Q&A: Donald Kaberuka on financing the AU peace fund

Former African Development Bank President Donald Kaberuka. Photo by: Herve Cortinat / OECD Development Center / CC BY-NC-ND

DURBAN, South Africa — Donald Kaberuka is on a mission to help the African Union become a self-funded international organization, less dependent on donors abroad. As former leader of the African Development Bank and recently appointed head of the African Union Peace Fund, Kaberuka hopes to lead the AU out of a deep budgetary crisis even as it expands support to costly peace operations.

The goal is ambitious: Since 2015, the AU has made a commitment to pay for 100 percent of its administrative budget, along with 75 percent of the organization’s program budget and at least 25 percent of its peace-related expenditures, according to Kaberuka.

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Through a miniscule import levy, former Rwandan Minister of Finance Kaberuka estimates that the AU can raise roughly $400 million per year, of which $60-80 million would be reserved for upstreaming peace support operations, or preventative diplomacy mediation. A further $100 million would be used to build standby capacity so that “if there’s a crisis we don’t have to wait six months to have the means to intervene,” he said.

Devex sat down with Kaberuka on the sidelines of the World Economic Forum on Africa earlier this month to learn more about his ideas to close the AU’s financial gap and better support peace operations on the continent. The conversation has been edited for length and clarity.

What are your priorities for the Peace Fund for 2017?

First we must understand what a peace support operation is. A peace support operation is not the same thing as a peacekeeping operation, because peacekeeping presupposes there is peace to keep. Also, under the 1945 peacekeeping doctrine, you cannot send peacekeepers unless three conditions are met: a) they have to be invited by a country, b) the [invitation] has to be neutral and impartial, c) it has to be characterized with minimum use of force.

So for example, in a case like Somalia, where there is no country to invite you, where you cannot be impartial, and where you are likely to fight the insurgents, you need another type of force. Peace support operations are for those kinds of operations, where the United Nations peacekeepers are unable to go because there is no peace to keep. With the Peace Fund, the instruments have been set up, the operation manuals and the governance instructions, and I expect that at the next [AU] summit the full blown fund will be launched and adopted.

Are any particular regions of Africa being targeted by the fund?

“The AU aims to be ‘silencing the guns’ by 2020.”

— Donald Kaberuka, head of the AU Peace Fund

At the moment, regions which qualify for this kind of thing [include] the Sahel, for instance against Boko Haram, and the Horn of Africa — especially in and around Somalia.

The AU aims to be “silencing the guns” by 2020. If [that goal] is met, we will have fewer and fewer fully blown crises after 2020. But for now, we need our own means to be able to deal with those crises.

Will this peace fund send its own forces, or will the fund utilize local actors who are already on the ground in these countries?

The mandating and deploying is in the hands of the AU Peace and Security Council. The council will determine that in a particular area we have a crisis, and this is a crisis the U.N. cannot intervene in. It will then mandate us to go there.

At the moment, the AU Mission in Somalia force in Somalia is funded by the European Union, but earlier in the year they cut back by 20 percent. The forces fighting Boko Haram are also supported by the European Union and a few other bilaterals, so my expectation is that the AU will work in close collaboration with the regional communities that have been at the forefront of fighting some of these insurgencies. Will there be another crisis which will necessitate an intervention? I don’t know. But in any case, the task of mandating will be in the hands of the AU Peace and Security Council.

Tell us more about the finance model for the fund and the use of an import levy to raise additional money.

The AU dependence for money from foreign countries had reached unacceptable levels, especially since the demise of the Libyan economy, because about five countries pay around 60 percent of the budget, including Libya. So the AU finances were in deep crisis.

We aimed to seek a mechanism that can increase increase compliance, and also equalize burden among different countries.

It’s a very small levy — 0.2 percent — and will have no impact on trade. But it could raise enough money for the AU to function. Remember that the European Union used to do exactly that a long time ago, so it has proven its worth. The Economic Community of West African States does that quite well; that’s how they fund the organization. The West African Economic and Monetary Union does the same; they raise enough money to run the organization and fund some of the programs.

The idea is to levy imports from outside in accordance with national regulations and then that money is deposited into the central bank account of the AU, so compliance will be higher, and I believe it will enable the AU to become independent. The mechanism is beginning to be implemented in some countries. Rwanda has voted the law, [as well as] Kenya, and a few others. I expect many more to follow.

Looking at your legacy at the AfDB, what would you say was your biggest accomplishment there?

I never like to talk about my legacy. Others should talk about it. But I want to emphasize that in a job like this, there are some things you succeed in doing and others you don’t succeed in and others where you have internal consequences. This is true for any job.

“I believe if you’re going to have impact you have to focus on a few things and do them well.”

I think there are things that we did that gave the bank significant punch in leading the front on infrastructure [development] across the continent. Anywhere you go on this continent, whether inside a country or between countries, you’ll find our signature. The bank has become the leader in funding infrastructure on the continent. During my tenure, I believe we put out about $28 billion in infrastructure funding. The second thing we did, for which I feel very proud, is that we expanded lending to businesses in the private sector, thereby trying to demonstrate that Africa is not as risky as people say.

We put our money where our mouth was, so we went from lending about $400 million a year to about $2.8 billion a year, lending to governments and businesses. The third thing for which we are very proud, was the push that we gave to economic integration in different countries. The fourth thing, for which I remain particularly proud was the support we gave to fragile states. I am not saying that because there are millions trapped in those countries, but because of the huge neighboring effects — whether it was with refugees, displaced persons, or the spread of small arms. We had a special project at the bank for fragile states which had become a signature for the institution.

Finally, it may sound like a small matter, but for me it was very important: the African Natural Resources Center, which was meant to help countries discovering natural resources to manage them differently from what has been done in the past, to help countries better manage their wealth.

In doing this, I opted for what I called “focus,” because I believe if you’re going to have impact you have to focus on a few things and do them well. I didn’t believe that we should spread our wings too far, as the best way to succeed. I identified our comparative advantages, our comparative strengths, which were in doing the things I just mentioned.

Looking toward the future development of Africa, are there things we should be doing differently or things we can do better?

Between 1980 and 2000 Africa was getting poorer, because the rate of economic growth was lower than delta population increase, which means that the per capita incomes were weakening every year. From about 2000, we reversed the trend, and for the first time, economies were growing above population increase.

“Economic growth for a larger number of people but also which transforms — that’s where the emphasis should go.”

We need to sustain high levels of economic growth, higher than population increase. Every country has the growth drivers, deliverables, and obstacles they have to overcome. But economic growth is not the same thing as economic development. Economic development is spreading the wealth to the largest number, improving living conditions. So we are talking about economic growth, which is strong and sustained, but also which is broad enough to affect the lives of many people. And economic development is not the same as economic transformation. With economic transformation, you don’t simply grow the economy, you transform its structure — you join the global value chains, because this is where the jobs are created. So economic growth for a larger number of people but also which transforms — that’s where the emphasis should go.

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About the author

  • Christin roby

    Christin Roby

    Christin Roby is the West Africa Correspondent for Devex. Based in Abidjan, Côte d'Ivoire, she covers global development trends, health, technology, and policy. Before relocating to West Africa, Christin spent several years working in local newsrooms and earned her Master of Science in videography and global affairs reporting from the Medill School of Journalism at Northwestern University. Her informed insight into the region stems from her diverse coverage of more than a dozen African nations.