Financing the African Union: Would the Kigali Decision make our AU an African Organization?

The African Union has just taken another decision on how to finance the continental body and its activities in order to make it a truly independent Pan African organization.

In fact, if the laws governing civil society organizations in many African countries are to be applied to the African Union, then our Union will be qualified as a “Foreign Organization” in Africa because more than 70% of its budget is paid by foreign partners while the 54 African countries only pay all together less than 30%. For example the 2017 budget adopted by the Kigali Heads of State Summit is $782 Million of which foreign donors  are expected to pay $576 Million while African countries will only pay $205 Million.

0.2 % levy on eligible imports to fund the AU

Yesterday 16 July 2016, the Heads of State of the African Union informally decided to allow a collection of 0.2% levy from “eligible” imports from all member states to fund the African Union and its programmes.

While I think this is a courageous move, it is important to precise that this is not the first attempt to resolve the shameful financial dependency of our Union.

What happened to previous proposals on alternative funding?

In 2014, President Obasanjo and the UNECA suggested the following proposals to the African Union:

  • $2 hospitality levy per hotel stay
  • $10 airfare levy on international flights originating in or out of Africa
  • $0.005 SMS Levy (UNECA)

If implemented, those proposals would have brought all together at least $ 2.3 Billion annually to the African Union. Pushed by African tourism-dependent countries, Heads of State rejected the proposal last year. The Assembly simply decided an increase of the contributions of members to meet the new funding targets, leaving it up to countries themselves to choose any of the proposed ideas. Everyone including member states themself knew at that time that the decision was just a way of putting the proposal off.

They have however decided to cover AU expenses as follow:

100 % of the operating budget

75 % of the programme budget

25 % of the peace support operations budget

All to be phased within five years starting from 2016 and a new scale of contribution has been adopted…. But how the same countries paying less than 30% of the AU budget can suddenly multiply their contributions?

Donald Kaberuka’s Formula

The adoption of the Agenda 2063 and its 10 years implementation plan, coupled by an apparent donors fatigue forced the AU to deepen the discussion on the alternative funding of the AU. Dr. Donald Kaberuka has then been called to help as the AU’s High Representative for the Peace Fund… Here we are with a new proposal of 0.2 %  levy on eligible imports.

According to estimates, if implemented this new proposal may bring up to $1.2 Billion yearly to the AU. The details of the new proposal are not yet available. The devil may be hiding within those details.  For example which imports will be “eligible”?, By which mechanisms the money will be collected and who will manage it?, Would the current AU structure and ways of working handle such mechanism and this amount of money? For it to be effective, the formula must provide for a direct collection at the source by/for the African Union.

In any case, let’s say this is a good move. ECOWAS successfully uses a similar mechanism through the Community Levy System (o.5% of imports) but not without difficulties. My only problem is that more than 80% of the African Union decisions are not implemented, so, the citizen that I am will not believe it just because it was adopted by the AU. I need to see concrete signs of implementation.

Follow my blog for further analysis on this issue in the coming days.

2 thoughts on “Financing the African Union: Would the Kigali Decision make our AU an African Organization?

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