Sustaining the African Union’s Peace Fund
Despite recent strides in fundraising, the AU Peace Fund should explore alternatives amid immense challenges.
Since its revitalisation in 2018, the African Union (AU) Peace Fund (PF) has been at the heart of Africa’s quest for financial autonomy and ownership of its peacemaking initiatives. It is the financial pillar of the African Peace and Security Architecture (APSA) and covers three stabilisation windows, namely mediation and preventive diplomacy, peace support operations (PSOs) and institutional capacity building and readiness of other APSA structures.
Over the last five years, the AU has stepped up efforts to fully implement it, addressing structural challenges that had halted progress of the peace fund for 30 years following its establishment in 1993. The challenges above related to, among others, the lack of an effective governance structure and assessment scales for member state contributions. Article 21 of the PSC Protocol calls for contributions from various stakeholders, including AU member states, the private sector and individuals.
The governance structure alleviates doubts about the AU’s capacity to use funds appropriately and timeously
It prescribes possibilities of resorting to appropriate fundraising activities in light of which the fund’s secretariat has launched an intense resource mobilisation process. This led to the introduction of ‘innovative mechanisms for financing peace’ on 20 July 2024, on the sidelines of the mid-year AU and regional economic community coordination meeting in Accra, Ghana. These mechanisms had a twofold objective. The first was to meet the PF’s US$400 million initial goal, and the second was to ensure sustained replenishment of the fund through increased mobilisation of the African private sector and citizenry.
While the fundraising ceremony was a success, securing substantial commitments from crucial stakeholders, the journey to sustainability is an ongoing challenge. As Dr Donald Kaberuka, the AU High Representative for the PF, emphasised, ‘(…) Africa needs more resources’ than the amounts collected during the ceremony, given its enormous peace and security issues.
Peace Fund progress
Significant progress has been made in making the Peace Fund fully functional. On one hand, the AU addressed the above-cited pressing structural matters by establishing a robust governance structure and agreeing on modalities for using available funds. On the other, it made substantial strides in resource mobilisation.
The fund's governance structure comprises a high representative – who ensures political uptake – backed by a board of trustees, an executive management committee, an independent evaluation group, a secretariat and a fund manager.
Chart 1: AU Peace Fund governance structure
 Source: AU Peace Fund secretariat
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It has been established to respond to crucial needs, including proper funds management and continuous engagement of key stakeholders to attract more resources. The governance structure also builds confidence among contributors, alleviating doubts about the AU’s capacity to use funds appropriately and timeously to achieve planned results. Member states’ agreement on the use and disbursement of resources was, similarly, a milestone. It has given the Peace Fund clear direction in structuring its expense monitoring and a solid basis to properly pitch the need for private contributions.
The fund has exceeded its initial goal of US$400 million. Until 20 July 2024, it stood at US$398 million – US$392 million from member states (98%) and US$6 million from private voluntary contributions (2%). As the innovative financing mechanisms was launched on the same day as part of the secretariat’s decade-long fundraising, the fund attracted more resources from the private sector and individuals.
While the African Export-Import Bank (Afreximbank) pledged US$210 million, with instalments over the next three years, others such as Standard Bank Group and Ethiopian Airlines donated US$1 million each. Afreximbank's contribution will be disaggregated into various components, including grants, technical assistance, project preparation facility and seed capital. Accra commitments took the PF’s resources from US$398 million to an estimated US$610 million.
Chart 2: Member state funding vs private contribution
 Source: AU Peace Fund secretariat
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The progress in fundraising instils hope for continental peacemaking, finances always having been a stumbling block. Almost all the 27 African/AU-led PSOs and continental conflict prevention arrangements have faced financial constraints. The African Union Mission for Mali and the Sahel and the African Union Transition Mission in Somalia (ATMIS) are examples. Thus, substantial contributions such as those collected in Accra are an important boost to continental stabilisation efforts. These resources will help the AU sustain its 25% contribution to continental PSOs and realise Africa’s ambition to address African problems with endogenous solutions and financial means.
Relatedly, increased private donations are a significant step to achieving the citizen-driven entity envisioned at the AU’s inception – states and citizens joining hands to address continental peace and security challenges. The trend sparked in Accra seems, according to sources, to have increased the private sector’s appetite to contribute further. In addition, the PF secretariat is exploring avenues to secure larger public donations.
The progress in fundraising instils hope for continental peacemaking, finances always having been a stumbling block
As the AU commendably strives to enhance its response, available funds have yet to be commensurate with the immensity of Africa’s peace and security challenges. For instance, the ATMIS annual running cost was estimated at US$1.5 billion in 2023. Should the AU Support and Stabilisation Mission in Somalia (AUSSOM), become a reality with a similar cost, based on the UN Resolution 2719 75%:25% burden share, the AU will have to contribute US$375 million ― 61.5% of the fund’s current capacity. The remaining US$235 million of the US$610 million will barely cover other missions such as the Multinational Joint Task Force and conflict prevention activities.
Ensuring sustainability
Given the enormity of Africa’s peace and security challenges, the AU must ensure the PF’s sustainability by maintaining its current upward trend and multiplying its resources. This could be realised in two ways. The first is to seize the momentum of Accra to further encourage contributions from the diverse and resourceful African private sector and public. The continent is home to numerous profitable enterprises and charity foundations that could boost the peace fund.
In similar vein, individual philanthropists and the public could potentially be an asset to the fund. To onboard these actors, the PF should sustain its communication strategy, making greater use of digital platforms to sell the benefit of contribution, developing robust crowdfunding approaches and forging increasing bilateral engagements. The secretariat should consider institutionalising private contributions, advocating memoranda of understanding when possible.
Although several investment options are available, real estate and equity deserve thought
It should also consider investing some of the resources collected for mid- and long-term periods through its fund manager. Although several investment options are available, real estate and equity deserve thought. According to projections, Africa will have an average estimated growth rate of 6% in the real estate sector annually in the next four years, which might be an interesting opportunity.
In addition, the continent has vibrant stock markets in almost all regions. For instance, most of the top 10 West African Economic and Monetary Union (WAEMU) stock market companies have registered an average of 10% growth and substantial benefits over the last 20 years despite numerous continental and global shocks. In some cases, according to sources, capital invested has tripled over a five-year period due to sustained average growth of 24.6%, including about 14.6% capital gains and a 10% dividend as the stock value grew (see Table 1).
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Chart 3: Five-year projection with compound interest
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If 10% of PF resources – US$61 million – is invested in one or several WAEMU top companies over five years with compound interest – reinvesting the annual dividend as capital – the initial investment could grow by some 65%. Practically, the initial US$61 million is likely to turn into US$101 million including the US$39.7 million interest generated after five years.
Although one could argue that stocks are volatile, and hence risky, investing with the right approaches and qualified human resources could be highly beneficial for Africa’s peace and security. Dismissing such an opportunity might prove riskier.
