Double-edged sword for AU
Member states, partners impede organisation’s quest for financial autonomy
THE AU has developed ambitious plans for the continent, ranging from security to trade. But when it comes to financing these ambitions the organisation is caught between a rock and a hard place.
Since the AU does not have an independent source of income, it either has to affront members for their irregular payments or remain dependent on external partners.
Financing the AU goes to the heart of its pan-African agenda, which is driven by de-colonial integration and development objectives. Having examined the finances of numerous organisations in the Global South, we observe that the double dependency on member states and external donors poses important challenges.
Unsustainable funding has hindered the AU from developing its full potential. Irregular payments from member states and fragmented external funding have led to repeated cash flow crises, often with serious consequences. In 2016, the AU’s mission in Somalia failed to pay allowances to its soldiers for six months.
Achieving financial autonomy requires member states to improve their payment record .
Although the 55 member states have in principle agreed to provide the AU with reliable and adequate financial means, African governments do not always consider it a priority in practice. Many states pay their yearly fees late or only in part. However, the AU is not powerless.
In 2018, a three-stage sanctions regime came into effect to deal with defaulting states. The longer a member state fails to pay its financial contributions, the more rights it loses. While some consequences are primarily symbolic, it severely curtail their leeway in foreign policy, such as losing the right to host summits or run for office.
In an institution that traditionally prefers consensus to confrontation, the imposition of sanctions constitutes a drastic measure. In one recent case, the new assertiveness has proven to be effective. In June this year, South Sudanese officials were barred from attending AU meetings. The country rushed to reduce its arrears to have their sanctions lifted.
However, the implementation of AU financial autonomy is much harder to achieve than general political agreements as it generates conflict over public finances at the national level.
The urgency to cover AU membership dues is doubtlessly relayed by ambassadors in Addis Ababa, but time and time again, domestic budgeting issues undermine the disbursement.
Many treasuries are reluctant to give in because AU membership is a sizeable budgetary item. For example, in 2019 South Sudan’s contribution to the AU amounted to $2.2million (about R32m). This is a considerable percentage of its foreign ministry’s annual budget of $56m and far more than any of its other membership fees.
This widespread situation limits the capacity of the AU. As of October, one third of member states were under sanctions for non-payment. Overtly pushing them for payment would generate a plethora of diplomatically embarrassing situations.
The three-tier sanctions regime is part of broader financial reforms which aim to reduce the heavy dependency of the AU on external funding. However, international partners continue to flock to their “donor darling”.
Thanks to the reforms, the AU Commission is becoming more efficient and transparent in its spending. As a consequence the reforms that were supposed to wean the AU off its external dependence have had the unintended consequence of making the AU a more attractive partner for development aid.
In addition, the Covid-19 crisis amplified the AU’s attractiveness to international partners. It became a clearing house for donations to the continent. The African Centres for Disease Control has seen record contributions, both from traditional partners such as the EU and new private sector actors. Although this income is welcome, it ultimately undermines the AU’s claim to financial autonomy.
For now, AU financial reform has not durably addressed the low payment morale among its members. Its new sanctions regime is a step in the right direction but many member states still prioritise other expenses. And the Covid-19 crisis could further increase the rate of non-payment,.
Eventually, the AU will need to secure its own sustainable source of income, starting with the 0.2% levy on imports from outside the continent. The AU will have to change its approach in at least one of the following:
First, a decrease of the budget, which the AU Commission has already proposed, would reduce the financial pressure.
Second, acknowledging international partners as permanent stakeholders would enable the AU to treat them as similar to members by enforcing more transparency and giving them sanctionable duties.
Lastly, naming and shaming members for underming the AU’s culture of consensus.