12 November 2017

East Africa: EAC Chief Orders Budget Cuts As Deficit Bites

The East African Community has adopted a new package of austerity measures as the Secretariat navigates an acute budget deficit.

An official document seen by The EastAfrican indicates that as of end of September, the EAC executive arm in Arusha had only pocketed 4.6 per cent of the 2017/18 budget contributions, leaving the Secretariat in critical liquidity pressure.

The EAC budget for 2017/18 stood at $113.8 million, an increase of 12 per cent of the $101.4 million the previous year. Each partner state's contribution to the EAC's main budget for the financial year 2017/2018 was $8.4 million.

The financial doldrums compelled EAC Secretary General, Liberat Mfumukeko to go back to the drawing board and craft new austerity measures to mitigate the ripple effects of the budget shortage.

"At the moment, no activity can be undertaken unless the finance directorate confirms availability of cash," Mr Mfumukeko ordered.

For the meetings that have to be undertaken, the fresh austerity measures say the delegation must be reduced to bare minimum and only staff performing critical roles should be allowed to travel.

"Nomination for meetings must be approved by the Deputy Secretary General Finance and Administration," the September 27, internal memo from the Secretary General to executives reads.

Mr Mfumukeko also directed all the EAC directorates to identify the critical activities to be undertaken, while other operations are put on hold until funds are available.

Tasks that can be done without any financial implication should be prioritised, further reads the memo, directing the Deputy Secretary General Finance and Administration and Director of Finance to ensure compliance.

The budget deficit resulting from declining donor support notwithstanding, the EAC is in dire need of $1.28 billion to effectively carry out its fifth development strategy. The ambitious strategy calls for an annual budget of $258 million, up from $130 million it receives a year.

"The fourth plan was overloaded due to shortage of funds," said Mr Mfumukeko, stressing that agriculture and job creation was high on the community's 2016/2017 - 2020/2021 development agenda.

The Secretary General believes substantial investments in the agricultural sector will create jobs for the youth and do away with insecurity in the region. The strategy also focuses on invigorating industrialisation and embracing technology and innovation.

Addressing the EAC Development Partners Consultative Forum last month, Mr Mfumukeko pleaded with development partners to support the projects stipulated in the fifth development strategy which aims at stabilising and making the community competitive enough to become lower-middle income by 2022.

The ambitions strategy calls for, among other things, consolidation of the Single Customs Territory to cover all imports and intra-EAC traded goods.

Danish ambassador to Tanzania Einar Jensen called on the EAC partner states to remit their contributions to the bloc promptly, warning that the decline in funding did not augur well with the integration process.

"With strong commitments and hope, we will resist the challenges and emerge as stronger, truly collaborative partners," he said.

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