The Finances of Regional Organisations in the Global South: Follow the Money by Ulf Engel & Frank Mattheis

Author:Ulf Engel & Frank Mattheis [Engel, Ulf & Mattheis, Frank]
Language: eng
Format: epub
ISBN: 9780367152468
Google: F8hTxgEACAAJ
Goodreads: 52152733
Publisher: Routledge
Published: 2019-10-14T00:00:00+00:00

Modernising the partnership with the African Union

Barely two years after signing the Paris Declaration on Aid Effectiveness, the African Union politically agreed to transform the partnership with its thirty-odd donors. Specifically, it committed to introducing Programme-Based Approaches with its donors (African Union Commission 2007). This coincided with ongoing AU efforts to comprehensively transform its institutions. Through the “Institutional Transformation Programme”, the AU sought to strengthen the capacities of the AUC, to improve its governance systems with the various AU stakeholders and institutions, and to upgrade the quality of its partnership with donors. Up to that point, these external partners had largely operated in a fragmented manner, without a joint AUC framework for cooperation and funding. Many donors tended to prioritise their own preferred policy areas or programmes, which created “orphanage areas” as this behaviour left “little flexibility as regards the allocation of the funds according to the AUC’s programme priorities” (African Union 2010, in Lawson and Kamaray 2010, p. 29).

Moreover, most donors resorted to earmarked and fragmented projects, thereby raising transaction costs for RECs and the AUC and reducing the scope for enhancing recipient ownership. A sub-group of donors have tried to eliminate these downsides by complementing their earmarked project aid with what might be called a “halfway house PBA”.2 Such aid is situated somewhere in between the basic PBA and the more ambitious budget support.3 Budget support would provide the highest possible level of funding flexibility for recipients, while also creating a platform for donor alignment and harmonisation and minimising transaction costs for RECs and the AUC. In reality, the halfway house PBA modality was channelled through a separate budget system consisting of a minor fraction of total aid to Africa’s regional organisations and only partially aligned with recipient strategies.

Still, as the AUC grew in size and importance in terms of tackling pan African and global challenges, the stakes for reform-minded donors and the AUC in terms of upgrading the partnership were high. Both sides also worried about the increasing dependency of the AUC – and other regional organisations – on external funding. Of the approved 2010 AUC budget of USD 251 mil., donors provided USD 125 mil. in fragmented ways in the form of project support.4 Only a mere USD 2.9 mil. was provided through a pooled fund earmarked for capacity building. Hence, the transaction costs of earmarked project management were substantial. The AUC Peace and Security Directorate (PSD), for example, was obliged to report on 110 separate project accounts, each with its own specific reporting and auditing requirements (Lawson and Kamaray 2010).

This fragmentation and dispersion of projects and partners took a heavy toll on the AUC’s scarce administrative capabilities. It drained human resources away from other core functions and tasks such as financial planning, budget execution, monitoring, and crucial ‘aftercare’ such as accounting and managing learning loops about what is effective in terms of implementation. In addition, AU member-state representatives had voiced concerns about the lack of integrity of the AUC budgeting process, the lack of prioritisation and implementation gaps (African Union 2017; African Union Commission 2015; Vanheukelom 2016).

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