East African Legislative Assembly, Arusha, Tanzania: 31 August, 2016: EALA has debated and adopted the Report of the Committee on Accounts on the audited Accounts of EAC for the period ended 30th June 2015. Three outstanding issues the Assembly says need immediate redress, are a curb on wasteful expenditure, a stem on all irregular procurements and an end to short-term contracts that contravene the staff rules and regulations of the Community.
EAC Secretary General, Hon Amb Liberat Mfumukeko moved to assure the House that reforms initiated under his regime would bear fruits.
The report presented to the House by the Chair of the Committee on Accounts, Hon Jeremie Ngendakumana notes the overall financial position of the Community remained reasonably healthy with sufficient liquid assets to meet its maturing liabilities. It further states that the financial performance and cash flows for the period were in accordance with the International Public Sector Accounting Standards (IPSAS).
However, many projects and programmes at the EAC have an issue of budget under-absorption requiring proper budgetary planning and coherence and consistency in the budgeting process. The Community also suffers from poor financial management including over one thousand adjustments to the transactions on the general ledger after submission of financial statements.
The Assembly has given the Secretary General up to October 2016 to share with the House the matrices of implementation of its current and previous decisions.
The issue of non-remittances by Partner States also comes to spotlight with the Assembly urging the EAC Council of Ministers to engage all stakeholders on the matter and to ensure contributions are remitted timely.
The report takes an incisive analysis of all the Organs, Institutions and projects of the Community whose budget during the period under review was USD 125,643, 894. Actual expenditure totaled USD 81,349,607, pegged at 65%. The report arises from the Audit Commission on the Financial Statements for the period ended 30th June 2015 and is in line with the Commission’s mandate to fulfil the mandate bestowed on it by Article 134 of the Treaty for the EAC.
The lengthy report also calls for a roadmap on recruitment of staff in line with the staff rules and regulations and calls for an end to short-term contracts.
The Assembly advises the Council of Ministers to direct the Secretary General to strengthen EAC Secretariat’s Internal control mechanisms by ensuring that financial transactions are accurately and timely. Consequently, there is need for the directorate of finance to render efficient and supervisory role within itself. The Assembly is concerned by the high number of adjustments to transactions in the general ledger after the submission of the Financial Statements which it terms a result of laxity.
The report further reveals of the need for EAC management to negotiate and conclusively finalise agreements that exempt VAT with all Partner States that host all meetings and events. According to the report, there is to date an outstanding VAT claimable of USD 847,183 from authorities in the Partner States.
Among other recommendations, the Committee recommends empowering the Office of the Secretary General to sanction members of staff who contravene the Treaty and the Financial Rules and regulations. With it also is the need to undertake a comprehensive review of the Procurement manual in order to bring it in line with the Financial Rules and Regulations 2012. There is need for adherence to the Procurement procedures as laid down.
The Report also takes an inward look of the Assembly itself and findings therein necessitate need for EALA Management to comply with procurement policies and the Financial Rules and Regulations. At the same time, management of the Assembly is urged to adhere to the staff rules and regulations.
At the East African Court of Justice, the report reiterates similar recommendations. The Assembly thus wants the Service Commission to be convened to develop a roadmap to fill all positions that were previously held by short-term contract holders if necessary.
The report further observes that the Partnership Fund should regularly prepare financial statements in line with the Memorundum of Understanding with the development partners.
The Assembly is categorical that any or all required documents should be presented to auditors and any irregularly spent amounts reimbursed back. The findings of the African Peace and Security Architecture reveals that a number of projects were not implemented and that only 27% of the total budgeted funds were utilised. In the regard, the Assembly wants the Council of Ministers to direct the Secretary General to draw realistic budgets, supervise and follow up on disbursement of funds and to institute a Committee which shall probe and come up with solutions to end poor budget performance.
At the Kisumu-based Lake Victoria Commission (LVBC), the report emphasises strengthening of control measures, urges the institution to comply with accounting principles and recover all outstanding imprest from staff in line with regulation 40 (3) of the financial rules and regulations.
Under LVBC, the audit further covered the Mount Elgon Regional Eco-System Conservation Project, the USAID Population, Health and Environment Programme (USAID-PHE). Others are the Lake Victoria Water Supply and Sanitation (LVWATSAN) Project and the Lake Victoria Environmental Management Project II (LVEMP II) for the year ended 30th June 2015 as well as the Lake Victoria Basin Commission Partnership Fund.
