The 27th African Union (AU) summit ended Monday in Kigali, Rwanda, with a commitment for the first time in the continental body’s history to come up with new strategies to reduce dependence on donors.
The summit brought together more than 3,500 delegates from 54 member states, including 35 heads of state and government for the first time, to re-design the current finance framework of the African Union (AU).
Participants said that the existing financing mechanism ensures that money is allocated in accordance with the priority projects that have long been proved to be inadequate to achieve self-financing target.
They said that the African Union has set ambitious self-financing targets of US$1.2 billion annually to reduce heavy dependence on external partners to finance development projects.
In the implementation phase, the former President of African Development Bank (AfDB), Donald Kaberuka, has been assigned the task to work out a self-financing formula practical to member countries.
According to the new auto-financing mechanism to be implemented from January 2017, countries’ contributions will be increased through 0.2 per cent levy on eligible imports which is expected to raise about US$1.2 billion every year.
It said that the levy will be collected by tax collection authorities of African countries and channeled through central banks of member countries.
“This will allow member countries of African Union (AU) to contribute about 73% to the budget organization,” the executive secretary of the United Nations Economic Commission for Africa, Carlos Lopes, said.
According to him, the continent has the capacity to self-finance if appropriate mechanisms are put in place.
