Kenya turns to the Bank of England for gold in a move to protect its economy

Kenya is in advanced discussions with the Bank of England (BOE) to diversify its foreign reserves by adding gold, a move designed to safeguard its economy and reduce exposure to global currency fluctuations.

The talks, which include details about bullion storage, mark a significant shift in Kenya’s economic strategy as the East African nation seeks more stability amid volatile global markets.

With gold prices rising sharply this year, Kenya has joined a growing list of countries looking to benefit from the metal’s surge.

Economists in the country see gold as a safer store of value compared to the U.S. dollar, especially as global uncertainty continues to reshape financial systems.

According to a Bloomberg report, other African nations such as Zambia and Ghana have already implemented similar strategies, while Rwanda and Uganda are exploring the idea.

“We’ve talked to the Bank of England and other banks to see how we go about it, where it will be stored, those kinds of things,” said Central Bank of Kenya Governor Kamau Thugge in an interview in Washington. “I’m hoping that we can do it as soon as is practical because we’re ready to move.”

Thugge emphasized that Kenya’s gold strategy “is not an intention to diversify away from dollars per se, but basically to diversify our foreign holdings.”

Investors’ expectations of more interest rate cuts from the U.S. Federal Reserve have contributed to gold’s historic rally, while mounting debt levels in developed economies have fueled further concerns.

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However, Thugge expressed caution given the sharp rise in gold prices, which have soared to nearly $4,200 an ounce. “Those who got in early have made a killing,” he noted.

“Those who get in late can also be killed. So it’s important that we hold a level where, should there be a reversal in the price of gold, it doesn’t really have a huge impact on our holdings,” he added.

Midway through the year, Kenya emerged as one of the few African countries with a notable gold reserve.

Maintaining gold reserves has become increasingly important for African economies, as it helps reduce dependence on foreign currencies and enhances monetary independence.

Following global trends set by countries like China and India, African nations including South Sudan, Zimbabwe, and Nigeria have begun initiatives to expand their reserves. They aim to join Algeria and Libya, which already possess substantial gold holdings.

A report by the World Gold Council (WGC) indicated that about 20 central banks globally plan to boost their gold reserves this year.

In Africa, the top gold reserve holders are typically resource-rich or gold-producing nations such as Ghana, Egypt, and Tunisia. Kenya ranks seventh on the continent, with reserves totaling 0.02 tonnes.

In line with the ongoing rise in gold prices and the continental push to increase resource-based holdings, Ghana is preparing to start local gold refining and launch fire assay operations in October 2025.

The initiative follows the West African country’s efforts to combat illegal gold mining, which has caused significant environmental damage and placed stress on local communities.

As part of these measures, Ghana plans to tighten visa access for Chinese nationals involved in the sector.

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Image Credit: Sky News

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