African Union mulls 0.2% levy on imports to check foreign donor reliance
The African Union is planning a 0.2 percent levy on all eligible imports that enter a member country from outside the continent. This is to make it financially dependent and stop relying on western donations to fund its budget.
The proposal, which would be deliberated at the 29th Summit of the African Union, is coming as the AU gets 80 percent of its budget from western donations.
While the proposal has its supporters, some fear the levy (‘AU tax’) would be difficult to implement. There have even been suggestions, from reticent members that the move would contravene world trade rules.
The implication of the levy, according to analysts, is that the price of foreign goods would rise on the continent as importers would pass the 0.2 percent tax onto the consumers.
“The idea of this tax is to make the organisation independent and self-sufficient,” Geoffrey Onyema Nigerian foreign minister, is reported to have said.
He dismisses claims that the tax would break World Trade Organisation rules pointing out that there is a similar levy within ECOWAS (the West African group of nations).
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“Our position was that the implementation of the tax seemed to be posing problems for a number of states. We think that more time could be afforded to give countries the time to make the necessary changes,” he told Reuters.
While in principle there is a broad consensus supporting the move, the practicalities of implementing a continent-wide tax are complex. The complexity could also be gleaned to the many unresolved political issues among its member states, which analyst view could jeopardise the proposed levy.
The AU is still battling with a lot of internal politics among its members, which would be addressed by the 29th meeting
For example, the AU is adjusting to the changing dynamic the readmission of Morocco early in the year brings to its internal politics.
For decades Morocco had been barred from the Union over the disputed region of Western Sahara.
The AU recognizes the government of the Saharawi Arab Democratic Republic, while Morocco claims it as part of its territory.
Equally, the United Nations does not deem the territory, also known as West Sahara, an independent state.
When the AU’s Human Rights Commission called for an “evaluation mission to be sent to the occupied territory” to investigate allegations of rights abuses, Morocco protested.
Among other crises facing heads of state and government at this summit is the fighting in South Sudan.
Last week, Juba sent a team to South Africa, where the vice president, turned rebel leader, Riek Machar, is currently in exile.
If there are signs of an opening coming from president Salva Kiir, one reason is the pressure being applied by the African Union for the warring factions to cease hostilities.
As one AU official puts it, this summit is the “last chance saloon” for the parties to return to the negotiating table.