Africa’s catch-22 funding situation

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Decision taken… The just-ended 27th AU summit.

Windhoek

While African leaders are in unison Africans should fund programmes of the African Union (AU), most of its member states still depend heavily on donor funding to cover their budgetary deficits.

This results in billions of dollars being sourced from America, Germany, Australia, Norway, Netherlands, Luxembourg and Denmark, among others, channelled to fund Africa’s economic development and welfare programmes.

According to World Bank figures covering 2012, the top African recipients of foreign aid to offset national deficits are Uganda (N$23 billion), Egypt (N$25,8 billion), Ghana (N$25,8 billion), Nigeria (N$27,3 billion), Mozambique (N$41,7 billion), Côte d’Ivoire (N$37,3 billion), Kenya (N$37,3 billion), Tanzania (N$40,2 billion), Democratic Republic of Congo (DRC) (N$40,2 billion) and Ethiopia (N$46 billion).

Recently some of the donor funds to Africa were used to combat the Ebola outbreak in west Africa and mass displacement in Central African Republic (CAR), South Sudan and Syria.

It is the argument of author Dambisa Moyo who reasons that money from rich countries has trapped many African nations in a cycle of corruption, slower economic growth and poverty, that cutting off the flow of this donor money would by far be more beneficial to the resource-rich continent.

Moyo indicated that evidence overwhelmingly demonstrates that foreign aid to Africa has made the poor poorer and its developmental trajectory even slower.

This is the same belief of observers of the recent decision taken by AU leaders at the just-ended 27th Summit to cut the continental body’s dependence on foreign aid for the running of its programmes and peacekeeping missions.

African leaders have been cautioned to further apply prudence, spend wisely their resources and speedily resolve crippling disputes in order to decrease dependency on funds from sources outside the continent.

Also, African governments have been advised to first get their houses in order by, among others, closing the taps on illicit financial flows of billions of dollars outside the continent through corrupt unions with foreign multi-nationals.

At the AU meeting a new funding model was introduced which is expected to usher in the continental body’s self-reliance and less dependence on foreign donors.

According to international media, this will ensure that the AU will use its own funds to run its affairs and finance peacekeeping missions across Africa.

Rwandan Finance Minister Claver Gatete was quoted as announcing the funding model, whereby every member country will contribute “0.2 percent of its eligible imports to the AU”.

This will, however, exclude imports such as medicines, fertilizers and baby food.
This funding model is expected to raise about N$17,4 billion, which is said to be three times more than the current AU operational budget. The contributions are expected to start next year. As it is, about 72 percent of the AU budget comes from the United Nations and foreign donors.

Speaking to reporters at Eros Airport upon his arrival back in the country, President Hage Geingob described the AU meeting as a “good” one.

“We had a good meeting on how to finance our own activities. We cannot have an organisation which is financed by foreigners then think they will respect us,” Geingob said.

“So we took a decision that we must finance our own projects and the running cost of the AU and its peacekeeping missions. That way you can talk. But now people laugh at you when you are making a noise and in the evening you are going to beg them to finance you,” stated the Namibian head of state.

Local economist Omu Kakujaha-Matundu welcomed the idea, saying that at least there is a plan on how the funds will be raised.
“I would advise that they impose more on luxury goods. Things that we really do not need much, like luxury vehicles and luxury clothes, jewellery and so on,” explained Kakujaha-Matundu.

He however stressed that charity begins at home and “African leaders should look more into how to grow their own economies and decrease the dependency on donor funds at that level”.

“Our [national] budgets are partly funded with donor money due to the fact that our leaders have failed to grow our economies,” he said.

“This can be due to conflict, or mostly due to corruption whereby funds are syphoned outside the continent in conjunction with multi-national companies and sometimes economies are in a mess due to poor planning.”

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