Deconstructing ECOWAS’s war chest of $US252million, or a Brief Tale on Financing African Integration (1)

“The Accidental Ecowas & AU Citizen”:

Deconstructing ECOWAS’s war chest of $US252million, or a Brief Tale on Financing African Integration (1)

By E.K.Bensah Jr

One of the major highlights of the festive season was hearing on no less than the BBC world service business news that apart from Africa’s supposed rise (which has spawned the now-platitudinous “Africa rising” tag), the regional economic communities are doing well. Truth be told, as in the case of the Economist magazine apologizing for calling the African continent “hopeless” in 2001 in its Dec 2011 edition, we really did not need the venerable BBC to acknowledge the presence of the RECs to know that they are making waves. 

Those African integration actors at the UN Economic Commission for Africa(UNECA); the African Union(AU) and the African Development Bank(AfDB) who have been working tirelessly and assiduously to ensure the narrative is consistent with that of the Abuja Treaty are perhaps the unsung heroes of the fight for continental integration.  It is good to know that their efforts have not been in vain. The fact, though, is that these achievements cannot have happened without resources.

It is an article of faith of the continental integration naysayer to claim that institutions like the AU and the RECs will never get far because apart from the political will, they do not have resources. Those of us that have grown thick skins to this kind of criticism appreciate the castigation as a valid point, but also readily dismiss it as we know this case to be untrue. While it is a well-known fact that a major part of the funds that the AU and institutions like ECOWAS receive is that of donors, it is also true that apart from ECOWAS, another AU-REC—the Economic Community of Central African States(ECCAS)—, and two other non-AU-RECs—UEMOA(West Africa) and CEMAC (in central Africa)—have innovative financing methods. Now, the key word here is “innovative”. 

History of Innovative Financing in African Integration

The fact is that the recondite idea of innovative financing for organizations like the African Union is not new as they have been ongoing since 2001. The actual idea emanated from a summit in Lusaka, Zambia in 2001. In conceiving of the AU, the Heads of State and Government of the AU appreciated the fact that they needed to pursue the idea of a new source and mechanism to finance the AU. In doing so, they realized that there were limitations to the existing financing mechanism. To this end, they authorized the Commission of the African Union to undertake studies, with the assistance of experts, to identify what one AU press release of December 2010 calls “alternative modalities of funding” the programmes of the then-OAU.

 

Currently, the African Union funds are predicated on two sources of financing: member states contributions and partner’s contributions. It is conceivable that the major constraint associated with these two sources constrain the AU from implementing its integration agenda. At no time has this become as important as now when the effects of the 2008 financial crisis are affecting Africa in different ways. As a consequence, AU policymakers believe it is high-time the AU got its act together by implementing the decisions of the Lusaka Summit.

Explaining the Lusaka Appeal

The Lusaka Appeal is contained in Decision AHG/Dec.160(XXXVII), which reads as follows:(1)The Conference authorizes the Secretary-General to: (i)Explore the possibility of mobilizing extra-budgetary contributions from member states, OAU partners and others; (ii)Undertake studies, with the assistance of experts, to identify alternative modalities of funding the activities and programmes of the OAU, bearing in mind that the Union cannot operate on the basis of assessed contributions from member states only, and to make appropriate recommendations thereon.” It goes on to list challenges, which include funding that fluctuates and is “paltry”; funding sources that are limited and “are not diversified and remain permanently uncertain”; the “largely inadequate” and “unstable” funds that are given to the AU, and which are not given “in real-time”.

It finally concludes that “the one and only solution allowing Africa to meet all these challenges lie in Africa making available to the AU and its organs, their own resources that are stable, substantial and more or less permanent; and hence the Lusaka Appeal of July 2001”.

How the AU Commission has responded

The study was first validated by independent expert, followed by experts from member states. At the request of experts of member states, the study was further complemented by an impact study measuring the effects of the proposed instruments on the economies of individual African countries. Truth be told, all the theoretical issues, such as the practical aspects of introducing the initiatives or the adoption of alternative sources of funding, have been explored in-depth. Furthermore, the study has even been the subject of two extraordinary conferences of African ministers of Economy and Finance (CAMEF). 

As one might expect, the implementation of the Lusaka Appeal has been fraught with challenges, which include, for example, country delegations. Most often than not, the experts working on the Appeal are not the same ones from one meeting to another; and the government changes in our countries also change with every government, inevitably taking with them vital information that would have been necessary as input for the implementation.

This trend has inevitably derailed the “virtually-permanent achievements” of previous meetings, with each new delegation wanting to make its mark on the proposed instruments.

The good news is that a decision was adopted at the 15^th ordinary sessions of the Assembly of the AU in Kampala, Uganda, in July 2010, and that decision reflects the firm political will of the Heads of State and Government to finalize the issue. Furthermore, the political will expressed by Heads of State and Government in the Kampala Decision invites experts as well as the ministers, to truly address the issue and make clear, consensual and concrete recommendations very much-needed for innovative financing to make the impact it so needs for African integration. 

In the second part, we’ll be looking at the scenarios for innovative financing; the different cases of the regional economic communities; as well as how ECOWAS ended up with a surplus of USD252million in its coffers from its innovative financing under the ECOWAS Levy.

In 2009, in his capacity as a “Do More Talk Less Ambassador” of the 42^nd Generation—an NGO that promotes and discusses Pan-Africanism--Emmanuel gave a series of lectures on the role of ECOWAS and the AU in facilitating a Pan-African identity. Emmanuel owns "Critiquing Regionalism" (http://regionswatch.blogspot.com ). Established in 2004 as an initiative to respond to the dearth of knowledge on global regional integration initiatives worldwide, this non-profit blog features regional integration initiatives on MERCOSUR/EU/Africa/Asia and many others. You can reach him on ekbensah@ekbensah.net / Mobile: +233-268.687.653.