The East African Community (EAC) member states may start surrendering at least one percent of their revenues from imports to fund the Community’s annual budget if a new proposal is discussed and passed in its current form.
The objective is to remove dependency on donor funds to bankroll the regional development budget.
A member of the East African Legislative Assembly (Eala), Dr James Ndahiro, said that should the talks succeed, the EAC will be able to finance its development programmes with or without external assistance.
“At national level, many countries continue to depend on hand-outs from development partners. This is an undesirable situation which is not in the EAC alone. The problem is in our mindset and unless we get rid of it, at national level, we shall forever be dependent,” he said.
Continued donor dependency, many in the Assembly and the EAC believe, is likely to compromise the regional bloc’s operations and development agenda.
“It is now being given serious consideration and there are negotiations among the five partner states to come up with a financing model whereby each country will contribute one percent of its import revenue. If done, it will exceed the current budget by 150 percent and with this we can finance ourselves,” Ndahiro added.
Unless this is achieved, Ndahiro who also sits on Eala’s Committee on General Purposes, said: “I don’t see any other solution.”
The outcome of the negotiations will be spelt out during the bloc’s leaders’ summit in November.
Last week, Eala approved the bloc’s 2014/15 budget of $124 million, with member states contributing only $41.9 million. The rest of the money will come from institutions and agencies in partner states and from development partners. In fact, donor support amounts to $73.2 million.
During the 2013/14 budget, the Community budgeted for $130.4 million with partner states directly contributing $37, 297,442, $ 7,249,252 coming from other agencies, while donors supported the budget with $85.6 million.
Before Eala wound up business in Arusha, Tanzania, on Thursday, it was revealed that a report on alternative financing mechanism for the EAC will be tabled before the ministerial meeting in August.
Imposing a one per cent levy on all imports to the region would generate $310 million a year, nearly three times the annual bloc’s budget.
However, Uganda minister for EAC Affairs, Shem Bageine, told the Assembly that not all member states are comfortable with the proposed arrangement as some states, he said, feel they have to benefit from revenue collections accrued from their imports.
According to Bageine, a report on alternative financing is ready. The EAC Council of Ministers, the bloc’s policy organ, will forward their recommendations to the Heads of State Summit in November for consideration and possible approval.