The Treaty establishing the EAC provides that; “The budget of the Community shall be funded by equal contributions by the Partner States and receipts from regional and international donations and any other sources as may be determined by the Council.”

Currently, the budget of the regional bloc (excluding assistance from development partners) is shared equally between Burundi, Kenya, Rwanda, Tanzania and the Republic of Uganda.

Although there has been a steady increase in the budget of the community from US$ 2.44 million in 1999/2000 to $122 million in 2011/12, the increase has not been enough to fund all the planned projects and programmes during the period.

The bloc is currently implementing the 4th EAC Development Strategy (2011-2016), to deepen and accelerate the integration process.

This strategy focuses on consolidating the benefits of a fully-fledged Customs Union, full implementation of the Common Market and laying the foundations for the Monetary Union and the Political Federation.

This implies it will require additional funding which may not be realized through the current financing arrangement.

What is the practice in other Regional Economic Communities?

Various RECs apply different modes of budget financing. Contribution to the budget of the African, Caribbean and Pacific Group of States (ACP) is based on Member States’ capacity to pay as represented by GDP, with a system of sanctions applicable in the event of default.

The Association of South East Asian Nations (ASEAN) applies “Equal Contribution” mode of budget financing, while COMESA’s budget is financed through the “Assessment Method” in accordance with a formula that is decided by the Council from time to time.

The formula incorporates a ceiling and floor mechanism. COMESA also imposes sanctions to secure fulfillment by the Member States of their obligations under COMESA’s Treaty.

The Economic Community of West African States (ECOWAS) funds it budget from a “Community Levy” and such other sources as may be determined by the Council. A special budget is made available through the recommendation of the Council to meet the extra-budgetary expenditure of the Community.

Source: The New Times

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