A new self-funding scheme aims to decrease the AU’s dependence on donor funding, but how realistic is it?
Since independence half a century ago, African leaders have periodically launched continent-wide initiatives aimed at reducing and eventually ending the continent’s dependency on foreign aid. Establishing the Organisation of African Unity (OAU), the African Union (AU), and the African Development Bank was part of that effort. These plans to extend African institutions and socio-economic platforms continued in the 1980s with the Lagos Plan of Action, while the 2000s featured the New Partnership for Africa’s Development (Nepad).
These broad initiatives included resource mobilisation strategies, among them proposals for a continental common market that would see trade replacing foreign aid. In 2015, a proposal for a levy on air tickets in member states to raise money for financing AU operations and programmes was nearly adopted but soon abandoned. Since the 1960s, no continent-wide initiative on the part of the OAU or its successor organisation, the AU, has succeeded.
Currently, the AU’s dependence on foreign aid — much like that of its member states — is still shockingly high. In 2014, for example, of the AU’s total budget of $600,8 million, member states’ assessed contributions amounted to a mere $126 million, as against $474,7 million from partner funds realised. In other words, in 2014, nearly 80% of the AU’s budget came from donors.
A new self-financing scheme was announced at the AU Summit in July 2016. The plan proposed the institution of a 0,2% levy on “eligible” goods imported into each member state. Money collected from the levy would be “automatically paid … into an account opened for the African Union with the Central Banks of each Member State for transmission to the African Union by each Member State”, according to the AU. The levy would, starting in 2017, finance the AU’s programmes and peace-building operations. The AU expects to raise $325 million in 2017, and $400 million by 2020.
If implemented, the self-financing plan would have a spectacular and almost immediate effect, as illustrated by the 2017 budget. Without the levy, donors would be expected to contribute $576 million, or 73%, of the approved total budget of $782 million for 2017, while member states would contribute only $205 million. However, if the expected $325 million raised from the levy in 2017 materialises, the equation will change radically. Member states’ contributions would rise to a total of $530 million — meaning that the AU’s self-financing would rise sharply from 27% to 67%, while donor funding would drop from 73% to 33%.
The question arises, however: who will execute the plan, and when? Over the past 50 years, African leaders have failed to consider similar questions each time they have launched a new continent-wide plan. That African leaders are also ill-prepared to answer such a question with regard to their latest plan was abundantly evident from the decisions taken at the July 2016 Summit.
First, African heads of state failed to elect a new head of the AU. None of the three candidates was able to muster the two-thirds majority required to win and the election was postponed to January this year. Second, the self-financing plan was launched before the legal, governance, and financial processes necessary to implement the scheme had been raised or discussed. Addressing these vital matters was left for the future — to the very AU Commission chair whom African leaders had, until then, failed to elect.
This anomaly becomes apparent in the Kigali Summit decisions. For instance, the AU Assembly requested “the Chairperson of the Commission to implement all aspects related to the operationalisation of the Fund, in particular the legal, operational and financial rules and regulations”. It mandated “the Commission to finalise the processes relating to decision- making for mobilising assessed contributions”.
It also asked the AU Commission to “put in place strong oversight and accountability mechanisms for ensuring the effective and prudent use of the resources”. In line with all this, the AU Commission was also asked to “complete the on-going institutional reform of the African Union to ensure a more effective attainment of the objective of the Union and prudent use of all resources”. It seems so strange indeed to launch a plan and only then to build the structures and systems needed to implement it.
Aside from these considerations, the current political and economic environment in Africa is highly problematic. A full-on assault on constitutional limits to presidential terms is under way across the continent. Second-generation African leaders are showing an extraordinary appetite to join the club of first-generation autocrats who have held power for over 30 years. The presidents of Togo, Gabon, Democratic Republic of the Congo, Burundi, and Rwanda are attempting to cling to power in the same way as their older counterparts in Angola, Equatorial Guinea, Cameroon, Zimbabwe, Chad, Sudan, Uganda, and Republic of the Congo.
In a few cases, people power was able to resist and even defeat autocratic rulers, as in Burkina Faso, where “the freest and most competitive [elections] ever to be held in the country” — according to a 2016 report from Freedom House, an independent organisation that monitors democracy globally — were subsequently permitted. In others, like in Egypt, people power was defeated, ushering in autocracy once again. In still other cases, a Humpty Dumpty situation prevails in which failing states keep failing — Somalia, the Central African Republic, Libya, and now South Sudan come to mind here.
In economic terms, resource-rich countries such as Nigeria — which has pipped South Africa as Africa’s largest economy — have fallen on hard times. Nigeria’s GDP fell from $568 billion in 2014 to $481 billion in 2015 because of the decline in petroleum prices. South Africa, at the time of writing, is facing a crisis of “state capture” by powerful oligarchies, some of which are said to have appointed cabinet ministers. Meanwhile, Ethiopia, which hosts the AU headquarters, is under a six-month state of emergency after people power robustly resisted further official land grabs. An estimated 500 people lost their lives in the Oromo region at the hands of Ethiopian security forces.
When Nepad was introduced, with its vision of “African Renaissance”, some African leaders seemed to have been inspired. But presently a lack of vision and a paucity of ideas prevail across the continent, even in the larger economies of South Africa and Nigeria.
The self-financing plan launched by African leaders in July 2016 makes sense — and is achievable. What remains to be seen is how and when it will be implemented and by whom. Another big “if” is how the self-financing strategy is to become a reality, and replace foreign aid, in the current challenging political and economic environment. One hopes, nonetheless, that the latest plan will succeed. If it does, it will prove that not every continent-wide plan in Africa is doomed to fail.
