Kenya to pay the largest share in new EAC hybrid model
Kenya will now pay the largest share in financing the East African Community (EAC) budget after the community’s Sectoral Council on Finance and Economic Affairs (SCFEA) made up of Finance Ministers from the member countries agreed on a new hybrid model.
Through the new model, each partner state will be required to pay an equal amount for 65 percent of the budget while the remaining 35 percent will be based on the country’s GDP. The agreement comes following a meeting held in Mombasa led by SCFEA Chairperson Ukur Yatani.
“The new model requires EAC Partner States to contribute equally 65% of the budget while the remaining 35% will be contributed based on the assessment of Partner States’ average nominal GDP per capita for the previous five years as assessed by the World Bank,” reads the statement.
Currently, member states equally contribute an amount of Ksh.897.5 billion to the budget of the Community as outlined in Article 132 of the EAC Treaty.
EAC Secretary General, Peter Mathuki said the current model which has seen some member states issue late payments to the EAC budget is not sustainable as it slows down projects within the region.
“For a long period, we have noted and discussed the need to find sustainable financing mechanism in order to ensure that our community is able to take full charge of its integration agenda,” he said
Kenya which leads the bloc with a GDP of Ksh.11.2 trillion will be forced to pay more of the 35 percent.
Tanzania trails Kenya with a GDP of Ksh.6.1 trillion will pay the second-highest followed by Uganda with a GDP of Ksh.3.2 trillion.
Rwanda at Ksh.1.1 trillion, Burundi Ksh.336.5 billion while the latest entry South Sudan with a GDP of Ksh.224.3 million will pay the least.
The council has directed the EAC Secretariat to implement the proposed hybrid that will be reviewed after three years of its implementation.