In Summary

"There are challenges with some countries delaying payments but we have talked on how to tackle this", he said as the House debated the 'State of EAC' speech by current Chair President Museveni of Uganda recently. 

Arusha. Fears of shaky financial status of the East African Community (EAC) were allayed on Tuesday evening when a Kenyan cabinet secretary declared it cannot run bankrupt. "The Community cannot run bankrupt due to delayed contributions by the member states", the newly appointed cabinet secretary for EAC and Northern Corridor Peter Munya affirmed. He told the East African Legislative Assembly (Eala) that the financial woes facing the regional organization were being addressed by relevant authorities.

"There are challenges with some countries delaying payments but we have talked on how to tackle this", he said as the House debated the 'State of EAC' speech by current Chair President Museveni of Uganda recently. However, he said the long term solution to the crisis lay with the often touted sustainable financing mechanism which was also discussed during the recent Heads of State Summit in Kampala. He noted discussions were on advanced stage on how to sustainably raise funds through slapping tax on imports, slicing the GDP "or a combination of these". According to him, the Community was also weighing on the current system where each of the six partner states made equal contribution to its annual budget and equity option.  Mr. Munya's remarks came only weeks after the Arusha-based secretariat announced that only 40 per cent of the 2017/2018 expenditure budget by the partner states had been remitted to Arusha.

The EAC and its organs and institutions had budgeted to spend a total of $ 110 million during the 2017/2018 financial year

The secretariat, which is the executive arm of the Community, was allocated the lion's share  of $ 60,183,201.

Two other principal organs, the East Africal Legislative Assembly (Eala) and the East African Court of Justice (EACJ) were to get $ 17.9m and $4.1m respectively.

The rest of the funds were to meet the annual expenditures of seven institutions of the Community which are budgeted from the Arusha coffers.

The development partners were to inject $ 52.8m while the partner states were to contribute $ 50.2m through their respective EAC ministries and $ 4.8m and 1.5m through the Education and Fisheries ministries respectively.

Sustainable or alternative financing mechanism for EAC has been on cards for years and was proposed due to delayed remittance of funds by member countries and declining donor support.

However, some countries such as Tanzania, Uganda and Kenya preferred equal contribution arrangement while Burundi and Rwanda wanted differentiated contributions.

One of the options was to slap a 0.7 per cent levy on the value of dutiable imports from outside the bloc.  The other mechanism once recommended by the experts is a hybrid option which will use various parameters for each country and considered would promote equity and fairness.