Tanzania’s earnings from agencies raises concern among EAC partners

Tanzania’s benefits from the five organs of the EAC that it hosts
Tanzania's earnings from agencies raises concern among EAC partners

The East African Community has announced the need to redress the lop-sided gains that Tanzania receives from hosting most of the trading bloc’s agencies. The highest of this being Dar es Salaam’s 73 per cent earnings from the $31.5 million annual average budget of the organs.

Tanzania’s benefits from the five organs of the EAC that it hosts. They are the EAC Secretariat, the East African Court of Justice, the East African Legislative Assembly, the East African Kiswahili Commission, and the Competition Authority.

Tanzania also gains monetarily from local employment, rent income and supplies.

Aime Uwase, the EAC principal planning and research officer said that “the earnings by Tanzania is the percentage of gains from hosting EAC organs and institutions only. It does not include gains from trade where Kenya benefits most.”

READ: EAC intra-trade to grow by implementing joint policies

Uganda hosts the East African Development Bank, the Lake Victoria Fisheries Organization, the Inter-University Council of East Africa, and the Safety Oversight Agency.

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Kenya hosts the Lake Victoria Basin Commission, Rwanda, the East African Science and Technology Commission, while Burundi hosts the EAC Health Research Commission.

All EAC partner states contribute equally to the bloc’s budget through annual subscriptions.

A new report by the EAC regional bloc secretariat revealed that Tanzania earns $23 million from hosting five of the seven EAC organs, much more than the other partner countries.

The draft report, which is yet to be approved and adopted, proposes a review of the formula for equitable sharing of costs and benefits. 

The report also states that Kenya gains the most from trade within the EAC, earning $38 million annually, followed by Uganda earning $22 million, and Tanzania, which earns $15 million.

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The draft report said that “given the current reality and lessons from the former EAC community which collapsed mainly as a result of unequal share of benefits, there is a need to share the costs and benefits in a fair and equitable manner for sustainability of the EAC Community which generates far more benefits than the costs.”

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However, Rwanda, Burundi and South Sudan make net losses from trading with the region, according to the draft report titled “Equitable Sharing of Benefits and Costs of EAC Integration Process.”

It further stated that provisions in the EAC Treaty such as equal contribution to the EAC budget “may no longer be sustainable given the huge differences in population size and GDP of partner states.

The EAC, initially made up of Tanzania, Kenya and Uganda, broke up in 1977 after the then-socialist Tanzania, complained that capitalist Kenya was benefiting more than the other two partners.

Other issues that caused the collapse included Kenya’s demand for more seats than Uganda and Tanzania in decision-making organs and disagreements with Ugandan dictator Idi Amin who demanded that Tanzania as a member state of the EAC should not harbour forces fighting to topple his government.

READ: Inflation, oil price threaten East African currencies

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The disparate economic systems of socialism in Tanzania and capitalism in Kenya also contributed to the fall.

The report observes that regional integration, by its very nature, creates imbalances in gains if partner states do not take effective measures to maximize the prospective and potential benefits and minimize costs.

The overall objective of the study was to assess whether there is equitable sharing of costs and benefits of the EAC integration so far, and provide a remedial mechanism where possible.

The study suggested that EAC institutions and organs allocate jobs equitably and sustainably as per the treaty’s provisions as integration deepens.

The study also suggested that job distribution should be proportional to partner states’ contribution to the EAC budget.

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