AU budget: He who pays the piper calls the tune

The African Union (AU) is a result of an age-old process that stimulated a sense of solidarity and unity among Africans and other people of African descent. It is the continuation of the Pan-African movement, which had its roots in Black Nationalist movements in Europe and America.

Prior to the birth of the OAU, the predecessor of the AU, there was an inter-state politics in Africa which was characterized by growing rivalry between the Casablanca and Monrovia group of states. The Casablanca group was principally led by Kwame Nkrumah, Sekou Toure, and Madibo Keita. This group had a more radical approach involving the creation of the federation of African states with joint institutions with a joint military command. The Monrovia group, on its part, was constituted by the Brazzaville group including most of the moderate Francophone states such as Ivory Coast, Senegal, Liberia, etc. plus members like Ethiopia, Nigeria and Somalia, which were somewhat neutral. The group stood for the protection of national sovereignty, territorial integrity and independence of its members.

The main contention can be summarized as to whether the organization should lead to a union of states or merely to an association of the independent units. Both groups had a lot in common and these were emphasized by the mediation of the relatively neutral states like Ethiopia leading to the establishment of the OAU in Addis Ababa on May 1963. The OAU as an association of the independent units prevailed over the creation of a union of states. The latter view had to wait for another favorable historical ground to be a reality. That time seems to arrive half a century later with a consensus to achieve the United States of Africa in a gradual approach.

Continental Integration

A gradualist approach to formation of the United States of Africa sees regional political and economic integration as a precursor to continental integration and rightly so. Many African countries have relatively small population, hence, small economies, which makes it hard for them to be competitive at the global level and develop industries and infrastructure that would enhance productivity and growth. Regional economic integration generates powerful economies of scale and allows free movement of goods, capital and people across borders – permits the formation of large regional markets.

The idea of continental economic integration was enshrined in the 1991 Abuja treaty establishing the African Economic Community (AEC), which was adopted under the auspices of the OAU in June 1991. The Treaty envisioned the establishment of the African Economic Community (AEC) as a goal achieved through the development of Regional Economic Communities (RECs), which would eventually fuse to create the AEC. With an emerging need to come up with an institution that would combine OAU’s political nature and the AEC’s economic character. African leaders met at an extraordinary summit of the OAU on September 1999, to discuss the formation of a ‘United States of Africa’. It was there that the African leaders adopted the Sirte Declaration, which called for the establishment of The AU.

The AU is supposed to be a forum to drive and accelerate the integration process until its conclusion, i.e. the establishment of the United States of Africa. Working towards this goal, the AU has so far recognized seven and incorporated them in its grand continental plan, Agenda 2063.

Funding the Pan-African dream

Here is the catch. The organization entrusted with this enormous mandate is an underfunded institution heavily dependent on “development partners” (a new-speak for foreign donors) to run its programmes. The 2013 budget was a mere $395 ml ($522 ml approved for 2015), which was roughly equal to ECOWAS budget, a 15 country West African regional body.

The operational budget of the AU is almost exclusively from the contribution of member states while “partners” almost exclusively cover the programme budget. The trend does not instill much confidence as the share of budgetary contribution by “partners” rose to 65% of the total budget in 2014. If the AU was just a local NGO working in Ethiopia, with this contribution ratio, it can only be registered as a “foreign” NGO according to Ethiopian law.

Of this meager amount, only about 67% of the planned programme budget gets to be spent, delayed release of funds and lack of implementation capacity accounting for the underperformance. The delay in the release of funds is the consequence of dependency.

The lack of implementation capacity however, is mainly the outcome of the meager operational budget allocated to a commission that is supposed to attract the best of African intellectuals and run an integration of 54 states. The average annual member states contribution is $ 119.85 ml even though estimates show it should at least be $200 ml.

There is more. Even the meager portion obtained from contribution of member states is riddled with holes. First, the amount is concentrated on a few nations since 66% of it comes from just six nations namely Tunisia, Algeria, Egypt, Libya, Nigeria and South Africa. The other problem is delayed payments, e.g. by mid 2012 only 11 of the 54 states paid their dues. Member states arrears are also a burden as seen by the fact that only 19 member states were totally paid up by the end of September 2013 as 8 nations (Libya, Sudan, Kenya, Cameroon, Senegal, Madagascar, Tanzania, Uganda) with the biggest arrears while only 4 (Gabon, Zambia, Nigeria, Ethiopia) had substantive advances for 2014.

Realizing that the status quo is unsustainable, the AU has since 2005 been discussing and reviewing proposals for ‘alternative sources of financing’.

This issue found momentum again at the 17th Summit in June 2011 which was held after Barrack Obama bombed a major contributing member, Libya, exposing the shaky financial ground of the AU. That point is probably the only unintended favor Africa got from Obama. The summit resulted in a decision to expedite the setting up of a High Level Panel on Alternative Sources of Financing the Union.

This Panel, also known as the Obasanjo Panel, named after the former President of Nigeria Olusegun Obasanjo, reviewed the previous “Wade Proposals”, which was prepared by former President of Senegal Abdoulayi Wade and finally settled on only 2 options. These options are a $2.00 hospitality levy per stay in a hotel and a $10.00 levy on flight tickets for flights originating from Africa. It is estimated that these proposals could raise the AU’s Budget to $ 2 billion a year.

After a year and half and two sessions, a decision is yet to be made.

It is now up to the next ordinary session of the AU in January 2015 to move it forward although you should not hold your breath.

Considering the excruciating pace of the process, it is only fair for an African to question the ability of the AU to implement this monumental mandate without attaining financial independence. The only possible scenario of that happening will only be if the organization adjusts its work to sync with the interests of its donors, which will run contrary to its mandate, the establishment of an independent United States of Africa.

Hence, the status quo only leads us to conclude that there is a need for a significant need funding of the AU solely sourced mainly from Africa and it should be achieved sooner. Short of that, the AU will lack the capacity and legitimacy it needs to realize the Pan African dream. That would be such a pity.


Fetsum Berhane is an Ethiopian resident, economist researcher and a blogger on HornAffairs.

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