It will take at least another three to five years for the African Union to start seeing progress in its bid to wean itself off donor funding, according to the organisation’s 2016 budget document that formed part of discussions at the summit that ended in Johannesburg on Monday.
The AU will use the year 2016 to find additional sources of income.
“In 2016, the union will focus on establishing mechanisms for domestic resource mobilisation, including alternative sources of funding in order to provide predictable and sustainable implementation of AU development priorities as defined in Agenda 2063 and the post-2015 development agenda,” said the AU in its budget document.
The AU wants to see the organisation “owning the budget” within the next five years and its wishes include that member states should fund 100% of the operational budget, 75% of the programme budget and 25% of the peace operations.
Currently, about 70% of the AU budget comes from donors – referred to as partners – with the World Bank, the European Union and China being the biggest.
Doing without donor funding, however, will not be easy to achieve.
Too poor
Some AU member states struggle to pay their contributions because they are too poor, and others simply do not honour their commitment to pay their dues.
The burden is already being put on better-performing economies, such as South Africa.
When the organisation implements its new budget formula, those countries that are better off – South Africa, Nigeria, Algeria, Angola, Egypt and Libya – will be expected to increase their contributions to cover 60% of the AU budget.
Based on this new budget formula South Africa will increase its contribution by four times the current annual contribution of $16 265 607.
This could see Pretoria paying almost R800-million a year to the organisation.
‘Major departure’
The AU said, “although its implementation will stagger over three to five years to allow for countries to adapt to the new formula, it will, however, be a major departure from being predominantly dependent on partners for programme funding towards self-sustenance, self-pride and belief that African problems can be solved with Africans and accountable to Africans. It will be an African renaissance indeed based on the ideals of Pan Africanism,” reads the AU’s budget document.
“This notwithstanding, the union is still increasingly dependent on funding from development partners that are unpredictable [and] selective, [which is] often tied to restrictive conditions, requires specialised management and thus subjected to risk of nonimplementation of some of the key programmes,” the document says.
The AU’s 2016 budget comes from two main sources: contributions from member states that are used for operational expenses and donor funds to finance peace-building and socioeconomic development programmes.
The proposed contribution of member states towards that year’s budget is expected to be $196-million of the overall amount of almost $524-million, according to the budget document.
“As 2016 will be a transitional year towards the new budget formula, the expected amount may not be fully realised,” it cautioned.
Infrastructure improvements
Despite its financial problems, the AU plans to build an accreditation centre and a new cafeteria in Addis Ababa, improve its offices in Lilongwe in Malawi, Lagos in Nigeria, Bamako in Mali, Yaoundé in Cameroon, Geneva in Switzerland, Brussels in Belgium and New York in the United States as well as complete construction of its office buildings for the Inter-African Bureau for Animal Resources in Nairobi, Kenya. An amount of $15-million has been set aside to fund these activities.
In the same year the AU also wants to “upgrade the security and safety of office buildings and staff in view of increased extremist threats” at a cost of $3-million.
The 2016 budget has been set at $523 873 040 and 79% of it is allocated to the AU Commission headed by Nkosazana Dlamini-Zuma. Her term of office ends next year and the organisation has budgeted $1.4-million for “separation costs for outgoing and costs related to the incoming commission”.
Because AU member states disagree on which option of alternative funding should be adopted, the organisation has decided to allow individual countries to choose what suits them.
Levies
A $2 hotel levy, a $10 airfare levy on each international flight entering or leaving Africa and a $0.005 an SMS levy are some of the options put on the table.
If these options are used to increase AU funds, they would “translate into an estimated additional finance of $730-million a year”, according to Dr Ulf Engel from the Institute of African Studies at the University of Leipzig in Germany, who researched a paper on AU finances.
Engel, in his paper titled The AU Finances – How Does It Work?”, said: “Although member states’ willingness to contribute to union affairs has slightly increased recently, in comparison to external support the amount of money allocated to the continental project by member states is still embarrassingly low.
“And it seems not to be a matter of nonexistent resources of their own, but simply of misplaced political priorities, which in turn raises a serious question of ownership and commitment.”