South Sudan faces expulsion from EAC over $24m debt

South Sudan has rushed to pay a paltry $3m (Shs11b) out of $27.6m (Shs99.8b) to avoid being suspended from the East African Community for nonpayment of its membership fee.

The pressure was mounted on the Republic of South Sudan by the East African Legislative Assembly (Eala) members on October 3, when they called for the suspension of the world’s youngest nation.

“We are urging the council of ministers to suspend the Republic of South Sudan,” Mr Wanjiku Muhia, the Kenyan representative to Eala, told the assembly.
In response, the council of ministers said an investigation to determine whether South Sudan should be suspended or not was in the offing.

“The EAC secretariat has been directed to develop a procedure of investigations for breaches of the Treaty along the schedules of sanctions,” Mr Adan Muhammad, Kenya’s minister for East African Affairs, said.
South Sudanese legislators Kennedy Mukulia and Kim Gai Rout Duop pleaded for more time.

The resolution to suspend South Sudan also forced other countries to clear their outstanding balances. Kenya paid $4.8m (Shs17.4b), Tanzania $2m (Shs7.3b) and Burundi $1.2m (Shs4.4b).
It’s only Uganda that had paid beyond its contribution of $8m (Shs29.5b) and had a surplus of about $2m (Shs7.3b).

According to the East African Community treaty, all partner States are supposed remit all their annual contribution by December of every financial year, but none has ever met this requirement, which normally sends the community into a financial crisis.

The EAC is largely dependent on donor handouts to a tune of more than 51 per cent of the community’s annual budget, which makes it vulnerable to external influence.
This, according to Mr George Odongo, Uganda’s representative to the regional assembly, donors have a right to ask the most embarrassing question regarding their finances.

The EAC has proposed an alternative financing mechanism to deal with the problem. The proposal, if adopted by partner States, will see members agree on the tax percentage on the imports to finance the community.
Some countries have opposed the proposal because Kenya, being the largest economy in the region, will have more powers when it comes to the decisions in the Community.

Financial challenges

Resources. Despite the Community’s financial troubles, the EAC continues to create new institutions, which put more pressure on its meagre resources. The Community recently created the EAC Monetary Institute and the EAC Statistic Bureau, which require an increase of its annual budget from the current $100m (Shs369.6b). This has remained at zero budget increase over time.
The EAC is the only single regional block in Africa with ambitions of having a political federation.

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