EAC budget insufficient, say lawmakers

The East Africa Legislative Assembly during a session in Arusha, Tanzania. PHOTO | FILE

What you need to know:

  • The $103 million would not suffice implementation of projects and operations of the regional body for 2023/24 despite a marginal increase compared to recent years

Arusha. The budget estimates for the East African Community (EAC) tabled at the regional assembly last week may not achieve the desired targets.

The $103 million would not suffice implementation of projects and operations of the regional body for 2023/24 despite a marginal increase compared to recent years.

“The absolute rise was not significant,” said Ms Fatuma Ndangiza, a member of the East African Legislative Assembly (Eala) from Rwanda.

She told the House, currently holding a sitting here, that the budget increase this time around was partly due to admission of DRC Congo into the bloc.

She argued that the regional organization needed “a higher budget allocation to meet its integration targets”.

Increased funding will not only cover routine operations of the EAC but finance an increasing number of projects being executed across the region.

These include, among others, fast-tracking the single currency economy project (monetary union), infrastructure development and peace building.

Eala MP from Tanzania Abdullah Hasnuu Makame said the budget proposals may not meet their targets due to failure by some EAC partner states to remit their contributions in time.

Some member countries in the Community do not remit their contributions in time “which hampers budget execution,” he said.

The MP called on all member states to honour their financial commitments to avoid delays in execution of an array of regional projects.

When he presented the budget estimates before Eala on Thursday, Ezechiel Nibigira, the EAC Council of Ministers chairperson, cautioned the bloc on the growth statistics.

He said although the EAC economies are expected to register positive growth due to the strong performance of some sectors, the region is still grappling with a huge trade deficit.

Last year, the region’s economic growth improved to 4.8 percent from 3.5 percent in 2021, driven by robust performance in industries such as construction, mining, and manufacturing.

The positive growth due to the strong performance of the services sector, effective government policies and increased public and private investments.

But Mr Nibigira, who is the Burundi minister for EAC Affairs, said the huge trade deficit in the region is manifested in trade imbalance.

The EAC import bill far surpasses its export revenues with the region’s total exports to the rest of the world amounted to $20.1 billion in 2022 against imports exceeding $53.8 billion.

“These figures indicate that the EAC is predominantly a net importer, resulting in a high trade deficit,” the minister pointed out.

Intra-EAC trade, nonetheless, saw a growth of 11.2 percent, reaching $10.9 billion in 2022 from $9.8 billion in 2021.

Another Eala member from Rwanda Francine Rutazana proposed increasing intra-EAC trade and reducing dependency on European and American markets.

These, according to her, should be aligned with each country’s comparative advantage. The EAC bloc has seven member states.

The region’s economies currently rely heavily on the export of agricultural commodities, manufactured products, services like tourism, ICT, and financial services.

While there has been an increase in the trade of finished goods, primary commodities continue to dominate the composition of EAC trade, including coffee, tobacco, cotton, rice, maize, wheat, and tea.

Ms Jacqueline Amongin from Uganda stressed the importance of investing in local production to increase intra-EAC trade and boost exports.