Principle of Equal Contributions to the budget of the EAC by Partner States: time for change?

OPINION

By Dr. Amissi M. Manirabona, Associate professor, Faculty of Law, University of Montreal

On the July 7, 2020, the East African Community (EAC) Secretariat issued a clarification statement following an article published by the EastAfrican newspaper in its July 4 -10 edition.

Among other things, the newspaper stated that the EAC Assembly had passed a resolution designed to expel the Republic of Burundi and the Republic of South Sudan from the Community, as the two countries owe $15m and $27.8m respectively in membership fees.

While the EAC secretariat contested the newspaper's conclusion regarding possible sanctions against the two countries, it did not do so in relation to the amounts owed. 

It is important to remember that the problem of arrears of contributions to the community budget is not a new phenomenon but rather constitutes a recurring issue. This is partly due to the fact that Burundi has been under economic sanctions for several years while South Sudan has recently emerged from an internal armed conflict. 

The aim of this opinion is to suggest the taking into account of financial capacity of EAC partner States through the amendment of article 132 (4) of the Treaty for the Establishment of the EAC which states the principle of equal contributions by the Partner States to the budget of the EAC.

According to that principle, each Member State has to contribute annually about $ 8 million to the EAC budget. I argue that the principle of equal contributions places a heavy burden on EAC States with low income.

The consequences of that have been that Burundi and South Sudan for example have been struggling to meet their financial commitments towards the EAC for several years. Therefore, the principle of equal contributions should be replaced by the one, which requires States to contribute according to their financial capacity.

The fact is that the EAC is one of few integration communities, if not the only one, that maintain the equal contributions system. Others like the Southern African Development Community (SADC) abolished it since 2002.

Also, the Intergovernmental Authority for Development (IGAD) has a mix formula that takes into account the GDP and the population of each member. The same can be said regarding the African Union whose 37 States with low income just pay 15% of the total operational budget. 

I am aware of the importance for each EAC State member to be treated equally by other States. However, equal treatment should be based on the customary principle of sovereign equality.

After all, we did not hear about unequal treatment against SADC members States that pay less than South Africa, which alone contributes the largest share (about 20%) of the SADC's budget. Similarly, the AU group of 5 (namely Egypt, South Africa, Morocco, Algeria and Nigeria) which pays around 50% of the AU operational budget, does not necessarily treat other States unfairly.

Leaving unchanged the principle of equal contributions risks jeopardizing the development efforts of low-income countries, which, in the end, will not be beneficial for the whole EAC. A satisfactory solution needs to be found for the sake of the community citizens as a whole.

Therefore, the best way would be to find a new formula for membership contributions based on each country's wealth and potential. Tanzania would not object to this idea because it already benefits from this differential treatment within SADC. Kenya and Uganda are also used to the application of this principle at IGAD level. 

Being fair in favor of those who lack resources is one of the noble objectives of an organization whose aim is based on regional solidarity.

Competent authorities are then invited to meet and adopt an agreement designed to amend Article 132 (4) of the EAC Treaty so that the equal contribution principle is replaced by a new formula that does not disregard the lack of enough resources by some Partner States.

The best budget financing modality seems to be the one adopted by the Economic Community of West African States (ECOWAS) which instituted a Community levy (a percentage of the total value of import duty derivable from goods imported into the Community from third countries).

The adoption of this modality would not be an issue as the Customs Union is already in force in the Community. However, this is a personal opinion and if Burundi and South Sudan are satisfied with the current system, then there is no room for change.