The African Union (AU) has developed ambitious plans for the continent, ranging from security to trade. But when it comes to financing these ambitions the organisation is caught between a rock and a hard place. Since the AU does not have an independent source of income, it either has to affront members for their irregular payments or remain dependent on external partners.

Financing the AU goes to the heart of its pan-African agenda, which is driven by decolonial integration and development objectives. Having examined the finances of numerous organisations in the Global South, we observe that the double dependency on member states and external donors poses important challenges for the establishment of independent and powerful administrations. The AU is a particularly telling case of this trend.

Unsustainable funding has hindered the AU from developing its full potential. Irregular payments from member states and fragmented external funding have led to repeated cash flow crises, often with serious consequences. For instance, in 2016 the AU’s mission in Somalia failed to pay allowances to its soldiers for six months.

Achieving financial autonomy requires member states to improve their payment record. Simultaneously, the AU needs to wean itself from external funding, even if its administrative and institutional reforms make it ever more attractive to external partners.

AU sanctions and member states’ arrears
Although the 55 member states have in principle agreed to provide the AU with reliable and adequate financial means, African governments do not always consider it a priority in practice. Many states pay their yearly fees late or only in part. However, the AU is not powerless.

In 2018, a three-stage sanctions regime came into effect to deal with defaulting states. The longer a member state fails to pay its financial contributions, the more rights it loses (see table below). While some consequences are primarily symbolic, others severely curtail their leeway in foreign policy, such as losing the right to host summits or run for office.

AU sanctions regime for non-payment of assessed contributions. Author’s compilation based on AU Assembly decisions
In an institution that traditionally prefers consensus over confrontation, the imposition of sanctions constitutes a drastic measure. In one recent case, the new assertiveness has proven to be effective. In June 2020, it became public that South Sudanese officials had been barred from attending AU meetings. The country rushed to reduce its arrears just enough to have their sanctions lifted. In another recent case, Tunisia’s foreign minister publicly lamented his country’s first ever sanctions for non-payment.

However, the implementation of AU financial autonomy is much harder to achieve than general political agreements as it generates conflict over public finances at the national level. The urgency to cover AU membership dues is doubtlessly relayed by ambassadors in Addis Ababa, but time and time again, domestic budgeting issues undermine the disbursement.

Many treasuries are reluctant to give in because AU membership is a sizeable budgetary item. For example, in 2019 South Sudan’s contribution to the AU amounted to $2.2 million. This is a considerable percentage of its foreign ministry’s annual budget of $56 million and far more than any of its other membership fees.

This widespread situation limits the capacity of the AU. As of October 2020, one third of member states were under sanctions for non-payment. Overtly pushing them for payment would generate a plethora of diplomatically embarrassing situations. The resulting rumblings in national governments would then provoke a backlash to the AU’s newly acquired sanction powers.

The AU prefers to deal with the delicate issue of non-payment behind closed doors. Public confrontations, as in the cases of South Sudan and Tunisia, are thus not instigated by the AU. They begin when foreign affairs officials relay the AU’s grievances to their governments.

Old dependencies revisited
The three-tier sanctions regime is part of broader financial reforms which aim to reduce the heavy dependency of the AU on external funding. However, international partners continue to flock to their ‘donor darling’.

Thanks to the reforms, the AU Commission is becoming more efficient and transparent in its spending. As a consequence the reforms that were supposed to wean the AU off its external dependence have had the unintended consequence of making the AU an ever more attractive partner for development aid.

In addition, the COVID-19 crisis amplified the AU’s attractiveness to international partners. It became a clearing house for donations to the continent. The African Centres for Disease Control has seen record contributions from around the globe, both from traditional partners such as the EU and new private sector actors. Although this income is a welcome cash injection it ultimately undermines the AU’s claim to financial autonomy.

Overcoming the AU’s reform gridlock
For now, AU financial reform has not durably addressed the low payment morale among its members. Its new sanctions regime is a step in the right direction but many member states still prioritise other expenses. The COVID-19 crisis could further increase the rate of non-payment, as countries embark on costly national recovery plans.

Eventually, the AU will need to secure its own sustainable source of income, starting with the 0.2% levy on imports from outside the continent. This will make the budget independent from the benevolence of members and international partners. But it faces many obstacles. Only 17 countries have implemented the levy since 2017.

Given the current challenges, the AU will have to change its approach in at least one of three regards: budget size, donor dependency, and culture of consensus.

First, a decrease of the budget, which the AU Commission has already proposed, would reduce the financial pressure. Second, acknowledging international partners as permanent stakeholders would enable the AU to treat them as similar to members by enforcing more transparency and giving them sanctionable duties. Lastly, naming and shaming members for their lack of commitment undermines the AU’s culture of consensus but is likely to improve payments, at least in the short term. – The Conversation Africa