July 7, 2008

Burundi allowed to pay only $1m to EAC budget

By KEZIO-MUSOKE DAVID, NationMedia
Special Correspondent

The East African Community has allowed Burundi to pay only $1 million as budget contribution for the two EAC financial years of 2007/08 and 2008/ 09.

Burundi’s request to pay only the stipulated amount of $1 million was granted after the recent 9th EAC Heads of state Summit meeting in Kigali. The five EAC presidents were briefed that Burundi’s current financial position cannot allow the country to meet its financial obligations to the regional budget.

This means Burundi will not pay $4.5 million as its annual contribution to the community. Almost 59.2 per cent of EAC’s financial year 2008/2009 budget is to be financed by the community’s other partner states. The budget, which was approved by EAC’s Council of Ministers in June, totals about $40.5 million. About $16 million will be sought from donors.

A communiqué signed by all the presidents of the partner states indicated that the shortfall in the contribution arising from Burundi’s request shall be shared equally by the other four partner states.

As a result of the deficit caused by Burundi’s request, the summit further decided that the EAC Secretariat undertakes a study on other budget funding modalities.

This communiqué was signed by President Paul Kagame of Rwanda, Jakaya Kikwete of Tanzania, Yoweri Museveni of Uganda, Mwai Kibaki of Kenya and Pierre Nkurunziza of Burundi.

Investors were told during the East African Investment Conference, a parallel event held on the same day of the Summit of the Heads of State, that Burundi’s current financial sector is insufficient to boost the economy. Despite the shortfall, the investors were still welcomed in all areas.

According to a presentation from the Uganda Industrial Research Institute (UIRI), Burundi and Tanzania have EAC’s least Gross Domestic Product (GDP) growth rate quoted at 5 per cent.

Burundi’s economic condition comes as a result of a decade of civil conflict that has seen 300,000 people killed. The government and Palipehutu-FNL rebels signed a new peace agreement earlier last month after one signed in 1996 one stalled over disputes on how to deal with demobilised fighters.

President Nkurunziza assured potential investors attending the conference that 10 years from now, Burundi’s per capita income will at least have reached $300.

“Today peace is progressively coming back. The former government forces and those of the six parties and political armed movements, that were fighting have laid down their arms and have united to form the National Defence Force and National Police of Burundi.”

“Negotiations with the last party and armed political movement, Palipehutu-FNL, are in progress. The government has offered them the possibility of joining the institutions,” he added.

In her presentation on the investment opportunities in the EAC, Dr Maggie Kigozi said that Burundi, which only joined the EAC together with Rwanda in July last year, attracted the least number of exports in the EAC in 2007. These exports were valued at $41 million compared with Kenya which attracted the most exports valued at $118 million in the same year.

Dr Kigozi, who is also the executive director of the Uganda Investment Authority (UIA), said that Burundi’s imports in 2007 were valued at only $787,000 compared with Kenya’s $495 million and Tanzania’s $30 million.

Francis Gatare, Director General of the Rwanda Investment and Export Promotion Agency (RIEPA), said that Burundi is aiming higher despite challenges.

Officials from the East African Business Council (EABC) told investors that the International Finance Corporation’s “Doing Business Index,” an annual survey carried out by the World Bank on the ease of doing business, ranks Burundi at position 174. The index ranks 178 World Bank-supported countries.

Charles Mbogori, executive director of the EABC, said that among Burundi’s 2007 improvements included employment of workers and improvements in the registration of property.