18 April 2017

East Africa: EAC Ministers Vote for Budget Rules to Stay

East African partner states have agreed to maintain the equal contributions model in funding the bloc's budget.

A report of the EAC Council of Ministers meeting, held in Arusha from March 30 to April 4, indicates that all partner states except Burundi endorsed the scheme.

Burundi preferred a hybrid financing mechanism, with a certain percentage of equal contributions and a separate proportion based on equity, solidarity and equality.

In their report, partner states proposed sanctions for default. In the first year of default by a partner state, the minister responsible for East African Community Affairs of the country concerned will be notified by the Secretariat.

"This action is not considered to be a sanction, but a necessary and indispensable precondition that must be resorted to before any penalties can be considered," states the report.

In the second year of default, the country concerned will not receive any documents; not participate in decision-making on Community affairs, and will be ineligible for chairmanship of the Summit, Council, Sectoral Council, co-ordination committee and any of its subcommittees.

During the third year of default, no new nationals of that defaulting country will be employed within the Community organs and institutions.

If a country is in arrears of more than three years, its representative will be excluded from participating in all EAC meetings, including those of the Summit.

"The Secretary General of the East African Community shall be charged with the responsibility for implementing these sanctions," states the report.

The proposals will be tabled before the EAC presidents during their Ordinary Heads of State Summit scheduled for the end of April in Dar es Salaam.

Equitable formulaSince 2012, the bloc has been negotiating for an equitable formula for determining how much each country contributes to its chest in an effort to meet its budget, 72 per cent of which is provided by donors.

The Secretariat is experiencing challenges in facilitating some activities as funds for the previous financial year are yet to be paid in full.

The Reserve Account has no money, hence no funding for the 2017/2018 financial year budget could be included in the Medium Term Expenditure Framework.

In the 2016/2017 budget, only Kenya has cleared its contribution; Uganda has paid 90 per cent, Rwanda 64 per cent, Tanzania 30 per cent, and Burundi has paid nothing.

The government of Burundi could be sent to a regional court for failure to pay anything towards the EAC budget while continuing to depend on remittances from member states.

At an EALA meeting last month, a motion on the state of the EAC budget for financial year 2016-2017, by Nancy Abisai (Kenya) showed that of the $8,378,108 needed from Burundi, it had contributed nothing in this financial year and had arrears of $771,037 from the previous fiscal year.

Each of the five EAC member states is required to make a contribution of $8,378,108 per financial year and required to pay before December 31.

The 2017/2018 total budget is $113.8 million for the financial year starting July, up from $101 million for the financial year 2016/2017.Owing to the current economic situation, all partner states are rationalising their national budgets and it will be difficult to increase contributions to the EAC. The meeting therefore agreed not to increase contributions.The total contribution is expected to increase following the inclusion of the contribution of South Sudan.

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