EAC faces cash crunch as states default on budget contributions

Despite growing in membership from three to eight since its revival in 2000, the EAC has struggled to meet its financial obligations, largely due to inconsistent payments from some of its member countries.

For the 2024/25 financial year, the EAC approved a budget of $112.9 million, with each member expected to contribute $7 million. 

However, as of April 25, 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 internal reports and regional analysts, these imbalances have disrupted key operations, stalled projects and raised questions about the sustainability of EAC programmes.

“What is happening now is pressure meetings with underperforming member states to urge them to honour their financial commitments,” said a senior EAC official involved in the budget discussions.

Persistent underfunding has historically crippled core EAC activities, including cross-border infrastructure development, peace and security missions, and the harmonisation of trade and customs policies.

Despite its expansion, the EAC’s financial difficulties have only intensified. 

The current budget was designed to fund strategic programmes such as the Single Customs Territory (SCT), preparations for a common EAC currency, and initiatives supporting regional peace, good governance and market integration.

“The credibility of the EAC is being eroded, especially when member states do not honour commitments they themselves approved,” said Mr Amon Kimei, a regional integration analyst. “You can’t have deeper integration when you’re struggling to finance even basic operations.”

This chronic underfunding not only affects programme implementation but also undermines staff welfare, administration and diplomatic engagement with global development partners.

Search for solutions

To address the ongoing crisis, the EAC has over the years floated several alternative financing proposals—including a 0.2 percent levy on imports from outside the bloc, mirroring the African Union’s model. However, this plan has faced political resistance and remains unimplemented.

Another option under discussion is a revised funding formula that would allow economically stronger states to contribute more, while reducing the burden on newer or less stable economies. 

But as of 2025, the idea remains stuck in bureaucratic limbo.

“The problem isn’t lack of ideas; it’s lack of political will,” said Mr James Manyika, a political economist at the University of Dar es Salaam.

“No country wants to be seen as subsidising another. But until this mindset changes, the EAC will continue limping.”

The expansion of the bloc—from founding members Tanzania, Kenya and Uganda to include Rwanda, Burundi, South Sudan, the DRC and Somalia—was expected to increase its regional clout and economic power. Instead, it has exposed deep economic disparities and strained shared resources.

“Having eight members should mean more resources and ideas. Instead, we’ve seen a deeper funding crisis and growing political differences,” Mr Kimei noted.

To safeguard the bloc’s future, experts and officials are calling on member states to urgently clear their arrears.

“The burden of underfunding not only stifles operations but also weakens the trust and unity that the community was founded upon,” said diplomat and political analyst John Silayo.

“Prompt disbursement of committed funds would allow the Secretariat to plan and execute key programmes more efficiently.” 

Mr Silayo also stressed the need for a more flexible, equitable funding model that reflects the varying economic capacities of member states.

“While equal contributions might appear fair on paper, they fail to account for economic disparities. A sliding scale model could bring the financial stability the bloc desperately needs,” he said.