South Africa is set to contribute even more to the African Union (AU) under a new self-funding model adopted at the continental body’s summit in Kigali, Rwanda this weekend.
From 2017 all countries will be required to impose a levy of 0.2% on all their “eligible imports” to contribute to the AU, which meant the body’s income will be boosted to $1.2bn (R17.16bn) from its current $447m (R6.4bn) budget.
The eligible imports excluded products such as medicines, fertilisers and baby food.
Member states currently contribute only 24% of the body’s budget, with foreign donors, including the World Bank, the European Commission and developed countries contributing the rest.
South Africa’s contribution in 2015/16 was one of the biggest from a single country at just over $33m (R472.45m), but it is unclear what its portion would be according to this formula. A well-informed source said South Africa would be able to pay this through the Southern African Customs Union, just like countries in other regions would pay their contributions through their customs unions, but the new formula meant a rise in South Africa’s contribution.
Rwanda’s finance minister Claver Gatete told journalists at the summit on Sunday that “there have been a number of models that were discussed in the past, but this time the heads of state were determined to adopt a model so that there are no more discussions”.
The matter has been dragging on for a number of years, with countries failing to agree on adopting a $2 per stay hotel levy and a $10 per flight air ticket levy, as well as SMS levies, as suggested in a report by former Nigerian president Olesegun Obasanjo.
Smaller countries complained that this could affect their tourism industries and economies negatively.
Default on payment
Gatete said the AU’s aim was to fund all of its activities, 75% of the AU Commission’s programmes and 25% of peacekeeping on the continent, with $65m (R930m) going to each of the continent’s five regions.
Peace operations could range depending on the conflict.
Gatete said the current model was chosen because it “will give (the AU) even more money than we are currently generating. It will be predictable, it will be very easy, it will be collected by the revenue authorities in our countries, and it will be in an account opened in a central bank, and the money will be disbursed from that”.
He said the previous proportionally indexed GDP-based formula presented problems because some countries defaulted or delayed payment, which “affected the functioning of the AU”.
Under the new model, states would be sanctioned for not paying their contributions.
At the opening of the AU heads of state summit on Sunday, leaders praised the AU and its outgoing chairperson, Nkosazana Dlamini-Zuma, for adopting the new proposals.
Dlamini-Zuma said the adoption of the new funding guidelines was a “historic landmark decision”.
She told leaders: “You took an unprecedented leap forward for African self-reliance and dignity. We congratulate you for this bold and visionary leadership that you have shown.”