East Africa: Region Facing Cash Crisis After Delay in 2021 Budget Presentation

The East African Community is set to miss the annual budget reading deadline for the financial year starting on Wednesday, July 1, pushing the trading bloc into a financial crisis that could paralyse many of its operations.

The EAC Council of Ministers, the body mandated with budgetary preparations and presentation, is yet to present its 2020/21 budget proposals to the East African Legislative Assembly (Eala) budget committee with only days to go to the June 30th deadline, The EastAfrican has learnt.

Payment of staff salaries, recurrent expenditure and supplies as well as development projects could grind to a halt if reading and adoption of the budget is delayed.

The EAC secretariat performs critical trade facilitation functions in the region, and is currently heavily involved in finding a solution to the cross-border trucking standoff triggered by the Covid-19 pandemic.

In an interview, Vincent Biruta, Rwanda's Minister of Foreign Affairs and International Co-operation who is also the chair of the EAC Council of Ministers, explained the failure to meet the June 30 budgeting deadline.

"The Council is yet to convene and approve the budget due to the current circumstances related to Covid-19 pandemic, as well as some member countries that need more time to get prepared. We expect the Council to convene as soon as possible," said Dr Biruta.

The EAC budget is funded from annual member contributions as well as external grants.

Besides the travelling disruption that came with international border closures after entry of the virus into the region three months ago, The EastAfrican has also learnt that the budgeting process has been marred by lethargy of some member countries and deaths of Burundi president Pierre Nkurunziza as well as South Sudan Minister for EAC Affairs John Luk Jok.

The upcoming elections in Tanzania and Uganda have also divided member countries' attention.

EAC Secretary General Liberat Mfumukeko blamed the current scenario on factors "beyond the Community's control.

"As for the budget and renewal of contracts, a Council meeting is required. We hope to hold one very soon, possibly next week," said Mr Mfumukeko.

The EAC Secretariat operations stand to suffer most, including renewal and termination of staff appointments and contracts, some of which expire on June 30, 2020, and other operations at the Arusha headquarters.

Development of regional infrastructure, which was allocated $2.1 million last year, is also likely to suffer delays.

Lack of a budget will also affect the EAC council and ministerial meetings, Eala operations, employment and replacement of judges and staff at the East African Court of Justice, and funding of agencies spread across the region, among other activities.

The EAC is at the centre of coming up with measures to enhance free cross-border movement of goods and services in the region, which has been greatly affected by border closures announced to manage the spread of coronavirus by truck drivers.

Failure to pass the budget on time could delay recovery of EAC economies that are heavily battered by the shutdowns.

Four judges of the EACJ are set to leave by June 30, yet there are no appointments to replace them. The Court is staring at a shortage of judges on July 1.

Effective implementation of the Common Market Protocol -- enhancement of free movement of persons, labour, capital and implementation of commitments on other areas of co-operation as envisaged under the Common Market -- which was allocated $28.06 million in the 2019/20 financial year, will also be affected.

Enhancement of regional industrial development, agricultural value addition, skills development, technology advancement and innovation to stimulate economic development, last year got an allocation of $5.8 million.

The budget is expected to prioritise and allocate funds for various activities including deployment of the EAC Election Observation Mission to Tanzania whose election is due in October 2020. This too is hanging in the balance.

The Council of Ministers is required to present its 2020/21 budget proposals to parliament. "According to EAC Budget Act, Eala is expected to receive the tabling of the budget estimates from the Council chair by April 30 this year for consideration and passage before June 30 as required by EAC Treaty. Unfortunately the Assembly is yet to receive any estimates from the executive (council of ministers)," said Abdikadir Omar Aden, chair of the Eala Committee on General Purpose-Budget.

Through its budgetary function, the Committee on General Purpose-Budget analyses the proposals and makes recommendations before presentation to the Assembly.

"It normally takes about 30 days for the Assembly to process and pass the estimates," said Mr Aden.

"From the look of things, I don't see the budget passing before June 30 as required by the Treaty. It may have to be sometime in July, depending on when the Council brings the estimates to the House," he added.

The EAC's emphasis on maintaining consensual decision-making in all its decisions has proven an uphill task due to frequent absenteeism by some members, including South Sudan, Burundi and Tanzania.

"This consensus protocol is not working. There is nowhere in the world where you can attain 100 per cent turnout of members. It is upon the EAC Heads of State to review it," said Mr Aden.

Rwanda's efforts to convene a virtual conference last month hit a snag after requests from South Sudan, Tanzania and Burundi to postpone the meeting. The EAC Council chair was, however, non-committal as to when the budget will be tabled.

"We are working on this matter and we are going to respond soon," said Dr Biruta.

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