Major reforms in EAC funding to end cash crisis at secretariat

*Uganda President Yoweri Museveni takes over the chairmanship of the EAC from President William Ruto at EAC headquarters in Arusha on March 7, 2026*

East African Community leaders have adopted sweeping financial reforms.

Move seeks to stabilise the bloc’s operations after the Secretariat faced a deepening cash crisis caused by delayed contributions from member states.

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During the 25^th Ordinary Summit of EAC Heads of State on Saturday, leaders agreed to overhaul how the community is funded and introduced relief measures to help partner states clear mounting arrears.

The decisions mark one of the most significant financial restructurings in the bloc’s history and are intended to ensure predictable funding for regional programmes, institutions and staff.

The new financing model replaces an earlier framework adopted during the 23^rd Ordinary Summit.

In the previous one, the community was to be funded through a 65 per cent equal contribution and 35 per cent assessed contribution formula, which factored in the economic strength of each member state.

However, leaders agreed to vacate that decision and adopt a 50:50 financing model instead.

Under the new formula, 50 per cent of the budget will be funded through equal contributions by partner states, and 50 per cent will be based on assessed contributions tied to economic capacity.

The summit directed that partner states implement the new financing framework starting July 1, 2026.

Leaders instructed the implementation should proceed “without fail and without further consultations by the Council of Ministers”, signalling urgency to address the funding instability that has plagued the community.

The move is expected to distribute financial responsibility more evenly among the partner states while recognising differences in economic size.

In a bid to unlock immediate cash flow into EAC’s operations, the summit also approved a one-off waiver on outstanding contributions owed by partner states.

Leaders agreed to waive 50 per cent of all arrears owed by member states, citing economic pressures currently facing the region.

However, the waiver comes with a condition. That partner states must pay the remaining 50 per cent of their arrears within two years, starting from March 7, 2026, when the decision was adopted.

This move seeks to incentivise countries to settle their debts while acknowledging the fiscal challenges many governments are facing.

The EAC Secretariat in recent years has struggled with delayed remittances, forcing the institution to slow down programmes, postpone activities and face difficulties meeting operational costs.

To prevent a recurrence of the funding crisis, the summit also directed the EAC Council of Ministers to finalise a schedule of sanctions for partner states that fail to meet their financial obligations.

The sanctions framework will take into account the new financing formula and is expected to be presented at the 26^th Ordinary Summit of EAC Heads of State next year.

The sanctions regime is meant to strengthen fiscal discipline among member states and ensure predictable funding for the bloc.

Beyond financial reforms, the summit also addressed persistent trade challenges within the regional bloc.

End trade barriers

Leaders directed both partner states and the Council of Ministers to resolve all outstanding non-tariff barriers to trade within the community by June 30, 2026.

Non-tariff barriers, including administrative restrictions, customs delays, and regulatory hurdles, have long been cited by businesses as major obstacles to trade across EAC borders.

By imposing a firm deadline, the summit signalled a renewed push to deepen regional integration and boost intra-regional trade.

The summit also adopted a structural change affecting members of the East African Legislative Assembly. Currently, EALA legislators are remunerated through the community’s budget.

However, leaders decided that after the end of the current assembly’s tenure in December 2027, members serving in the regional parliament will instead be paid by their respective national assemblies.

The decision is expected to reduce the financial burden on the community while increasing accountability of EALA representatives to their home countries.

The latest reforms reflect growing concern among regional leaders about the sustainability of the community’s finances.

Over the past decade, the EAC has expanded both in membership and institutional responsibilities, with the bloc now comprising eight partner states.

These are Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan, DRC and Somalia.

The expansion has increased the scope of regional programmes and institutions, placing greater strain on the bloc’s financial structure.

Outgoing secretary general Veronica Nduva on Saturday said Burundi, Tanzania and Uganda on Friday had sent some contributions after they were pushed to pay.

“This is after me showing up in a bullish way or in a diplomatic way, urging or consistently knocking on doors”.

“Every time, I have to write a letter to a partner state asking them for money, then follow up through phone calls and that is important, even for the next secretary general,” Nduva said. Her term concludes in April.