EAC TURNS TO RESERVE FUNDS TO FINANCE BUDGET

 

The East African Community (EAC) has turned to reserve funds with its organs and institutions to finance the 2022/23 budget. 

A total of $ 3.4 million will be raised from the kitty out of a total of $91.5million proposed for the coming financial year's estimates.

Out of $ 3,458,000 projected from the reserve funds, some $1.3million will be sourced from EAC General Reserve Fund.

Another $2million will come from  the reserves of Inter University Council of East Africa (IUCEA) while the Lake Victoria Basin Commission (LVBC) will contribute $ 78,000 from its reserve kitty . 

The member states will remit a combined total of $49.8 million to the EAC coffers while some $495,870 is expected from member universities of IUCEA. 

The development partners, about a dozen of them, will raise a total of $ 37.4 million, according to a breakdown obtained by The Citizen.

Interests and proceeds from disposals are projected to garner some $285,740 for the budget, the lowest in recent history of the EAC.

The 2022/23 budget was read before the East African Legislative Assembly (Eala) on Thursday by Ms Betty Maina, the chairperson of the Council of Ministers.

When contacted on why the reserve funds are this time around to be used to finance the budget, a senior EAC official said it was a normal budget procedure and not an indication of worsening cash woes.

"Of course, the reserve fund is a source of funds for the Community", he told this online platform on condition of anonymity.

He added in the affirmative; " "any monies that are not spent during a particular financial year or contributions remitted after a financial year lapses go to the general reserve."

Ms Maina, who is Kenya Cabinet Secretary for Trade, Industrialization and Enterprise Development, said the secretariat will take the lion's share of the allocation. 

The secretariat which doubles as the executive arm of the Community has been allocated a whopping $45.1million, followed by Eala $15million. 

The Kampala-based IUCEA will get $10.5million followed by LVBC, an EAC  institution operating from Kisumu, Kenya which will get $ 8.2 million.

The East African Court of Justice (EACJ), one of the three EAC organs, will walk home with an allocation of $3.8million for 2022/23 fiscal year.

The Jinja-based Lake Victoria Fisheries Organization (LVFO) will get $2.8million followed by $1.7million for the East African Science and Technology Commision (Easteco).

Other allocations are  $ 1.2million for the East African Kiswahili Commission (EAKC), $ 1.8million for the East African Health Research Commision (EAHRC) and $1 million for the recently established East African Competition Authority (EACA).

EAC's turn to the reserve funds to finance the budget did not come as a surprise as several times the cash-strapped body had thought of the option. 

However, there had been criticisms against the withdrawals (of reserve funds) without the approval of the Council of Ministers, which oversees budget matters.

At one time, Eala MPs expressed outrage over the withdrawal of $ 1.1 million they claimed had not been approved by the authoritative organ. 

As of June 2018, before the regional body started to grapple with the cash woes EAC had $3.3million for its General Reserve Fund.

Only a year later in June 2019, the figure had dropped to $ 764,400, raising alarm over the declining reserve funds balances.

The MPs joined the fray and argued all withdrawals and refunds be done "in an appropriate manner".

A reserve account is generally like a savings account; an accumulation of funds for a future purpose. 

The source of funding for a reserve might be surpluses from routine operations or scheduled transfers that have been planned or budgeted.

The EAC maintains a General Reserve Fund where money has been drawn for payment of critical services like mandatory staff emoluments.