Kenya to pay most under new EAC budget model

By Newsflash Writer

Kenya is poised to contribute the largest share to the East African Community (EAC) budget under a proposed funding model aimed at resolving chronic payment defaults by partner states that have left the bloc financially strained.

Prime Cabinet Secretary and Foreign Affairs CS Musalia Mudavadi told the Kenyan Parliament on Thursday that the model, developed from each member’s average nominal GDP per capita over the last five years as assessed by the World Bank, would see Kenya pay $12.1 million annually — or 23.7 percent of the budget. This is based on an equal share of $8.5 million per country plus a GDP-based top-up.

Tanzania would remit $9 million, Uganda $8.5 million, Rwanda $8.3 million, South Sudan $6.6 million, and Burundi $6.4 million. Assessments are ongoing for the newest members, the Democratic Republic of Congo (DRC) and Somalia. Currently, all partner states contribute equally — $7,007,747 — to the EAC budget.

At their 23rd Ordinary Summit on November 24, 2023, EAC Heads of State adopted a formula in which 65 percent of contributions are shared equally and 35 percent are determined by economic size. “Using this model, our calculations show that Kenya’s annual contribution will rise by $3.6 million to $12.1 million, representing 23.8 percent of the total budget,” Mudavadi said when appearing before the National Assembly Committee on Regional Integration.

The structure seeks to address disparities between member states while guaranteeing sustainable financing for EAC programmes. “Smaller economies like Burundi, Somalia, and South Sudan, which have faced difficulties meeting previous equal-share requirements due to limited fiscal space, will benefit from the new arrangement,” he added.

Addressing arrears and operational strain

The plan is designed to eliminate budget shortfalls caused by poor remittances. By mid-2024/25, only $32 million had been received against a $56 million target. “Over the past 20 years, Kenya has contributed $186 million to the EAC, as provided under Article 132(4) of the EAC Treaty,” Mudavadi noted.

The proposal follows a review of reforms needed to align EAC’s priorities and activities with available financial resources, ensuring the bloc avoids dependency on external donors. The study outlined priority projects and activities that could be implemented sustainably without derailing integration or causing delays from funding gaps.

The hybrid model will undergo a review after three years. Mudavadi acknowledged that the EAC is in a financial crunch, with July 2025 staff salaries still unpaid. “Although the East African Legislative Assembly passed a rationalised 2025/26 budget with a $20,000 overall reduction — lowering each partner’s contribution by $2,500 — operations remain under strain. July salaries and statutory payments are pending,” he said.

The Secretariat has resorted to borrowing from the confederation fund, which is now depleted. EAC Council of Ministers chairperson Beatrice Askul Moe tabled the 2025/26 budget estimates at $109.3 million. By July 15, 2025, Kenya, Uganda, Tanzania, and Rwanda had settled their full 2024/25 dues, while South Sudan had paid $300,000, DRC owed $20.7 million, and Burundi $15.7 million. EAC Secretary-General Veronica Nduva has since sent debit notes to states with arrears.