 2024, compared to 1,981 the year before.

The report notes that ATMs remain heavily concentrated in urban centres, with Dar es Salaam accounting for the largest share at 33.07%, followed by Aru- sha (7.13%), Mwanza (6.07%), and Dodoma (5.57%).

BoT attributed the overall decline in ATM usage to the growing adoption of alternative digital payment methods, in- cluding mobile money platforms, vir-tual cards, and internet banking services, which offer more flexibility and reduced transaction costs.

As of 2024, the number of payment cards issued in Tanzania reached 12.72m. Debit cards accounted for the vast major- ity at 97.05%, followed by prepaid cards (2.79%) and credit cards (0.16%). Visa, MasterCard, and UnionPay remained the leading card brands in circulation, along- side other international networks such as American Express, Cirrus, and Maestro.

The number of local brand cards is- sued fell by 27.92% – from 2.40m in 2023 to 1.73m in 2024. This trend was largely driven by several factors, including growing demand for cross-border transactions, the rapid expansion of e-commerce, increased digitisation of merchant payments, and the inherent limitations of local cards and mobile money systems in handling interna- tional payments.

Financial institutions and mobile network operators have ramped up the issuance of virtual prepaid cards, which allow users to fund transac- tions via their mobile money wallets. In 2024, virtual card registrations rose sharply by 60.37%, reaching 820,832 – up from 511,826 the previous year.

These virtual cards processed a to- tal of 4.51m transactions in 2024. Of these, transactions denominated in Tanzanian shillings were valued at $220.15m, while USD-denominated transactions totalled 0.6m in volume, valued at $187.33m.

Tanzania’s remittance inflows grow by 35%

Remittance inflows into Tanzania surged by 34.6% in 2024, reaching approximately $70m, as the government implemented policies to streamline and reduce the cost of sending money through formal finan- cial channels.

According to the 2024 Annual Report on National Payment Systems released by the Bank of Tanzania (BoT) recently, the number of inbound remittance transac- tions rose by 40.5%, totalling 1.3m.

“The increase in remittances is partly due to policy measures that reduce trans-action costs, enhance inclusivity, and make it easier for the diaspora to send money through formal channels,” the central bank stated in the report.

Outward remittances also grew. The number of transactions increased by 16.33%, while their value climbed 14.39%, to 148,274 transactions worth about $430m. Overall, Tanzania registered a positive net remittance position, record- ing 1.2m inbound transactions with a total value of around $271m more than out- bound flows, with the majority of funds coming from Tanzanians living in the United States, UK, and Canada.

The report credited the increase to greater collaboration between local fi- nancial institutions and global Money Transfer Operators (MTOs) and remittance hubs, which enhanced accessibility and affordability.

Electronic Money Institutions (EMIs) facilitated incoming remittances that showed a mixed trend. While the num- ber of transactions declined by 4.23% to 3.4m, the value increased by 8.60% to roughly $393m, pointing to a shift toward higher-value transactions.

Cross-border payments via the SWIFT system also recorded signifi- cant growth. Inbound transactions jumped 33.85% to 298,580, while the value rose 35.61% to approximately $12.14bn, up from $8.95bn in 2023.

Outgoing SWIFT transactions grew even faster – up 73.70% in volume to 310,622 transactions. Their total value almost doubled, increasing by 86.52% to about $43.07m, driven largely by growth in cross-border trade and the import and export of goods and services.

In the regional context, EMIs played a key role in supporting cross- border payments within the East African Community (EAC) and Southern African Development Community (SADC). Incom- ing regional transactions rose 45.48% in volume and 43.40% in value, reaching 4.32m transactions worth roughly $194m.

Outgoing regional transactions also in- creased, up 38.68% in volume to 2.21m and 31.99% in value to approximately $126m.

People’s Bank of Zanzibar sukuk bond finds favour

The People’s Bank of Zanzibar (PBZ) is calling on Tanzanians to invest in its newly launched bond product, the Zan- zibar Sukuk, positioning it as a tool for individual empowerment and national development.

A sukuk bond is an Islamic financial instrument structured in a way that com-plies with Islamic law (shariah), and in- stead of paying interest like conventional bonds, sukuk investors receive a share of the profits generated by the underlying asset they own.

PBZ Managing Director Arafat Haji highlighted the advantages of the bond, noting that the initiative stems from the vision of Zanzibar’s government, led by President Dr Hussein Ali Mwinyi, to mo- bilise domestic investment for key devel- opment projects.

The Zanzibar Sukuk offers a competi- tive annual profit rate of 10.5% in Tan- zanian shillings and 4.2% in US dollars, making it an attractive option for both local and diaspora investors. “The purpose of this bond is to raise funds for key de- velopment projects in Zanzibar, including laboratories, airports, ports, and other infrastructure projects,” he stated.

He added that profit payments will be disbursed every six months, and upon the bond’s maturity after seven years, inves- tors will receive 100% of their original investment plus cumulative profits.

The bond also offers flexibility: inves- tors can use their bond certificates as col- lateral to access loans from other financial institutions, unlocking opportunities for personal or business ventures.

Dar es Salaam Mayor, Omary Kumbila- moto echoed these sentiments, connecting the bond to broader economic progress under President Samia Suluhu Hassan, who he said is working to ensure Dar es Salaam functions as a 24-hour economy.

Stiff task ahead for Bank of Uganda’s new governor

The appointment of Dr Michael Atingi- Ego as the new Governor of the Bank of Uganda and Prof Augustus Nuwagaba as his Deputy comes at a critical moment for Uganda’s financial sector.

While they bring sterling academic and professional credentials to the top office, they inherit an institution under intense scrutiny – not only for its internal gov- ernance but also for its role in ensuring economic stability amidst a volatile global environment.

When the two new leaders stepped into office, the central bank was still grappling with the fallout from a major financial scandal. In September 2024, the Bank of Uganda made two erroneous transfers – one of $6.134m meant for the World Bank and another of $8.596m meant for the African Development Fund. The funds were instead wired to private companies: Roadway Company Limited via MUFG Bank in Japan, and MJS International in London, respectively.

The gravity of the situation quickly became apparent. Once the bank real- ised the payments had not reached the intended recipients, it launched inter-nal investigations and reported the incidents to the Uganda Police Force and the Financial Intelligence Au- thority.

Swift action followed. Working through its correspondent bank, Citibank N.A., the Bank of Uganda successfully recovered $8.205m from the MJS International transaction, which has since been credited to the Consolidated Fund Account. Efforts to recover the remaining $391,660.45 are ongoing.

As Dr Atingi-Ego and Prof Nu- wagaba take the reins, one of their immediate tasks is to restore public confidence in the central bank’s in-

tegrity. This involves not only investigat- ing past mishandlings but also improving verification processes for all future high- value transactions.

The new leadership faces broader structural issues that continue to plague Uganda’s financial landscape. High inter- est rates remain a persistent complaint from borrowers across the country.

Meanwhile, Uganda’s financial markets must navigate an increasingly unpredict- able global environment. With between 12 to 15% of Uganda’s domestic debt held by non-resident investors, geopolitical shocks and global financial instabilities present significant risks.

On a regional level, the central bank is also expected to take a lead role in fast-tracking the East African Monetary Union by harmonising financial markets across the region. 

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