The African Union self-financing mechanism adopted by the Heads of State during last year’s summit in Kigali could take longer than expected to implement.
The mechanism, popularly known as the ‘Kaberuka Proposal,’ is aimed at raising $1.2 billion (about Rwf898 billion) annually to reduce heavy dependence on external partners to finance Africa’s development projects.
The formula was proposed by former African Development Bank president Donald Kaberuka during the Kigali AU summit and its implementation was expected to start this year but is likely to take longer to implement as some countries are not ready the proposal.
A number of countries have asked for additional time to ready themselves, citing reasons such as binding commitments while others require legislative procedures in their respective countries.
Under the new formula, countries’ contributions would be increased through 0.2 per cent levy on eligible imports, which is expected to raise about $1.2 billion every year.
Beginning this year, the levy was to be collected by tax collection authorities of African countries and channelled through central banks of member states.
But, according to the Commissioner of the Economic Affairs at the Union, Anthony Mothae Maruping, some countries have requested for additional time before they commence implementation.
“They have requested to be given 2017 to adjust. Some would like to make legislative adjustments to ensure that it is within the law while others have customs union commitments, which would need to consult further,” Maruping told journalists at a news briefing in Addis Ababa, Ethiopia, yesterday.
He said regional blocs such as Southern African countries have similar common tariffs and would need to make more consultations on the way forward.
The East African Community, too, has a similar tariff whereby import levy arrangement of 1.4 per cent is earmarked for joint infrastructure projects.
Maruping said some countries are ready to commence immediately but they require a similar level of preparedness.
“Others have no problem while some need to prepare internal systems. We hope that by end 2017 they will be ready to begin implementation,” he said.
However, Maruping said there had been some progress.
“We have been meeting including in Washington on the sidelines of World Bank meeting and a lot of progress has been made, we have clear terms of reference on the implementation,” he added.
The African Union has previously heavily relied on donor support for funding, which experts say affects and influences the bloc’s priorities and approach to dealing with continental affairs.
For example, to finance last year’s budget, which was about $475-million, international partners and donors contributed up to 76 per cent of the total which experts say could have caused the body to compromise on certain actions.