Key speakers at the post-budget dialogue in a group photo
Several experts have called for concerted efforts among the East African Community (EAC) member states to curb the growing debt owing to the declining foreign donor aid and geopolitical tensions across the globe.
The call was led by Herbert Kafeero, Programs and Communications Manager at Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) Uganda during the fifth East African Community Post-budget dialogue on Tax and Debt, that was held today at Africana Hotel in Kampala.
“The global environment remains deeply uncertain but it is also characterized by shrinking aid budget, rising geopolitical tensions, climate induced shocks, and volatile commodity markets. I am sure you have heard of protectionist measures referred to as the Trump measures and that is the kind of global environment, we are surrounded in. These dynamics are redefining the development financing landscape specifically for the East African Community,” said Kaferro.
He added: “As concessional financing becomes increasingly conditional and donor aid is redirected to domestic and geopolitical priorities, we must urgently reimagine and reclaim our fiscal space. The reality is, countries are now looking inward, we have heard about America First Policy where America is considering priorities of Americans first before anyone else. So, countries are increasingly looking inward and it isn’t wrong to look inward.”
According to SEATINI, EAC member states public debt portfolio has increased more than 50% between 2018/19 and 2023/24 including 82%, 64% and 104% for Kenya, Tanzania and Uganda respectively.
For instance, Uganda’s debt grew from US$12.55Bn to US$25.6Bn between 2018/19 to 2023/24, while Kenya’s debt increased from Ksh5.809Bn to Ksh10.581Bn within same period.
Additionally, Tanzania’s debt increased from US$22.321Bn to US$36.690Bn between 2018/19 to 2023/25, while Rwanda ‘s debt grew from FRW4.751Bn to FRW13.356Bn under same period.
This prompted Kafeero to urge the East African Community, to also make national budgets whose priorities and aspirations focus on the domestic needs of its citizens with the focus on where the region wants to go, how to get there, whom regional states want to partner with and what kind of partnership the regional bloc needs.
Kefeero explained, “Across the EAC, we are witnessing increasing debt burdens, it is important that the regional conversations are kick-started in view of the global dynamics and the policy shifts at play. Financing development in East Africa requires a strategic and coordinated shift. Our reliance on external debt is no longer tenable and instead, the EAC must strengthen domestic revenue moblisation and at SEATINI we believe, domestic revenue resource moblisation is the only sure way of financing development.”
Moses Kaggwa, Acting Director, Economic Affairs at the Ministry of Finance revealed that efforts are underway to implement national budgets that address the economic bottlenecks affecting business environment within the region.
He explained, “In the budgeting, we aren’t only looking at the Ugandan projects but EAC projects. We are also thinking about the roads infrastructure, you know how we have intervened in Congo because we want to export our products from Uganda, Kenya, Tanzania to DRC by reducing the cost of doing business than means we also improve the welfare of our people. So, it’s how we are looking at our budget, how do we as East Africa be speaking the same language and having the same philosophy and the same understanding of where our economy should be.”
George Odongo, member of the East African Legislative Assembly (EALA) urged EAC member states to implement transparency while contracting debt, instead of leaving such decisions for a few individuals, yet the debts are paid by all residents in the different EAC states.
“We need to integrate transparency in public debt contracting. We must be able to articulate the rationale behind every public debt and I think this is where our government, particularly in Uganda, is not doing very well…we want to teach the people that we are contracting debt. But you see, debt contracting is in the best interest of the country if you do it rationally,” he argued.
Odongo added, “So we must have that conversation in order to gain public trust because you are contracting debts in public trust. You are doing it on behalf of the public, so you go with the public to explain the rationale behind specific debts because they are going to be paid by the generations to come because they are elements of public debt. And I think that is where we should be coming in, to see what kind of legislation, what kind of framework do we need to ensure that we eliminate the issue of public debt contracting and make it something that the public can talk about.”
