EAC Council of Ministers
EAC Treaty Article 132(
Economic Affairs
Sectoral Council on Finance

EAC ministers fail to agree on financing model

The East African Community will maintain the current budget contributions model, where partner states contribute equally to the Secretariat’s budget, after members failed to agree on the best financing mechanism.

At its meeting in Arusha from May 2-8, the EAC Council of Ministers agreed instead to consult further on a suitable financing mechanism for the community.

Tanzania, Kenya and Uganda want the status quo to stand, arguing that countries are equal partners and should therefore contribute equally.

The equal contribution model is provided for in the EAC Treaty Article 132(4), which the trio says reflects the wisdom of the founders of the Community.

Rwanda and Burundi prefer a differentiated contribution mechanism, including the option of a levy on imports from outside the region.

The other option being pushed by all the EAC partner states except Burundi is that of equal contribution with sanctions to defaulting partners.

The debate on the alternative financing method for the EAC has been on the table at the Secretariat since 2012.

About 57 per cent of the budget ($56.8 million) will be funded by partner states, with each country expected to contribute $8,371,320.

The ministers also approved $120,000 to facilitate consultancy services for a study on the reforms needed to align the EAC’s structure, programmes and activities with the available financial resources.

It was agreed that the Sectoral Council on Finance and Economic Affairs in collaboration with the Secretariat will identify an independent expert for the exercise. Each member will submit to the chairman a name of a potential expert institution.

The 2018/2019 budget is lower 2017/2018 budget which stood at $110.1 million. Only Tanzania has paid its full contribution.

Kenya has paid 97 per cent, Uganda 79 per cent, Rwanda 67 per cent while South Sudan has contributed 12 per cent of its total.

Burundi has contributed nothing to the budget and owes the EAC $530,924 for the 2016/2017 budget. Consequently, the Secretariat is unable to facilitate some of its activities, while the reserve account has a nil balance.

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