This week, the African Union became truly pan-African again – Morocco, the only country in Africa that was not a member of the African Union (AU), regained its seat at the table. Despite the question of the disputed territory of Western Sahara remaining unresolved – the very same issue that caused Morocco to leave the AU’s predecessor, the Organisation of African Unity, 33 years ago. When the body recognised the independence of Moroccan-occupied Western Sahara. Morocco reportedly submitted its bid to rejoin last year, according to AlJazeera, in the hope that as an AU member it could lobby against Western Sahara’s membership.

And for the African Union, this decision seems to go beyond the African Unity story and the Western Sahara issue, there are significant financial gains from Moroccan membership. The AU is highly dependent on external donors, attracting fierce criticism about its independence, or lack thereof, so it needs to find alternative revenue streams and Morocco has deep pockets…

Dependence on External Donors

The AU’s 2017 budget is set at $781 million of which foreign donors  are expected to pay $569 Million (63%), while African countries will pay $212 Million (37%). The bloc in earlier years was largely paid for by key donors such as Egypt and Libya, but due to the political and therefore resulting economic instability in those two countries, support has been a lot more sparse. Therefore, external donors have increasingly become indispensable, contributing 25% more to the budget from 2010 to today. For example, the EU (including its Member States as independent donors) is the main financial contributor of the African Union Commission (one of several budget lines of the AU budget), providing more than 80% of the Commission’s budget. This calls into question the ability of AU to manage its own financial affairs and act independently, a criticism openly discussed and accepted by the AU itself. 

The plan for financial independence

In July 2016, the Financing the Union plan was adopted to put an end to the AU’s dependency on outside financing through a 0.2% levy on imports to African countries, the plan is to be implemented by January 2017.

The intended result is a fully African-funded AU Commission and 75% financial coverage of its programmes. Regional organisations, like the Economic Committee for West African States (ECOWAS), currently have a similar levy in place to finance its Commission, showing that the model can work on the continent. The EU is also funded partially by collecting import duties on non-EU products.

What Morocco’s membership means for the AU’s financial independence

Morocco has already flexed its financial muscles across the continent in the lead up to its vote for membership, signing 83 agreements and memoranda with its African partners, like the $3.5-billion agreement to build a fertiliser plant in Ethiopia, and the planned gas pipeline linking Nigeria to Europe. Reflecting not only its willingness to offer financial support to its African partners, but most importantly, considering the economic downturn due to commodity prices, its ability to do so. This ability translates to potentially handsome contributions to the AU purse, since Morocco has the fifth largest nominal GDP on the continent and its imports were worth

This ability translates to potentially handsome contributions to the AU purse, since Morocco has the fifth largest nominal GDP on the continent and its imports were worth $44.9B in 2014 alone, this figure translates to a potential contribution to the AU budget of $89.8 million, under the AU’s current Financing the Union plan. Accounting for an impressive 41% of the contributions set to be made by African Union Member States this year.

Whilst this might not eradicate the need for EU support since its contributions in 2015 stood at $362 million (€337 million), approximately 46% of the AU’s 2017 budget and 63% of the foreign donor contributions, Morocco’s membership shows a pivot towards Africa from a country that was very much focused on Europe. A pivot not only in the symbolic sense but in a financial and practical sense.

 

Although it is too soon to say for definite that this is going to be the path towards financial independence within the AU, it is most definitely one of the strongest steps in the right direction.