Will the AU finally get it right with its $400m Peace Fund?

After over two decades since its establishment, the pan-African fund is about to be put into the use it was intended for. But, as Alfred Ndumo writes, concerns linger about its effectiveness

THE African Union Peace Fund, established in 2002, is on the verge of becoming operational. It was established to fulfil the AU’s longstanding goal of achieving financial independence and, more significantly, to decrease its reliance on external sources when addressing persistent peace and security issues on the continent. While economic self-reliance is commendable, the Fund faces challenges in its institutional structure and relevance to Africa's evolving peace and security landscape.

Seven years ago, African heads of state at the 27th AU Summit in Kigali accepted then President of the African Development Bank Dr Donald Kaberuka's recommendations for financial independence of the pan-African organisation, which included a Peace Fund to cover 25 per cent of peace and security operations. The overarching goal was to provide adequate, predictable, sustainable, and flexible financial resources to the AU, reducing reliance on external support.

For several years, the AU had toyed with several options, including a surcharge on SMS and imposing a levy on hotel stays and air tickets throughout Africa. In the end, a 0.2 per cent levy on eligible imports into AU member states was adopted as the viable way to raise revenue from member states.

Despite making progress, the AU's levy initiative faces significant challenges. Only 17 out of 55 member states have reported their contributions as of 2020, which is a mere 31 per cent of the membership. An enforcement mechanism is urgently needed to ensure effective transmission of the collected funds. Economic crises, limitations of existing tariff laws, and countries with minimal productive industries or export sectors need to be immediately looked into so that more countries remit funds collected from the levy.

Nevertheless, member states have already contributed over $279 million to the Fund as of mid-August 2022. The total amount, including voluntary contributions, interest earned, and the transfer of the Legacy Peace Fund, is $321.5 million. The Fund is expected to increase to $400 million by the end of 2023 with further member contributions.

However, disagreements among member states on how contributions should be assessed persist. Some countries have also called for a proper mechanism for contributing to the Fund, which should be addressed promptly.

The operationalisation of the AU peace fund has been delayed due to the slow terrorism operations, some UN Security Council members continue to raise operational concerns over accountability and oversight issues and instead prefer to support interventions through bilateral arrangements. process of establishing its bureaucratic structure. Since January 2018, the AU has been working on creating a governance and management system that will allow the Fund to function independently.

A Board of Trustees was established to ensure strategic coherence and provide oversight. The board comprises five distinguished African individuals appointed by the AU chairperson and two representatives from non-African partners who contribute to the Fund: the European Union and the UN.

In June 2022, the AU announced that Old Mutual Investment Group in South Africa and Sanlam Investments East Africa in Kenya would be the fund managers. In March 2023, Dagmawit Moges, former Minister of Transport and Logistics in Ethiopia, was appointed Director of the Peace Fund secretariat, responsible for managing its daily administrative operations.

Although the Fund is set to launch soon, concerns linger about its effectiveness. While its goal is to use funds to help with the ongoing crisis in Sudan, support projects in the East African Community, and provide further assistance in the conflict in Somalia, the delayed response to the crisis in Sudan raises doubts about the Fund's ability to provide swift and flexible financing in urgent situations.

Moreover, it remains unclear whether the Fund will be able to cover the current €25 million funding shortfall for the AU Transition Mission in Somalia (ATMIS), which heavily relies on military operations.

The challenge of operationalising the Fund persists due to the friction between the AU and UN regarding precedence and operational approaches. Despite the need for support in African counter-

The sharing of responsibilities between the AU and the UN still needs to be solved, particularly about interpreting the AU's 25 per cent contribution. While some members of the UN Security Council insist that the AU should contribute 25 per cent to each of its Peace Support Operation, with the rest being covered by the UN's assessed contributions, the AU believes that the 25 per cent contribution should be allocated to peace and security activities as a whole, in accordance with the principles of the Fund.

This includes mediation, preventive diplomacy, and institutional capacity building rather than solely on peace support operations. Those who oppose the AU's view in the UN Security Council argue that any shortfalls should be sourced from bilateral and multilateral channels.

A resolution must be reached promptly to avoid any detrimental impact on peace and security in Africa. The Fund needs proper leadership to effectively handle the challenges of past, present and future crises.

The focus on institutional modelling has overshadowed the crucial need for situational relevance and responsiveness to the ever-evolving peace and security concerns. A situation leadership model that can react swiftly and efficiently is paramount to tackle the constantly changing conflicts in Africa, and the Fund's developing structure must prioritise this crucial aspect.

To attain financial independence, the Fund needs to improve revenue collection, resolve disputes with external partners, and, most importantly, address leadership gaps. A proactive approach and adaptable leadership are crucial to overcome these challenges and navigate changing circumstances.