As Kenya, Uganda, Tanzania, and Rwanda unveil their national budgets for the Financial Year 2025/26, the East African Community (EAC) is witnessing divergent fiscal strategies shaped by economic pressures, political contexts, and development ambitions.
With a combined GDP of approximately USD 287 billion, these four countries are setting the agendas for infrastructure, industrial growth, and digital transformation, yet their budget choices reveal markedly different priorities.
Budget Scale & Economic Influence
Kenya leads with a proposed national budget of KSh 3.6 trillion, reflecting its 25.7% share of the EAC’s mammoth GDP.
In its fiscal blueprint, Finance Minister John Mbadi avoided new taxation, focusing instead on stronger compliance and expanded tax bases.
Tanzania follows, with Finance Minister Dr. Mwigulu L Nchemba presenting a TSh 57 trillion budget (USD 22 billion), a 13% rise aimed at funding rural infrastructure and upcoming elections.
Uganda commits UGX 72.3 trillion (USD 20 billion), leveraging finance champion Matia Kasaija’s focus on agro-industry and oil infrastructure to accelerate structural growth.
Rwanda, under Finance Minister Yusuf Murangwa, unveils a FRW. 7.03 trillion (USD 5 billion) plan, a 21% increase, prioritizing Bugesera airport, agricultural productivity, health, and education.
Deficits & Debt Strategies
Kenya’s deficit is capped at 3.8% of GDP, with Mbadi emphasizing debt servicing and fiscal consolidation, and avoiding direct public backlash over taxes.
Uganda allows a higher deficit, around 5.7%, but shifts focus to concessional borrowing to fund vital oil and infrastructure investments.
While Tanzania hasn’t published an explicit target, its 13% budget expansion indicates reliance on both domestic and external borrowing, supported by originally planned IMF and AfDB funding.
Meanwhile, Rwanda maintains fiscal discipline: 58% of the budget is funded domestically, 31% via loans, and just 8% from grants.
Strategic Focus Areas
Uganda directs substantial funding toward agro-industrial parks and oil pipelines like EACOP, supporting Kasaija’s vision of long-term oil revenues.
Tanzania is investing in rural roads, irrigation, election readiness, and local content measures such as mandating 20% domestic gold refining.
Kenya balances modest health and education boosts (15% and 11% respectively) with a nationwide push for tighter fiscal discipline and enabling private sector growth.
Rwanda’s Murangwa champions an expansive infrastructure push, framing the Bugesera airport as a regional gateway while scaling up agriculture, electrification, and public service investments.
Taxation & Revenue Reforms
Kenya is steering clear of new taxes, instead empowering the KRA and reducing spending to trim fiscal gaps. Which worries that increased enforcement may encroach on privacy.
Uganda is investing in digital tax management and narrowing exemptions to industrial and export sectors to strengthen URA’s capacity.
Tanzania is enhancing tax collection, especially in informal and rural regions, and expects to generate roughly 70% of its funding domestically.
Rwanda also pursues tax adjustments, raising excise on cigarettes, beer, airtime, and reinstating VAT on fuel while financing most of its budget domestically.
Infrastructure & Industrial Growth
While Uganda channels funding into agro-processing and energy, Tanzania leans on rural infrastructure to spur regional development.
Kenya increasingly relies on public-private partnerships to scale up core infrastructure, minimizing tax burden.
Rwanda’s flagship is the Bugesera airport project, framed as essential to transforming Kigali into a regional hub alongside renewable energy and social infrastructure upgrades.
Regional Integration Challenges
Despite ambitious national budgets, the EAC’s Secretariat operates on a modest USD 113 million annual budget, equally funded by all member states, a situation criticized by wealthier economies like Kenya and Uganda.
They advocate a scaled contribution framework, tied to economic capacity, to underwrite integration efforts like a monetary union.
Smaller states such as Burundi and the DRC often default on contributions, constraining the bloc’s collective agenda. Regional analysts suggest enforcing shared macro target deficits below 6%, tax-to-GDP ratios above 25% to foster stability and build shared institutional capacity.
Unity vs. Divergent Paths
Kenya’s tight fiscal discipline may reinforce macroeconomic stability but restrain ambitious development initiatives.
Uganda’s pivot to concessional debt supports its oil-driven transformation but depends on manageable global market conditions.
Tanzania’s expansive fiscal program could spark strong social and infrastructure gains, yet it hinges on external financing and donor predictability.
Rwanda dovetails austerity with strategic investments in connectivity and public services.
For the East African Community, aligning budget strategies, sharing fiscal burdens fairly, and meeting macroeconomic benchmarks will be pivotal to forging cohesion.
Until then, FY 2025/26 budgets reveal economies united in vision but divergent in execution, each charting its course to prosperity.