The Audit reveals of shortfall in funding at the Inter-University Council of East Africa (IUCEA) despite reminders and visits made to Partner States on follow-up missions of arrears and a lack of policy to guide on utilisation of arrears. It therefore recommends that IUCEA management should customise the EAC Secretariat policy on the use of reserve funds and apply the same on utilisation of arrears and excess funds. The education body is also urged to always seek approval for reallocation of funds and to further comply with the set rules and regulations more so on staff development matters. On its part, the Lake Victoria Fisheries Organisation in Jinja should be well funded by the Partner States.
Several reminders on outstanding contributions in form of telephone calls and written letters had not been released in a timely manner and during the period 2010-2013.
“The releases from Partner States in the FY 2014/15 improved greatly (67%) compared to the previous years (less than 35%). LVFO managed to refund USD 234,833 towards the outstanding Operation Save Nile Perch (OSNP) liability in the FY 2014/15”, the report says in part.
A number of legislators supported the report at debate. Hon Dr Francois Xavier Kalinda said irregular recruitment of staff was glaring and that it presented legal challenges for both the concerned staff and the Community itself.
Hon Bernard Mulengani remarked that diligent internal controls within the Finance department was needed and stated that lack of quorum was hampering co-ordination of the set procurement meetings.
Hon Judith Pareno said the report for the better part paints a negative picture of the Community.
“It means we are not planning well and are not adhering to the Financial Rules and Regulations. We need to have the Ministers of EAC resident in Arusha to do their political bit and supervisory bit and together with the Secretary General, they will let the Community move forward”, she said.
Hon Emmanuel Nengo said the gap in efficiency in the Secretariat needed to be addressed. “The Secretary General lacks the power to reward those who work well and punish those who do the contrary and the Council of Ministers needs to look into the matter”, he said.
Hon Dr James Ndahiro said there was need for a law on procurement to be introduced to create a legal framework for procurement. Hon Dr Odette Nyiramilimo said the decision to close the African Peace and Security Architecture (APSA) needed further scrutiny.
The EAC Secretary General, Amb Liberat Mfumukeko, assured the House of reforms in financial management, reduction of travel days among others.
“With these reforms, the Secretariat is due to save about USD 6 Million dollars. A few months from now, we shall be following the trends to see if we achieve our set targets”, Amb Mfumukeko said.
On procurement, Amb Mfumukeko, said the previous assessments by the European Union had returned poor scores on procurement, but that the manual had since been updated and the trend has changed.
“Last month, the EU assessment passed a positive result”, he said.
“I have considered the Audit report and the Fiduciary Risk Assessment. I have hope that we shall cure the institution”, the EAC chief said.
He said many dockets and departments depended on short-term staff. “The solution to this issue is the Institutional review and we hope that the positions which were frozen shall be opened up to have the staffing needs met”, Amb Mfumukeko said.
Hon Adam Kimbisa said the establishment of a Project Co-ordination Unit was timely.
Hon Patricia Hajabakiga, Hon Bernard Mulengani, Hon Valerie Nyirahabineza, Hon Emerence Bucumi, Hon Nancy Abisai, Hon Pierre Celestin Rwigema and Hon Straton Ndikuryayo supported the Report.
Others were Hon Abdullah Mwinyi, Hon Angela Kizigha, Hon Yves Nsabimana, Hon Martin Ngoga, Hon Susan Nakawuki, Hon Dora Byamukama, Hon Dr. Nderakindo Kessy, Hon Isabel Ndahayo, Hon Frederic Ngenzebuhoro and Hon Patricia Hajabakiga.
The Minister for EAC Affairs in Burundi, Hon Leontine Nzeyimana said the Council was committed to ensuring the decision matrices are implemented.
The Chair of the Council of Ministers, Hon Dr Susan Kolimba lauded the Assembly for the oversight role and remarked the Council of Ministers would make a close follow-up of the recommendations.
-Ends-
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East African Legislative Assembly,
Tel: +255-27-2508240, Cell: +255 787 870945 +254-733-718036;
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Arusha, Tanzania,
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