East African Community's expansion has triggered financial difficulties: why solutions come with risks

By Nicodemus Minde*

The East African Community is one of Africa’s oldest regional economic organisations. Its birth in 1967 was the culmination of decades of economic ties forged in the colonial era between Kenya, Uganda and Tanzania. It’s no surprise that the EAC is also the most deeply integrated regional entity.

In its heyday between 1967 and 1977, the bloc shared a common currency, jointly operated a development bank and administered its transport infrastructure as one. There was a common education policy with a single syllabus and examining body as well as the University of East Africa with specialised colleges in the three countries.

Political friction and conflicting priorities, among other factors, led to its collapse in 1977 but it was revived in 1999. Citizens within the bloc currently benefit from free movement of goods, services, labour and capital, along with the rights of establishment and residence. Unmet objectives include the return of a common currency and a political federation.

Meanwhile, the bloc has grown from three to eight – Rwanda and Burundi joined in 2007; South Sudan in 2016, the DR Congo in 2022 and Somalia in 2023. The territory covers stretches from the Indian Ocean to the Atlantic and brings together over 331 million people and a combined GDP of US$313 billion as of 2025.

However, this rapid expansion has triggered financial difficulties, putting the economic integration agenda at risk. While partner states are expected to contribute to fund the bloc’s operations, only Kenya, Tanzania and Uganda regularly meet their quota. The budget shortfall has led to massive staff layoffs and a freeze on new recruitment.

So serious is the crisis that it was top of the agenda at the annual summit of the heads of state in March 2026. The leaders stepped up to reform the funding model and signalled that the bloc was ready to sanction or sideline countries that compromise funding.

I have studied regionalism and integration in eastern Africa, conducted research on the EAC and published on Tanzanian citizens’ sovereignty, popular participation, and the EAC integration and democratisation.

It is my view that the radical proposals will compel non-paying partner states to either shape up or ship out. These reforms will salvage the East African Community but could potentially trigger mistrust and perception of unequal benefits in the long run.

The cost of rapid expansion

Each of the eight partner states is expected to contribute approximately US$7 million to fund the bloc’s operations. In addition, the bloc relies on development partners to fund some activities.

In recent years, six of the eight member states have missed their budget contributions. This resulted in a US$90 million budget shortfall. Regional institutions affected by these include:

the East African Legislative Assembly, the regional parliament
the East African Court of Justice, responsible for the interpretation and application of the EAC Treaty.

The two have failed to perform their core functions due to resource constraints. The regional assembly, on occasion, has been forced to skip sittings. This has an effect on critical debates and enactment of new laws to foster economic integration. The regional court grapples with case backlogs.

In November 2023, the EAC Summit adopted a new financing model. It shared 65% of the budget equally among partner states and the rest based on each country’s financial capacity. This capacity is assessed using the World Bank’s average nominal GDP per capita metric for the previous five years.

But only Kenya, Tanzania, and Uganda – and occasionally Rwanda – have remitted their contributions on time. Domestic conflicts in South Sudan, the DRC and Somalia may have played a role in the slow contributions of these newer EAC members. In the 2024-2025 financial year, Burundi paid only 19% of its expected contribution, the DRC paid 14%, Somalia paid around half, and South Sudan paid a mere 7%.

Overall compliance stood at roughly 58%, leaving the bloc with arrears exceeding US$55 million. In the 2025-2026 cycle, the picture was even bleaker: compliance slipped to just 36.6%, while outstanding obligations climbed to about US$90 million.

The pattern also hints at something deeper: political ambivalence among non-paying members, and uneasiness among some partner states about the benefits of belonging to the bloc. Despite the funding challenges, inter-regional trade in the EAC has been on the rise due to increased trade facilitation under the customs union and common markets protocols. The EAC has also made advances in peace and security. In 2022 for example, through the Nairobi Process, the EAC facilitated peace talks and deployed the East African Community Regional Force in DRC.

Beyond funding, personal and political differences between the DRC’s President Felix Tshisekedi and Rwanda’s Paul Kagame have contributed to tensions within the bloc.

What did the leaders decide at the March summit?

Kenya, Uganda and Tanzania, in a rather surprising but decisive move, pushed for a new financing formula, replacing the model adopted in 2023.

The highlights of the new financing formula include:

50% of the budget will be shared equally among all partner states, while the remaining 50% will be based on each country’s economic strength. The formula will take effect from 1 July 2026. By factoring in differences in economic capacity, the reform aims to reduce the burden on smaller economies and make the bloc’s funding more sustainable.
members of the legislative assembly should be paid by their respective national assemblies with effect from December 2027
the council of ministers should finalise the schedule of sanctions considering the new financing formula. The EAC aims to deal with mounting arrears and non-payment through a sanction regime.

A quorum for the meeting of all organs and institutions of the community will be two-thirds of all partner states. Previously, all states had to participate in passing crucial resolutions, and this was frustrated by absenteeism, especially by non-paying countries.

Nominations for the key institutional positions will depend on the sponsor state’s ratification of all community legal instruments, domestication of the treaty, and full implementation of the roadmap for the partner state’s integration.

What’s next

These are radical proposals, with consequences. Take the example of the decision to appoint Stephen Mbundi of Tanzania as the new secretary general. Based on the rotational principles of the EAC, South Sudan was poised to take over the position from Kenya’s Veronica Nduva. But South Sudan is a defaulter.

This decision signalled the bloc’s commitment to financial compliance and commitment to the spirit of regional integration. Uganda’s president, Yoweri Museveni, also took over the chairman’s position, bypassing Somalia and the DRC, which were poised to lead the community for a year. Somalia and the DRC have been behind in their annual payments.