High hopes for African Union self-financing mechanism

The feeling of expectation and desire for a new funding plan for the African Union to be realised is very high, according to Claver Gatete, the Minister for Finance and Economic Planning.
Delegates during the 27th African Union Summit in Kigali in July 2016. File.
Delegates during the 27th African Union Summit in Kigali in July 2016. File.

The feeling of expectation and desire for a new funding plan for the African Union to be realised is very high, according to Claver Gatete, the Minister for Finance and Economic Planning.

The self-financing mechanism of the African Union is a historic decision adopted by Heads of State and Government during the 27th AU Summit held in Kigali in July 2016.

This was aimed at weaning the continental body off external financial support for even the basics, such as operational costs.

To be able to raise the required funds, the mechanism suggests that all AU Member States implement a 0.2 per cent levy on eligible imports.

As of December 2017, the AU Commission, the Secretariat of the Union entrusted with executive functions, had on record 21 Member States – out of 55 – that were at various stages of implementing the historic Kigali Decision.

Amb. Gatete said: “We have a meeting here in Kigali and definitely, there is very big optimism that the self-financing mechanism will work given what has been done already. We are very optimistic. We held fruitful meetings last August and are now going to have another to evaluate progress in between.”

The AU Commission, in collaboration with the Ministry of Finance and Economic Planning, organised a meeting of the Committee of Ten Ministers of Finance (F10) responsible for the Financing of the Union.

The Meeting is scheduled in Kigali on Saturday to review progress in implementation of the decision to implement the 0.2 per cent import levy towards financing the Union.

“Not all countries get ready at the same time but with the support availed by the AU Commission and through the South to South cooperation, this will help solve the problems each individual country has. Once we share experiences, every country will be comfortable.”

At least 14 have already started collecting the 0.2 levy on imports and depositing the funds on an account dedicated for AU opened in their respective central banks.

These Countries include Kenya, Ethiopia, Rwanda, Chad, Djibouti, Guinea, Sudan, Morocco, Congo-Brazzaville, Gambia, Gabon, Cameroon, Sierra Leone and Côte d’Ivoire.

Others like Ghana, Benin, Malawi and Senegal have initiated internal legal and administrative processes to allow implementation of the decision while Mauritius and Seychelles have also indicated full commitment to the principles of financing the Union.

Saturday’s session is a follow-up on the one held in Addis Ababa, Ethiopia on August 9, 2017 during which the Finance Ministers recommended, among others, a set of rules for establishing clear financial management and accountability principles, a review of the current scale of assessment for more equitable sharing of the burden of the Union’s budget.

‘No room for pessimism’

Prof. Herman Musahara, a Rwandan economist, said “there is no room for pessimism” on the sustainability of African integration.

Afro-pessimism, the perception of sub-Saharan Africa as a region too riddled with problems for good governance and economic development, he said, has been as common as a cold even when Africa is experiencing good times economically.

Musahara said: “The financing mechanism was done by the best experts in the continent and the most able leaders of Africa. Almost half the countries of Africa have embraced it. No open challenge to the mechanism. It draws from an urgent sense of self-reliance. There is reasonable optimism.”

Financial sustainability of the AU from each member state is better than passing the traditional tin around, the academic said.

According to him, when you pass the tin around, “not every developed brother” will give aid without ties. The latter, he said, would be harmful to African Unity and Agenda 2063, a strategic framework for the socio-economic transformation of the continent.

“Defaulting on financial commitment is common. Even some instruments of AU are often not ratified. But the mechanism should be followed by a method of enforceability.”

Saturday’s meeting will also consider and adopt the technical documents developed pursuant to these recommendations, and also review the draft decisions to be presented to the AU Summit later this month in Addis Ababa.

The Addis summit will be chaired by President Paul Kagame in his capacity as Chairperson of the Union for this year.

editorial@newtimes.co.rw

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