East African Community (EAC) leaders have approved a new financing formula that will change how partner states contribute to the regional bloc’s budget, as part of broader reforms aimed at strengthening the organization’s financial stability.
The decision was reached during the 25th Ordinary Summit of EAC Heads of State held Saturday in Arusha, Tanzania.
Under the new arrangement, partner states will contribute equally to 50 percent of the community’s budget, while the remaining 50 percent will be determined through assessed contributions.
According to the summit communiqué, leaders “adopted a new financing formula for the Community of 50% (equal partner contributions) and 50% (assessed contributions).”
The new system replaces the previous structure under which partner states contributed 65 percent of the budget equally and the remaining 35 percent based on assessed contributions.
EAC leaders directed member states to begin implementing the new arrangement immediately.
The communiqué states that partner states must “implement the formula with effect from 1st July, 2026 without fail and without further consultations by the Council of Ministers.”
In a move intended to ease financial pressure on member states struggling with outstanding obligations, the summit also approved partial relief on arrears owed to the community.
Leaders “decided to waive as a one-off, 50 percent of all arrears due to all partner states due to the prevailing circumstances in all partner states.”
However, the remaining balances must still be cleared within a defined period.
The communiqué notes that the waiver will apply “on the condition that the fifty percent is paid within two years from 7th March 2026.”
At the same time, the summit directed the Council of Ministers to prepare a sanctions framework to enforce compliance with the new financing system.
The council was instructed to “finalize the schedule of sanctions, taking into account the new financing formula adopted by the Summit and report to the 26th meeting of the Summit.”
