Anger as financial crisis plagues EAC

Flags of EAC member States.

What you need to know:

  • East African Legislative Assembly (Eala) members took EAC’s policy organ to task for not taking action against wasteful expenditure.
  • MPs debating the Report of the Committee on Accounts said each time queries are raised on the alleged financial mismanagement, no tangible measures are taken by the EAC Council of Ministers which is tasked to oversee operations of the regional organisation.

Nairobi. The East African Community (EAC) financial crisis dominated the just-ended plenary debates at the regional Parliament.

East African Legislative Assembly (Eala) members took EAC’s policy organ to task for not taking action against wasteful expenditure.

MPs debating the Report of the Committee on Accounts said each time queries are raised on the alleged financial mismanagement, no tangible measures are taken by the EAC Council of Ministers which is tasked to oversee operations of the regional organisation.

“For the Council of Ministers not taking the appropriate action is a letdown to everybody: EAC governments, donors, East Africans, this Assembly and all the stakeholders,” lamented an Eala member from Tanzania, Ms Shy-Rose Bhanji.

She told the House, which ended its session in the Kenyan capital on Thursday, that the Audit Commission reports for the EAC for the year ending 2014/15 had exposed “a lot of rot” in the expenditure of funds as had been the case in the two previous fiscal years, yet appropriate measures have not been instituted to arrest misuse of tax payers’ money.

The outspoken legislator said she could not remember a time when the EAC Audit Commission reports have received a clean bill of health, especially in recent years but regretted that they appear to have been taken for a ride by the relevant bodies supposed to institute proper financial management.

“How long must this go on?” she asked. “Can we show some seriousness by taking action. Is this too much to ask from the Council of Ministers?”

Ms Bhanji told the House that the reports of the Audit and Risk Committees to the Council of Ministers smacked a recurrent pattern of malpractice from 2012/13, 2013/14 through to 2014/2015/15.

She urged the policy organ of EAC to take appropriate actions “so that we put to an end these ugly situations in the organs and institutions of the community”, noting that the development partners may be forced to scale down their financial assistance due to the misuse of funds.

According to the legislator, the problem with the audit reports has been that even the recommendations made to improve the situation have not been implemented, citing the 2015 Audit and Risk Committee report in which only one out of 17 recommendations has been implemented.

“If it is not due to under-staffing, it is the accounting systems or underfunding,” she said.

Another Tanzanian legislator to the regional House, Mr Adam Kimbisa, told The Citizen that although the current financial crisis at EAC was partly due to delayed remittances from partner states, the governments of the member countries were not largely to blame.

“The problem also has much to do with the budget cycle. Some countries begin their financial years in July and others in January. Even then they should not be expected to remit funds which are above the allocated quota for a particular period. It’s all on synchronisation of resources,” he explained.

He added that that was not the first time for EAC to face financial hitches although admitting that the major concern had been the scaling down of budgetary support by traditional donors or pulling out by some of them from some programmes.

During a debate in the House early this week, Ms Nusura Tiperu, from Uganda proposed that EAC partner states look for an alternative financing mechanism for the integration projects and programmes as well as day to day running of its regional organisation based in Arusha and institutions spread across the region.

She further suggested that it was time to devise a mechanism under which the telecommunication sector, especially the mobile phone companies, to contribute a fraction of revenues they generate each month to the EAC for implementation of the latter’s activities.

“Mobile phone operators are minting billions of shillings from the users every day. Why don’t we make them finance some of the EAC activities?” she asked noting that telecommunications firms in her country are among the leading companies in generating lots of revenues.

The Audit Report for the Community for the 2014/15 which was tabled before the House in Nairobi found a number of flaws in financial transactions and general lack of capability to exercise supervisory role in the finance department at the EAC headquarters in Arusha.

This was partly attributed to what the committee attributed to a failure of the EAC top management to supervise its departments and laxity of the finance staff and the Internal Audit to do their work.

To strengthen EAC internal control mechanisms, the EAC Council of Ministers was required to ensure that financial transactions are accurately and timely posted in the financial information systems.