View from Kigali International Convention Centre, where the 2016 AU Summit was held. The question of AU financing has been a dead end for many ambitious continental plans. (Photo/ Flickr/ UN Photo/ Rick Bajornas)

As New AU Chair Mahamat Takes Office: The African Union’s Financing Headache, In Two Charts

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THE new chairperson of the African Union (AU) Commission Moussa Faki Mahamat formally took office in Addis Ababa last week, outlining his top priorities for his four-year tenure.

Mahamat said he would focus on implementing structural and financial reforms at the AU, as well as place women and youth at the centre of Africa’s development agenda, accelerate intra-African trade and free movement of people, goods and services in the continent, silence the guns by 2020, and strengthen Africa’s voice in the global arena.

But it is the financing plan that is likely to get the most attention in the short term, unveiled at last years AU summit in Kigali by Donald Kaberuka, former president of the African Development Bank (AfDB).

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As of last year, more than half of the African Union’s budget is funded by outside donors (euphemistically termed international partners), compromising the independence of the organisation.

The Kaberuka plan is intended to change that, and would see member states finance 100% of the AU’s operating budget, three-quarters of the programmes budget and a quarter of the peace and security budget, effective January 2016 and phased in incrementally over five years.

In short, the strategy is to impose 0.2% levy on imports to African countries. This should enable AU member states to fully fund the AU Commission and to cover 75% of programmes as pledged by AU leaders at the summit in South Africain 2015. In addition, each region would also be asked to contribute US$65 million from the import levy for the Peace Fund.

On average, AU member states contribution fund the AU Commission has declined from about 54.5% in 2009 to 25.5% in 2015; at the same time, the share of donors in funding has increased from 45.5% to 74.5%.

It partly has to do with political instability in North Africa starting in 2011 just five countries, three North African (Algeria, Libya and Egypt) contribute the bulk of funding to the AU. With Libya and Egypt plunging into sectarian conflict and political upheaval over the past few years, contributions declined sharply, and donors started picking up the tab.

Nigeria and South Africa are the other two countries making up the Big Five funders of the AU according to 2014 data; other member states pay varying contributions depending on their capacity.

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Other countries with a considerable contribution are Angola ($6.3 million), Tunisia ($3.8 million), Sudan ($2.5 million), Ghana ($2.4million and Kenya ($2.3 million).

But right from its inception, the AU has faced problems of member states not paying their dues on time according to the organisations rules, sanctions should kick in after a country has defaulted two years in a row on its annual contributions, and these countries are not allowed to vote on AU decisions like the election of the new AUC chairperson.

Still, the AU is very reluctant to name and shame those who don’t pay up their dues, though as of 2014, sanctions were in force against Central African Republic and Guinea-Bissau, at least on paper. The lowest ten countries on the scale of assessment are paid an average of just $62,269 to the Union per year, according to this study.

According to latest figures, the AU’s estimated budget for 2016 is $416 million, of which $169 million (40.6%) is expected to come from member states contributions and $247 million (59.3%) from international partners.

Of the total budget, 36% is earmarked to cover operating costs, and the remaining 64% will go towards various programmes and projects.

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