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The AU's new funding model to focus on preventing conflicts
6 October 2016

The clock is ticking for the implementation of the new funding model for the African Union (AU), based on a proposal by the former head of the African Development Bank, Donald Kaberuka.

Kaberuka’s plan, to finance the AU through a levy of 0.2% on imports, was adopted unanimously by heads of state at the 27th AU summit in Kigali in July 2016. AU member states committed themselves to implement the levy from 2017. Many questions remain, however, about the modalities of this funding and whether the deadline will be met.

The new mechanism to fund the AU, proposed by Donald Kaberuka, the AU High Representative for the Peace Fund, could have far-reaching repercussions for the pan-African organisation. The plan, which has been adopted by the AU Assembly, entails a 0.2% import levy on all eligible imports entering the continent, to fund the AU. The expected revenue is US$1.2 billion in 2017. The import levy will fund ‘the AU’s operating, programme and peace and security operations budget’. It should contribute US$325 million to the Peace Fund in 2017, rising to US$400 million in 2020, while the remainder will fund the AU’s general budget.

The new mechanism to fund the AU could have far-reaching repercussions
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African ministers of finance adopted guidelines on the modalities of implementing the import levy during a meeting in Addis Ababa on 15–16 September. This was after Kaberuka had briefed the Peace and Security Council (PSC) on 5 September.

These guidelines – which have not been made public – are likely to include details regarding the delimitation of regions, the definition of ‘eligible imports’ and the regional mechanisms for collecting the funds.. The challenge would be to meet this ambitious timeline for operationalisation starting in 2017.

Secure funding for the AU’s preventative efforts

A new report on the Peace Fund, which will also be financed through the 0.2% import levy, has been published by the AU’s Peace and Security Department. According to the report, entitled ‘Securing predictable and sustainable financing for peace in Africa’ and dated August 2016, the Peace Fund will finance three sets of activities: mediation and preventive diplomacy; institutional capacity building; and peace support operations. Moreover, a crisis Reserve Facility will be established to fund rapid responses to unforeseen crises. The report advocates that the budget of this facility should not be less than US$50 million.

A major innovation of the report is its proposal to earmark funding for activities related to mediation and preventive diplomacy. The activities concerned are: the Continental Early Warning System, the Panel of the Wise, the mediation support unit, the special envoys appointed by the AU Commission (AUC) chairperson and the AU liaison offices.

Until now, the funding for these activities was on an ad hoc basis and relied mostly on support from AU partners. The report proposes to allocate US$37 million to these activities starting 2017, increasing the amount to US$43 million by 2020. This means that almost 10% of the Peace Fund will be allocated to preventive efforts.

The rationale behind this shift is that an increased effort to prevent crises and conflicts from erupting could avoid the high financial costs associated with peacekeeping operations. In the past, the lack of available funding for preventative action ended up affecting the impact of the AU’s response to emerging crises.

Increased efforts to prevent conflict erupting could avoid the high cost of peacekeeping operations
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The challenge in implementing this provision lies in the eligibility criteria for the activities to be funded. Since there is an increased call to address not only the immediate causes but also the roots of conflicts, the AU would have to balance its funding between direct and structural prevention.

A closer partnership between the UN and AU on peace operations

The target of collecting US$325 million in 2017, and US$400 million in 2020 for the Peace Fund, would meet the requirements set by AU member states in Johannesburg last year. Member states committed to funding 25% of the AU peace and security budget by these dates, with the remaining 75% to be funded by the international community, mostly through UN-assessed contributions.

The report on the Peace Fund proposes that UN-assessed contributions to AU-led peace support operations be undertaken under UN Chapter VIII, related to regional mechanisms, and Chapter VII, related to peace enforcement missions. The report acknowledges that such funding would be on a case-by-case basis.

A new decision-making process

Another innovative proposal by the report is a new decision-making process for AU-led peace support operations receiving UN funding. This process would include an initial appraisal of the crisis by the AUC; a letter of intent by the AUC chairperson to the UN secretary general to participate in a joint assessment of the situation; an AU–UN joint assessment mission on the ground, to develop a strategic mission concept; and a report by the AUC to the PSC that includes a strategic mission concept, a preliminary budget and the overall funding of the operation. Then the PSC would decide whether to adopt a decision acknowledging the financial implications for the AU and requesting authorisation from the UN Security Council (UNSC). The UNSC would then decide whether to vote on a resolution authorising the operation.

These operations will necessarily have to comply with UN standards
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These operations will necessarily have to comply with UN standards regarding financial management, human rights, transparency and access to information.

The mission would therefore be jointly implemented, with the AUC chairperson appointing the head of the mission and the force commander. In terms of reporting, the AUC chairperson would report to the PSC and the UNSC. Only the PSC would decide on the review and adjustment of the operation’s mandate.

Will the UN and troop contributors relinquish control?

This decision-making process creates an opportunity for a close partnership at various stages – from the situation assessment to the consultations between the PSC and the UNSC. However, there are questions regarding the flexibility of the UNSC when it comes to PSC decisions. The implementation of this provision will depend on the acceptance by UN troop and financial contributors to relinquish their control over peacekeeping operations for which the UN provides 75% of funding.

There is a shared view among AU member states, that if they reach their target of funding 25% of the budget for AU peace support operations, then it is the responsibility of the UN to fund the rest. Many UN member states, especially its top contributors, do not agree with this. Among the reasons for their reluctance to guarantee such funding is the possibility that assessed contributions could be used for missions that may not fit within the UN peacekeeping doctrine. For example, the UN usually insists that there is an existing peace agreement before deploying blue helmets, something the AU does not require.

The UN usually insists that there is an existing peace agreement before deploying blue helmets
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The challenge then would be to align what the AU considers to be its comparative advantage – offensive peace enforcement missions in high-intensity conflicts – with the doctrinal requirements of the UN.

AUC chairperson to oversee management of the Peace Fund

The report proposes a governance framework for the Peace Fund that will be located in the office of the AUC chairperson. The following structures would be established:

  • A secretariat in charge of the management of the fund that will report to the AUC chairperson. The secretariat will be responsible for approval of the project eligible for financing, monitoring and evaluation, administration, partnerships, resource mobilisation and advocacy.
  • An executive committee will provide the executive oversight of the fund. It will be presided over by the chairperson and consist of the deputy chairperson, the commissioner for peace and security and commissioner of political affairs.
  • An Independent Evaluation Group will be in charge of assessing the impact of the fund, and review its performance and management.
  • A board of trustees will provide oversight. It will be composed of the AUC chairperson and deputy chairperson, the commissioner for peace and security, eminent persons with experience in peace and security and two non-African partners contributing to the fund.

Region-based funding could reduce the power of big states

Another important aspect of this new mechanism is the shifting of the overall funding from a state-based to a regional arrangement. Each region of the AU is supposed to contribute US$65 million through the collection of the import levy, starting 2017. The modalities of the collection are still under discussion.

One of the implications of this change is that it will reduce the organisation’s dependency on a small group of contributors (Algeria, Egypt, Nigeria, South Africa and Angola). It will democratise AU funding by empowering regions.

It will also have an impact on the decision-making process regarding peace operations. The assumption is that regional mechanisms would play a more important role since the funding is regionally based. However, the governance structure proposed by the report does not include regional mechanisms, despite the critical role they play in preventive diplomacy and mediation. The proposed structure is only composed of AUC officials based in Addis Ababa. This situation, which creates a gap between the origins of the funding and the governing structure of the Peace Fund, could hamper coordination between the AU and the regions.

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