East Africa Community in Sh312 million debt— report

THE STAR|ARUSHA: Cash strapped East Africa Community is struggling to clear a Sh311.58 million debt as crisis hits the bloc in the wake of non-contribution by the member states.

A report by the East Africa Legislative Assembly on its scrutiny of the audit report by the audit commission reveals that the community borrowed from its General Reserve Fund.

“A total of USD 2.59 million (Sh311.58 million) was borrowed by EAC organs and institutions from the general reserve fund, to bridge the gap caused by the delayed and non-disbursement of the contributions by the partner states,” the report states.

The funds, the report adds, had not been refunded by the time of audit in June 2021, revealing the deep financial crisis that has hit the community.

EAC secretariat borrowed Sh32.40 million, East Africa Court of Justice took Sh18.04 million and EALA borrowed Sh261.14 million.

“This contravenes the directive 06 of the 41st extra ordinary meeting of the council of ministers and provisions of EAC financial rules and regulations,” the report says.

The EAC mainly relies on contributions by the seven members to fund it operations.

EAC member states include Kenya, Uganda, Tanzania, Burundi, Rwanda, South Sudan and Democratic Republic of Congo.

But the report by the EALA’s Accounts Committee shows most states either not contributing or making partial contributions, forcing the EAC and its organ to borrow to bridge budget deficit.

The member states have failed to remit Sh9.81 billion in the last five years.

“This means that the EAC cannot properly plan and implement its activities, which may negatively affect delivery of its mandate,” the report reads.

The report shows that in 2015-16 financial year, some Sh1.07 billion ($8.98 million) were not remitted to the community by the member states.

In 2016-17, the countries did not submit Sh942.10 million while in 2017-18, Sh2.21 billion was not remitted.

In 2018-19, the outstanding remittances shot to Sh3.55 billion while in 2019-20, some Sh1.83 billion was not submitted.

“It was noted that the contributions paid have been diminishing leading to an increase in contributions outstanding from $8.88 million in 2015-16 to $15.18 million in 2019-2020,” the EALA MPs noted in the report.

The report further reveals that some Sh860.55 million received by the community as arrears from partner states were not transferred to the General Reserved Fund as required by the regulations.

“The management explained that at the time, EAC organs and institutions were experiencing liquidity problems,” the report states.

“Thus, they used the amount to settle current obligations with persons in the service to the community (staff) as well as providers of goods and services.”

Further, the report reveals that many bills passed in the EALA are not being assented to by the head of states, thus hindering the integration of the community.

Some 21 bills, passed as far back as 2012, have not been assented to.

“The committees observed that this tantamount to injustice. Delayed assent to EAL laws hinders the community’s efforts to fully attain the objective for which it was established,” the report says.

And as the heads of states delay to sign the bill, several other bills are pending in the Assembly.

For instance, the EALA passed only one bill in the 2020-21 financial year.

“The committee recommends to the Assembly to ensure that it understudies factors that have led to the delay in passing the bills and address them,” the report recommends.