EAC borrows $660,960 internally to finance operations amid budget crisis

According to an internal memo seen by The Citizen, the borrowing is intended to finance virtual sessions of the East African Legislative Assembly (Eala), including the General-Purpose Committee and the Budget Plenary session.

Also read: Will new financing model end EAC cash woes? | The Citizen

“The Council observed, among others, the dire financial situation of the Community occasioned by non-remittance and delayed remittance of contributions by some Partner States,” wrote the Deputy Secretary General for Customs, Trade and Monetary Affairs, Ms Annette Mutaave Ssemuwemba, in the memo dated May 30, 2025.

The memo outlines directives for five EAC bodies—including the EAC Secretariat, the East African Health Research Commission, the East African Kiswahili Commission, the Inter-University Council for East Africa, and the EAC Competition Authority to transfer funds directly to Eala’s bank account by the end of May 2025.

Additionally, the Council has instructed the Secretary General to recover the borrowed amount from future partner state disbursements to Eala in a phased manner.

The EAC’s latest financial manoeuvre is part of a growing pattern of emergency measures to keep the bloc afloat amid chronic underfunding.

Last week, The Citizen reported that it was only Tanzania, Kenya and Uganda that had fully met their contributions for the 2024/25 budget as of April 25, 2025. For the 2024/25 financial year, the EAC approved a budget of $112.9 million, with each member expected to contribute $7 million.

Also read: Tanzania lawmakers speak out on EAC budget crisis

However, as of 25 April 2025, only Tanzania, Kenya and Uganda had fully met their commitments, with Uganda exceeding its share by two percent, remitting $7.16 million. Somalia, the bloc’s newest member, has paid $3.5 million, representing 50 percent of its expected contribution. More concerning are the Democratic Republic of Congo (DRC) and South Sudan, which have paid only $1 million (14 percent) and $500,000 (7 percent), respectively.

Burundi has contributed just $1.3 million—equivalent to 19 percent of its expected share. While the current year’s contributions may appear promising on the surface, the challenge of longstanding arrears continues to strain the Community’s financial base.

To date, only Kenya has cleared all of its arrears. Tanzania has performed relatively well, with outstanding arrears totalling just $122,694. In contrast, the DRC leads in unpaid arrears with $20.7 million, followed by Burundi with $15.8 million and South Sudan with $15.1 million.

Somalia and Rwanda have arrears of $3.5 million and $1.8 million, respectively. According to economists and political analysts, the bloc’s financial instability is now impacting operations, stalling strategic programmes, and undermining staff morale.

An economist from Saint Augustine University of Tanzania, Dr Isac Safari warned: “This kind of internal borrowing is a sign of systemic weakness. It might offer temporary relief, but it doesn’t solve the structural problem of unreliable funding.” He added that development partners are less likely to support a bloc that can’t meet its financial obligations.

“You lose leverage and credibility when you can’t fund even basic governance processes,” he said.

For his part, an economist from the University of Dodoma, Dr Mwinuka Lutengano, said the bloc’s growing membership has not translated into financial strength. “With eight members now, you’d expect more stability. But the expansion has simply widened the economic disparity, making equal contributions unrealistic,” he said.

Political analysts are also sounding the alarm. “The EAC’s credibility is now being questioned, not just by observers, but within member states themselves. Borrowing from internal organs is a desperate stopgap. Without reforms in the funding model, this cycle will repeat,” said a governance expert and political analyst from the University of Dodoma, Dr Paul Loisulie.

He also criticised the slow progress on adopting alternative financing proposals like the 0.2 percent levy on imports, modelled after the African Union’s approach. “There’s a clear lack of political will,” he said.

Another political analyst from the University of Dar es Salaam, Dr Onesmo Kyauke, pointed to deeper integration challenges: “You can’t build a common market or monetary union when your institutions are starved. This constant underfunding damages the unity the EAC is supposed to stand for.” He advocated for a sliding-scale contribution model.  

“Not every member can pay equally, and pretending otherwise is part of the problem. A formula that reflects each country’s economy is long overdue,” he said.

Despite repeated calls for partner states to clear their arrears, the problem persists. The memo noted that Rwanda has committed to pay $875,908 by June 10, 2025, but other countries—namely Burundi, DRC, Somalia, and South Sudan—were again directed to “urgently fulfil their financial obligations to the Community.’ Observers say if the funding crisis continues unchecked, the EAC risks losing not only the trust of its development partners but also the support of citizens across the region.

A political scientist from State University of Zanzibar (SUZA), Prof Ali Makame Ussi, put it: “When people don’t see results from regional integration, and leaders can’t even honour budget commitments, public support for the EAC weakens—and that’s the real danger.”