Here’s how ECOWAS ended up with a War Chest of $US252million (3), and How the African Integration narrative is far from over!

By E.K.Bensah Jr

Last week, I touched on proposals for innovative financing paths; the case of ECCAS and its levy on imports; the case of UEMOA/CEMAC; and the case of ECOWAS.

On the proposals, you may re-call that a study by the AU commission had proposed no less than eight scenarios, which included (a) tax on imports; (b)tax on revenue from hydrocarbon exports; (c)tax on insurance premiums; (d)levy on airline tickets, but that the AU had proposed three, which are: : (i) levy on imports from the rest of the world; (ii)levy on airline tickets; and (iii)levy on insurance policies.

ECCAS has a levy, which it calls community contribution for integration (CCI), which is calculated as 0.4%. UEMOA’s levy rate is 1%, whereas ECOWAS’s is 0.5% of the value of goods imported from third countries.  So far, so straightforward. The real story and one I hope has left one salivating long enough is how on earth ECOWAS ended up with a so-called “war-chest” of 252million. If you know your figures for how much ECOWAS made between 2007 and 2009 from imports, it is not difficult at all to understand how between that period, it managed to bag that amount.

In ECOWAS, during 2007 and 2009, revenue from the Community levy amounted to US$230, 314 and 360 million respectively. In that same period, the approved budgets of ECOWAS institutions run to US$160, 220 and 274 million, respectively. This left a positive balance of US$72, 94 and 86 million, respectively.

It is clear that in the three years, ECOWAS achieved “a cumulative positive balance of US$252million” and recorded in its books as carried forward earnings. This balance is what the AU’s “Bulletin of Fridays of the Commission” considers a veritable “war chest”, offering ECOWAS “considerable leeway in implementing its mandate”. There are two significant things about this development. First, that while the world was going through the financial crisis in 2008, here was West Africa, through its innovative fund-raising mechanisms raising revenue and secondly, getting a surplus for good measure.

Levy on Insurance Policies and airline tickets: Africa Solidarity tax

Even after all this good news on financing African integration, the story is not quite over – as exemplified by discussions on more levies. In this specific proposal, which is also known as “a citizen tax”, the idea is to get this levy to involve “all African citizens” through insurance subscriptions: automobile and real estate. Heath insurance is exempted.

The so-called “solidarity tax” is so-named because most of the tax is supposed to come from G8 and G20, and can be applied to flights leaving Africa and with destinations in Africa; flights departing from Africa with destinations outside Africa, with the Commission of the African Union proposing US$2 for short distances, and US$5 for ling distances.

How Senegal innovatively-finances (integration)…and way forward?

Truth be told, ECOWAS member state Senegal has been doing this for a while. In the country, the tax applies only to flights departing from airports in the country. Collection of the levy is done through IATA for all airlines associated with it. At its monthly payment operations, IATA pays the share due Senegal into a bank account (escrow account) held with the BNP Paribas.

If we stop and reflect on this for a nano-second, can we really say we need to continue depending on donors, or is it perhaps not time to re-consider that fallacy of needing an “aid-exit” plan to woo investors and so-called FDI? If we can get past this mindset – and I believe the sub-region has the capacity to do so, as exemplified by my post last year where I expatiated on how instrumental the Ecowas Bank for Investment and Development has been – then the sky will certainly offer itself as the proverbial limit on seed funding for continuing the narrative of African integration which continues to be written summit after summit.

AU summit: 23—30 January, 2012

Speaking of which, this week of 23 January is a great week for African integration as between 23 and 30 January, the AU hosts its 18^th summit in the home of the AU, with the theme “Boosting Intra-African Trade”.

Reports online indicate that although the main theme is intra-African trade, it will be a significant summit for the manner in which it will cover the following topics: Election of the Chairperson; the Deputy Chairperson and the other commissioners; the state of peace and security in Africa in relation to the North Africa Revolution; the issues of “shared values”: good governance; elections and human rights; the humanitarian situation in Africa; the review protocol of the African Court of Justice and human rights; the future of the Pan-African Parliament; the way forward on the political transformation of the AU.

It goes without saying that this will be the first AU summit without Gaddafi, and also the first that will include the full participation of the new Libyan and Egyptian authorities. It remains an exciting time for the AU on account of the fact that the AU is no less than 10 years this September. No less than the Chinese President Hu Jintao will be in Addis to officially hand over the new gargantuan AU Headquarters to the African Heads of State.

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://critiquing-regionalism.org). 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.