EAC Secretariat starved of cash, facing huge $35m budget shortfall

Tuesday November 30 2010

The EAC flag flies between flags of member states at Parliament Buildings, Nairobi. Picture: File

The EAC flag flies between flags of member states at Parliament Buildings, Nairobi. Picture: File 

By ADAM IHUCHA, Special Correspondent

The East African Community Secretariat is facing its “worst financial squeeze” in recent history, as the five partner states drag their feet on remitting their contributions.

The halting flow of contributions has constrained many crucial activities of the EAC executive arm, including the negotiation of an Economic Partnership Agreement with the European Union.

The latest report on the status of partner state contributions tabled before the EAC Finance and Administration Committee meeting held in Arusha from November 17-20, paints a worrying picture.

The document, seen by The East-African in Arusha last week, shows that the EAC has so far received barely 42 per cent of the member country contributions due.

Analysts said the issue was likely to feature prominently at the EAC Heads of State Summit this week in Ngurdoto Mountain Lodge in Arusha.

As of November 3, only $25,988,192 out of the total $61,496,740 budget to be footed by the EAC partner states had been remitted to the EAC, leaving an outstanding amount of $35,508,548.

According to the breakdown, the five EAC member states of Tanzania, Kenya, Uganda, Burundi and Rwanda were supposed to pay $12,299,348 each.

Uganda, with a remittance record of nearly 70 per cent, has already paid a total of $9,192,890, leaving an outstanding amount of $3,106,458.

Kenya has remitted 50 per cent by paying a total of $6,138,838. As it stands now, Kenya owes the regional body a total of $6,160,510.
Rwanda has also honoured its financial commitment to the EAC by 50 per cent. The record indicates that Rwanda remitted about $6,148,674, remaining with an outstanding amount of $6,150,674.

Tanzania, the EAC Headquarters host country, has only paid 30 per cent. According to the report, Tanzania’s outstanding amount stands at $8,629,775 after remitting barely $3,669,573, out of the total $12,299,348.

Burundi’s case is even worse, because it has only managed to pay 7 per cent of its financial commitment to the EAC. In real terms, Burundi paid $838,217, leaving an outstanding amount of $11,461,131.

A source within the EAC said that the EAC is in dire need of funds to undertake its day-to-day activities as the five partner states have failed to remit their contributions.

In October, the EAC Secretary General said that a new financing mechanism was needed for projects and programmes of the EAC to run smoothly.

Due to the slow inflow of contributions from the partner states as well as from development partners, Mr Mwapachu has told the EAC Council of Ministers that many projects and programmes undertaken by the Community have stalled.

Noting that slow release of funds has constrained the activities of the organisation, Mr Mwapachu said that the period between July and September every year was the most difficult because member governments started their fiscal year at the same time. “Being the beginning of the financial year of the partner states, the flow of funds to the EAC is normally slow and, with it, EAC’s programmes and activities are significantly slowed down,” he said.

Additionally, with funding for most EAC programmes and projects coming from the Regional Integration Support Programme (RISP) and the Partnership Fund, the EAC finds itself hamstrung.