Alarm raised as EAC coffers run dry

ARUSHA

The East African Community (EAC) is in dire financial strait, with fears the regional body may fail to even pay its workers the December salary, The Citizen has learnt.

The five member states have defaulted in remitting $30.9m (about Sh62bn) in budgetary support, leading to mounting supplier debts and disruptions of the calendar of its operations.

The money should have been credited to the EAC accounts by December 14 but sources within the body told The Citizen the five member countries are yet to act despite several reminders.

Budgetary constraints in some of the countries and the political unrest in Burundi are some of the reasons believed to cause the delays in remittances.

SPENDTHRIFT

There are however concerns that the EAC secretariat has become spendthrift, with MPs in the just ended session in Rwanda complaining that billions of shillings were being expended on non-productive activities like travel and allowances for executives and secretariat employees.

Burundi was the leading defaulter followed by Tanzania, Rwanda, Kenya and Uganda respectively. A breakdown seen by The Citizen shows that Burundi owes the regional body $11.2m (Sh22.4bn), including last year’s arrears of $2.8m (Sh5.6bn).

Tanzania’s arrears stand at $6.5m (Sh13bn), Rwanda $6.3m (Sh12.6bn), Kenya $4.2m (Sh8.4bn) while Uganda’s debt is the lowest at $2.7m (Sh5.4bn).

The unremitted funds equals 74 per cent of the total $42 million (Sh84bn) budget for this Financial Year. EAC also relies heavily on donor support, with Germany being the leading direct budget financier to the regional body.

A senior official at the secretariat told The Citizen on Monday that executives there fear raising the matter over regional reputation issues.

“There’re no funds even for December salaries if help does not come this week,” said the EAC official who preferred anonymity.

EAC spokesperson, Richard Owora, told The Citizen on phone from Uganda that the secretariat had already sent a polite reminder to the partner states to remit their contributions.

“I hope they will do their best to enable the EAC secretariat to execute its mandate, including projects that may stall,” Mr Owora said.

However there was good news from Dar es Salaam, with the Government confirming it had just released Sh6 billion (About $3m) as part of Tanzania’s contribution.

“The treasury approved the payment yesterday and we have already wired the money…it should soon be in the accounts of the EAC Secretariat,” the Permanent Secretary in charge of East African Cooperation, Ms Joyce Mapunjo told The Citizen.

BURUNDI TO STRUGGLE

The EAC Cooperation Ministry was merged within the Foreign Affairs docket to form the Ministry of Foreign Affairs, Regional as East Africa Affairs in President John Magufuli’s thin cabinet.

With a crippling civil strife that has seen key donors withdraw budgetary support to Burundi, the tiny EAC country may struggle once again to fully honour its quota in EAC remittances.

Development Studies lecturer at Stefano Moshi Memorial University College, Gasper Mpehongwa says it was perhaps the right time for EAC to think of alternative sources of finance to plug the budget hole.

“It’s shameful for leaders who preach the importance of EAC integration but go on to default on their financial obligations” Dr Mpehongwa told The Citizen.

He said a more viable way of funding the Arusha-based body was to allow a surcharge on trade. “This would be more viable and predictable.”

The bloc has since 2012 been negotiating for an equitable formula for determining how much each country contributes to its chest in an effort to meet its budget.

SNUBBED DEAL

The reflection has been around a member’s contribution should be based on GDP, imports from non-EAC countries, intra-EAC exports or tax revenues, but the most preferred model was on imports from non-EAC-countries but the idea was thwarted by Kenya and Tanzania who share the biggest percentage in regional trade.

Kenya and Tanzania snubbed the deal due to the fact that the mechanism would see the two shouldering the lion’s share of the EAC budget.

Taking the example of the 2011 imports data, Kenya would have paid to EAC $145.11million, Tanzania $108.06 million whereas Uganda would have contributed $49.10 million, Rwanda $8.15 million and Burundi $4.33 million.

The two countries argue that should that model be approved, it should be accompanies with some benefits such as a higher employment quota and more say on the economic and financial matters of the EAC.