Development Fund
The EAC Development Fund (EACDF) addresses among others infrastructural development issues, development imbalances, investment promotion and other development issues in the EAC Partner States for advancement, deepening and acceleration of integration.
Objectives of the EACDF:
- To establish a legal and institutional framework for mainstreaming development support;
- To support development projects with a regional outlook;
- To create a structural adjustment support mechanism;
- To build and strengthen human and institutional capacity in the region;
- To create a sustainable funding mechanism;
- To create an instrument for attracting support from Development Partners.
The Treaty establishing the East African Community supports the mobilizing of resources as stipulated in Article 132(4) that states: “the budget of the Community shall be funded by equal contributions by the Partner States and receipts from regional and international donations and any other sources as may be determined by the Council”.
Article 133 further states: “Other resources of the Community shall include such extra budgetary resources as grants, donations, funds for projects and programmes and technical assistance; and income earned from activities undertaken by the Community. Similarly, the 4th EAC Development Strategy 2011 - 2015 and the various sectoral development strategies emphasise the necessity of pooling resources and exploring modalities for increasing EAC’s resource base.
The process for the establishment of the Fund begun in November 2003 and the 10th EAC Council of Ministers Meeting held in August 2005 directed the EAC Secretariat to conduct a study on the establishment of the Fund.
The study involved a consultative process of desk reviews; consultations with regional institutions that operate similar Funds; consultations with the Secretariat; and consultations with Partner States' Government officials and non-state actors that included the private sector and civil society.
The main issues cited in the study include the:
- Proposed funding modalities for the Fund;
- Sources of resources for the Fund;
- Criteria for eligibility to the Fund;
- Conditionality for drawings from the Fund;
- Projects and investments to be supported by the Fund; and
- Governance and management of the Fund.
Proposed EACDF
It is proposed that the Fund be established as separate legal entity. It is further proposed that the Fund be governed and managed by a Governing Council; Board of Directors; and the Fund management which will include a Director and support staff. The Governing Council shall be composed of the Ministers responsible for Finance from the EAC Partner States.
The Board of Directors shall be composed of the Permanent Secretaries/Cabinet Secretary of the Ministries of Finance from Partner States, the Secretary General of the EAC, the Director of the Fund, Development/Cooperating Partners and the Director General of the East African Development Bank (EADB) as an ex officio member.
The Fund may provide support and financing to any agency, instrumentality or political subdivision of a Partner State, or to any entity or enterprise operating in the territory of such a Partner State, as well as to any international, regional or sub-regional agency or entity concerned with development in the EAC region. It shall draw its resources from contributions from the Partner States. These will be complemented by innovative mechanisms of mobilising additional resources from Development Partners and Non State Actors, private sector and Multilateral Agencies (MLA’s).
It shall further support and invest in the following areas that include infrastructure development; industrial development; energy production and supply; Information and Communications Technology; agriculture and food security; environment and natural resources; investments and legal, institutional and judicial reforms among others.
Projects and programmes supported must address specific development challenges within EAC; demonstrate a regional character; have an orientation or benefit; be in congruence with national and regional development plans and budgets and have funding from other sources.
They will also be required to have their own sources of capital, the ability to meet the obligations of the loan or grant and concurrence with the territorial Partner States objectives.
Current Status
The 12th Meeting of the EAC Sectoral Council on Legal and Judicial Affairs directed the Secretariat to develop a Bill for the establishment of the EACDF and the Secretariat is in the process of developing a Bill for the EACDF.
The 21st EAC Council of Ministers Meeting also directed that the EACDF be hosted by the EADB. The Secretariat is currently in consultative meetings with the EADB on the implementation modalities between the EADB and EACDF which include the development of a Management Contract between the two and a Resource Mobilisation Framework for the Fund.