The East African Community (EAC) is facing a severe financial shortfall that has disrupted operations across its institutions, forcing staff layoffs, delaying retirement payments and exposing deep funding gaps caused by member states’ arrears, according to official reports.
The regional bloc’s secretariat has exhausted its General Reserve Fund, which now holds just $23, leaving retiring employees without gratuity payments and threatening the smooth functioning of key institutions.
The crisis stems from a funding gap estimated at about US$89 million, driven largely by delayed or non-payment of contributions by several partner states. As a result, nearly half of temporary staff have been sent home, while critical vacancies continue to mount across the organisation.
The EAC Council of Ministers, meeting in Arusha in May, warned that staffing shortages had reached alarming levels, with 163 of 439 established posts at the secretariat remaining unfilled. A further 43 employees are expected to leave by June 2027, raising concerns of worsening capacity constraints.
“The immediate consequence of this is that retiring employees are going without pay,” the council noted in its report, highlighting the growing strain on the bloc’s administrative and financial systems.
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The staffing crisis has also affected key institutions such as the East African Court of Justice, which is operating with limited personnel, slowing down judicial processes and affecting service delivery.
Officials say the situation has been compounded by disagreements over contract extensions and an inability to recruit new staff due to the funding gap.
The Council has proposed a phased recruitment plan aimed at gradually filling 95 priority positions in the 2026/27 financial year, followed by additional hiring to replace departing staff and fill remaining gaps.
However, the financial strain has already forced the secretariat to divert funds meant for staff gratuities, leaving retirees and departing employees at risk of missing payments. The General Reserve Fund, intended as a financial buffer for such obligations, has been nearly depleted.
“The General Reserve account of the EAC Secretariat has a balance of $23,” the council said, adding that no new disbursements had been made since February 2025 despite some member states remitting funds beyond September 2025.
The council also raised concerns about non-compliance with financial regulations governing the use of reserve funds, noting that proper approval procedures had not always been followed before withdrawals were made.
The funding crisis is closely linked to persistent arrears by member states, with several countries failing to meet their financial obligations to the regional bloc. This has left the secretariat struggling to meet basic operational costs, including salaries and supplier payments.
In response, EAC heads of state have approved reforms to the funding model, introducing a hybrid contribution formula that splits payments equally among member states and based on economic size, measured by gross domestic product (GDP). The new system is expected to take effect in July 2026.
Leaders have also agreed to waive 50 percent of historical arrears on the condition that remaining balances are cleared within two years, alongside the introduction of sanctions for non-compliant states.
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Despite these measures, the bloc continues to face immediate liquidity pressures. On Monday, the EAC tabled a proposed budget of US$110.9 million for the 2026/27 financial year, with the secretariat allocated US$59.7 million and the regional parliament receiving US$19 million, a slight reduction from the previous year.
Officials warn that without timely remittances and strict adherence to the new funding arrangements, the EAC risks further operational disruptions, including reduced staffing, delayed programmes and weakened regional integration efforts.
The crisis underscores long-standing challenges in financing African regional organisations, many of which depend heavily on member state contributions that are often delayed or inconsistent, undermining planning and execution of regional priorities.
