East African Community (EAC) leaders on March 7 approved new rules setting a precedent for member states that have defaulted on their contributions, particularly those with the largest arrears to the regional bloc. ALSO READ: With reforms, EAC set to save $2.5m Part of the decisions include relaxing payment rules including foregoing 50 per cent of $89 million in membership arrears that countries owe. ALSO READ: Museveni takes over EAC chairmanship The remaining balance has to be cleared within two years as was announced at the 25th Ordinary Summit of EAC Heads of State in Arusha, Tanzania, where Kenya’s President William Ruto handed over the rotating chairmanship of the bloc to Uganda’s President Yoweli Kaguta Museveni. The EAC brings together eight countries namely Burundi, DR Congo, Kenya, Rwanda, Somalia, South Sudan, Tanzania and Uganda. MP Fatuma Ndangiza, a member of the East African Legislative Assembly (EALA), commended the move to hold members accountable, explaining that it is an obligation that countries who sign the EAC Treaty must uphold. “Whenever a country joined the EAC, it was required to contribute $7.2 million annually in line with the EAC Treaty. However, only four countries are contributing,” she noted. ''Some countries, like DRC has only contributed $1m since joining the community less than 0.5% of its total arrears. This is not sustainable funding. Every country should pay its dues. It is a good decision to hold chronic defaulters accountable,” she added. Rwanda, Tanzania, Kenya and Uganda have – reportedly – paid fully their contributions for the 2025/26 financial year. Only about 37 per cent of expected contributions for the 2025/2026 financial year have been paid. Key debtors Addressing leaders at the summit, Ruto warned that unpaid membership dues had severely undermined the EAC’s ability to function effectively. As of January 31, 2026, the EAC was owed up to $89.37 million by member states. Among the biggest debtors is DR Congo, which owes approximately $27.7 million and has not paid any contributions since joining the bloc. It is followed by Burundi with $22.7 million and has paid none of its expected contributions for the current financial year, South Sudan with $21.8 million, and Somalia with $10.5 million. ALSO READ: Bigger economies set to pay more into EAC budget Despite previously chairing the Summit and holding the Deputy Secretary-General position within the bloc, Republic of South Sudan has failed to meet its current financial obligations Not all members have completed their remittance payments for the 2025/26 financial year. However, it is generally observed that the four countries—Kenya, Uganda, Tanzania, and Rwanda—consistently meet 100% of their annual financial contributions before the close of each financial year. This is demonstrated by their full remittance for the 2024/25 financial year. Ndangiza said the “arrears are paralysing the East African Community and that penalties are therefore timely.” The funding gap has already affected EAC institutions: staff salaries have been delayed, meetings postponed, and projects stalled. For instance, EALA was forced to suspend its activities in the first half of 2025. “The Community was paralysed. EALA was not operating effectively. Projects were not running. Fifty per cent of member states were not paying contributions,” Ndangiza said. “However, we have learnt that the Council of Ministers has been tasked with preparing penalties for members that fail to clear arrears within two years,” she added. The suspension framework Sanctions framework The Council of Ministers is finalising a “sanctions framework” framework under which states that default on their dues could be suspended or removed from the bloc. The Council is tightening rules to allow for the suspension of a member state that fails to meet its financial obligations for 18 months or more. “At least sanctions are now guaranteed. Some already announced include the loss of eligibility to occupy key positions in EAC institutions,” Ndangiza said. States failing to clear arrears will not be eligible for key positions in EAC organs such as EAC Secretary-General and Deputy Secretary-General, Speaker of EALA, top leadership roles in the Inter-University Council for East Africa (IUCEA), the East African Court of Justice (EACJ), and others. Previously, Burundi held key positions in the EACJ, EALA and IUCEA, while Republic of South Sudan held the position of Deputy Secretary-General despite not clearing arrears. New funding formula Regional leaders also agreed to change how the bloc is financed, adopting a new formula that ties member contributions more closely to their economic strength. Under a funding formula adopted in 2023, contributions were split into two parts: about 65 per cent of the $67.7 million budget — roughly $44 million — was shared equally among the eight countries, while the remaining 35 per cent ($23.7 million) was based on economic strength. However, this system did little to resolve the issue of unpaid contributions. Under the new formula taking effect on July 1, contributions will be split evenly into two halves. Half of the $67.7 million budget — about $33.9 million — will be shared equally among member states, meaning each country would contribute around $4.2 million, according to the communique. The remaining half will be allocated based on economic capacity, calculated using the average nominal GDP per capita over the previous five years, with data drawn from institutions such as the World Bank and the International Monetary Fund. This means wealthier economies will contribute more, while less developed economies will pay less. Traditionally, decisions in the EAC were made by consensus, meaning all member states had to agree. This often slowed progress, as a single country could block decisions. ALSO READ: One-stop border posts save EAC over $63m annually For example, a proposal to amend the East African Community Customs Management Act, 2004 — aimed at extending the time for clearing goods from ports beyond 21 days — failed because one country did not support it, despite its potential to reduce costs for traders and consumers. Normally, a businessperson is required to have removed all their goods within 21 days after their arrival at the ports, regardless of the amount, and start paying fees or warehouse rent if they have not met such a deadline. The amendment would lower costs for traders and consumers subsequently through easing the ‘doing business,’ but that was not possible because only one country did not endorse the move. To address such challenges, decision-making has shifted from total consensus to a 65 per cent majority vote for certain matters. Remuneration reforms Members of EALA will now be paid by their respective countries rather than from the EAC’s central budget. According to MP Mathias Harebamungu, a member of EALA, the decision was influenced by concerns that some countries have members in key EAC institutions who are paid salaries yet their countries are failing to meet their financial obligations. The Council of Ministers is expected to provide guidance on the implementation of this reform by December 2027 and its implications for the EAC Treaty. John Bosco Kalisa, a regional economic analyst, supported the decision to have countries pay salaries for their legislators in the regional house rather than from the EAC’s central budget, saying it would reduce the burden on the Secretariat. He argued that governments should ensure their representatives perform their duties and report back to their constituencies. “EALA had too many members to be effective, even before shifting payroll responsibilities. Reducing its size would improve efficiency,” he weighed in. On chronic debts, Kalisa said that without strict penalties, member states may not prioritise contributions, suggesting that the EAC should diversify its revenue sources rather than relying solely on member countries’ contributions. “The Secretariat needs to be innovative. A 0.2 per cent levy on imports destined for the region could provide stable funding. Otherwise, even the current proposal may fail, as many member states are facing high external debt levels,” he argued. He described the new voting rule as a positive reform that would speed up decision-making. “The previous model was too cumbersome and bureaucratic, delaying many projects. If implemented effectively, this reform will fast-track decisions and have a meaningful impact,” he added. He cited delays in implementing the EAC Monetary Union, including decisions on hosting a monetary institute, as an example of how consensus-based decision-making has slowed progress.
