Nigeria’s former President Olusegun Obasanjo, has been appointed Chairman of the African Union High-Level Panel on Alternative Sources of Financing the Union through funds generated from taxes.
AU Commissioner for Economic Affairs, Dr. Maxwell Mkwezalamba, met with Obasanjo at his residence in Abeokuta, Nigeria’s south west Ogun State, to hand him the letter of appointment to the new post.
The commissioner travelled to Nigeria as a special envoy of Dr. Jean Ping, the Chairperson of the AU Commission.
The AU said the development could be described as a major boost to the commission’s quest to secure adequate, reliable and predictable financing for its activities.
African foreign ministers, sitting in the Executive Council, which met at its Ordinary Session in January 2011, endorsed the proposal by the commission to support the consultations on alternative sources of funding through a high level panel of eminent personalities.
The former president’s main task would be to engage AU member states on the issue of taxation as a way of generating income for the financing of the continental plans.
The panel is expected to develop “definitive proposals” for this long-standing issue.
The recently-concluded Malabo African Union Summit reiterated the decision and requested that the panel completes its work and submit a report to the next Ordinary Session of the Assembly, scheduled for January 2012, in Addis Ababa.
Responding to the appointment, Obasanjo pledged his full support to the union’s efforts.
Salim Ahmed Salim, former Secretary General of the Organization of African Unity, is also a member of the panel, alongside Dr. Luisa Dias Diogo, former Mozambican Prime Minister and Minister of Finance. Diogo is also a member of United Nations Secretary General’s High Level Panel on Global Sustainability.
A Personal Representative of the President of Equatorial Guinea and Chairman of the AU, Nguema Mbasogo, are also expected to serve as members of the panel.
The panel is expected to hold its inaugural briefing session in Addis Ababa during the first week of August 2011.
They are expected to embark on extensive consultations with member states and Regional Economic Communities (RECs) on this very important subject during the months of August, September and October 2011.
The panel will hold a final meeting sometime in November 2011 to adopt its report prior to its presentation to the African Union Assembly in January 2012.
It is clear the current financing arrangement for the African Union is dependent on assessed contributions of its member states and partner funds is no longer adequate, sustainable and reliable to meet the growing financing needs of the union.
Delays in payment of contributions by member states, coupled with the difficulty in accessing partner funds, are increasingly impacting negatively on the pace of implementation of the union’s activities, projects and programmes.
AU officials said these are major challenges that deserve urgent attention and all the technical analyses conducted so far have confirmed that options identified as alternatives to the current system of financing will not only have a significant revenue impact for the Union but will also be equitable and efficient.
The options include import levy, tax on air tickets and tax on insurance premiums.
Some of these options are already being applied and have proven extremely successful in some member states and RECs, such as tax on air tickets in Senegal and import (community) levy in the Economic Community of West African States (ECOWAS