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Alternative Sources of Financing the African Union

Alternative Sources of Financing the African Union

Addis Ababa, 15 July 2011 – In what could be described as a major boost to the Commission’s quest to secure adequate, reliable and predictable financing for the activities of the African Union, the Commissioner for Economic Affairs, Dr. Maxwell M. Mkwezalamba, met with Mr. Olusegun Obasanjo, former President of the Federal Republic of Nigeria, at his residence in Abiokuta, Ogun State, Nigeria, on Tuesday, 5 July 2011. The Commissioner travelled to Nigeria as a special envoy of Dr. Jean Ping, Chairperson of the AU Commission, to present a letter appointing former President Obasanjo as Chairperson of the High Level Panel on Alternative Sources of Financing the African Union.

It will be recalled that the Executive Council, at its Ordinary Session held in January 2011, endorsed the proposal by the Commission to support the consultations on alternative sources of funding through a high level panel of eminent personalities with a view to engaging with Member States and coming up with definitive proposals for this long standing issue. During the recently concluded Malabo African Union Summit, the Assembly reiterated the decision and requested that the Panel completes its work and submit a report to the next Ordinary Session of the Assembly scheduled for January 2012 in Addis Ababa. The appointment of former President Obasanjo was one step towards the fulfillment of the requirements of the aforementioned decisions. H.E. Obasanjo welcomed the appointment and pledged his full support to the Union’s efforts.

The Commissioner had also met with H.E. Dr. Salim Ahmed Salim, former Secretary General of the Organization of African Unity, at his residence in Dar es Salaam, Tanzania, on 23 May 2011 for the same reason. H.E. Dr. Luisa Dias Diogo, former Prime Minister and Minister of Finance of the Republic of Mozambique and Member of United Nations Secretary General’s High Level Panel on Global Sustainability, and a Personal Representative of the President of the Republic of Equatorial Guinea and Chairperson of the African Union, H.E. Obiang Nguema Mbasogo, are also expected to serve as members of the Panel.

Following the completion of the appointments, the Panel is expected to hold its inaugural briefing session in Addis Ababa during the first week of August 2011. Thereafter, members of the Panel are expected to embark on extensive consultations with Member States and Regional Economic Communities (RECs) on this very important subject during the months of August, September and October 2011. The Panel will hold a final meeting sometime in November 2011 to adopt its report prior to its presentation to the African Union Assembly in January 2012.

It is clear that the current financing arrangement for the African Union dependent on assessed contributions of African Union Member States and Partner funds is no longer adequate, sustainable and reliable to meet the growing financing needs of the Union. Delays in payment of contributions by Member States, coupled with the difficulty in accessing partner funds, for example, are increasingly impacting negatively on the pace of implementation of the Union’s activities, projects and programmes. These are major challenges that deserve urgent attention and all the technical analyses conducted so far have confirmed that options identified as alternatives to the current system of financing will not only have a significant revenue impact for the Union but will also be equitable and efficient. The options include import levy, tax on air tickets and tax on insurance premiums. Some of these options are already being applied and have proven extremely successful in some Member States and RECs, such as tax on air tickets in Senegal and import (community) levy in the Economic Community of West African States (ECOWAS). It is the Commission’s wish that this long standing issue would be acted upon decisively once and for all for inaction is no longer an option if the Union is to succeed in addressing its numerous challenges.

AU Commission, Ethiopia

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