Leaders of the East African Community have approved a new financing formula aimed at easing budget pressures within the organisation, after years of delayed contributions from member states strained the bloc’s operations.
The reform was adopted during the 25th Summit of EAC Heads of State and will come into effect on July 1, 2026, according to officials.
Under the new mechanism, financial contributions from member states will be split into two components. Half of the budget will be funded through equal contributions shared uniformly among member countries, while the remaining half will be based on each country’s economic capacity.
Officials say the revised formula is designed to strike a balance between fairness and the varying economic strengths of member states, while ensuring a more predictable funding base for the organisation.
The reform follows years of financial tensions within the regional bloc, which has struggled to secure timely payments from its eight member states.
For the 2025–2026 financial year, the organisation requires more than $89 million to finance its institutions and programmes aimed at strengthening regional integration across East Africa.
However, only Kenya and Tanzania have fully paid their annual contributions so far, each amounting to around $7 million.
Delays from other countries reflect a mix of fiscal pressures and competing national priorities, including security challenges in Democratic Republic of the Congo and large infrastructure financing needs across several member states.
Outstanding arrears remain significant across the bloc.
The Democratic Republic of the Congo, which joined the EAC in 2022, owes approximately US$27 million to the organisation, making it the member with the largest unpaid balance.
By contrast, Uganda has the smallest arrears, estimated at around US$1.1 million.
The funding gap has already disrupted the functioning of several EAC institutions.
Officials say staff salaries have been delayed, regional meetings postponed and development projects slowed due to the shortage of funds.
Legislative activities were also affected. The East African Legislative Assembly was forced to suspend operations during the first half of 2025 because of financial constraints.
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Regional leaders say addressing the funding challenges is essential to maintaining the momentum of East Africa’s integration agenda.
“Regional integration is no longer a choice, but a necessity for forging regional value chains that are resilient to global shocks,” said Beatrice Askul Moe, who chairs the bloc’s Council of Ministers.
She added that the success of the regional bloc depends on deeper economic integration among member states and stronger cooperation across the region.
The EAC has been working to expand trade, infrastructure connectivity and industrial development among its members as part of a long-term plan to create a more integrated regional economy.
Alongside the new funding formula, the summit also approved a one-time waiver on outstanding arrears owed by member states.
Under the decision, countries will receive a 50 percent reduction on their unpaid contributions to help ease financial pressures.
However, member states benefiting from the waiver will be required to settle the remaining half of their arrears within two years.
Officials say the measure is intended to reset the bloc’s finances while recognising the economic challenges faced by some countries.
Analysts say the reforms could help stabilise the organisation’s funding structure and reduce tensions among members over financial obligations.
Still, they note that the long-term success of the new formula will depend on whether member states comply with their revised contribution commitments once the system takes effect in mid-2026.
The East African Community (EAC) has adopted a new funding formula aimed at addressing persistent budget shortfalls and ensuring more predictable financing for the regional bloc’s operations.
Background to the reform
The EAC—whose members include Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan, Democratic Republic of the Congo, and Somalia—has long relied on equal financial contributions from member states to fund its institutions and programmes.
However, the system has frequently led to budgetary constraints, as several countries have struggled to meet their financial obligations on time. Delayed or incomplete payments have affected the functioning of EAC institutions and slowed implementation of regional integration projects.
Key features of the new formula
Under the revised arrangement, member state contributions will be calculated using a hybrid formula that takes into account:
- Gross domestic product (GDP) of each country
- Population size
- Equal baseline contributions from all members
The approach is intended to distribute the financial burden more equitably, ensuring that larger economies contribute more while still maintaining a shared commitment among all members.
Reducing dependence on external funding
The funding reform also aims to reduce the bloc’s heavy reliance on development partners. Historically, a significant portion of the EAC budget has been financed by international donors, raising concerns about long-term sustainability and financial independence.
By strengthening internal financing mechanisms, the community hopes to support key regional initiatives such as infrastructure development, trade facilitation, and the planned monetary union and political federation.
Expanding bloc increases financial pressure
The need for reform has become more urgent as the EAC expands. The admission of the Democratic Republic of the Congo in 2022 and Somalia in 2023 significantly increased the bloc’s population and geographic scope, placing additional demands on its administrative and development programmes.
Officials say the new funding model will help ensure that the organisation’s institutions—including the East African Legislative Assembly and the East African Court of Justice—have the resources needed to operate effectively.
Supporting regional integration
The EAC is one of Africa’s most ambitious regional integration projects, aiming to create a single market, monetary union, and eventually a political federation. Achieving these goals requires sustained funding for cross-border infrastructure, trade harmonisation and institutional development.
By adopting a more balanced contribution system, member states hope to strengthen the financial stability of the bloc and accelerate progress toward deeper economic integration in East Africa.
