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Financial reforms at the African Union lead to massive cuts of the Union’s Budget

Financial reforms at the African Union lead to massive cuts of the Union’s Budget

09 Jul 2018

The African Union has approved the 2019 budget for the Union at a total of $681.5 million, signaling a substantial decrease of the annual budget by 12%, compared to the previous year.

The approved budget is in line with the continent’s move to reduce dependency on partner funding and gradually move towards funding 100% of the Union’s operational budget, 75% of the programme budget and 25% of peace support operations by 2021 with resources generated from the Continent.

While presenting the budget proposal at the just concluded African Union Summit in Nouakchott, the capital of the Islamic Republic of Mauritania, the African Union Commission Deputy Chairperson Amb. Kwesi Quartey observed that Africa had recorded great milestones in the implementation of the decision on financing of the Union, which reflected in the preparation of the 2019 budget.

Following budgetary reforms initiated within the African Union, the preparation of 2019 budget demonstrated a significant shift in the programme planning and budgeting process from the previous budgets processes.

“This time we were guided by the nine golden rules adopted by the Assembly in January 2018 aimed at improving the budget process and financial management of the Union, and to enable us decisively address issues of low execution rates, identify undetected wastages and instances of over-budgeting by departments or organs, as well as ensure full compliance with the African Union financial rules and regulations,” he stated. Amb. Kwesi added the budgetary reforms were critical to drive the Union’s agenda and for greater impact in service delivery to the African citizenry.

The nine golden rules are financial management guidelines introduced by the Committee of Finance Ministers (F15), tasked with overseeing the financial and budgetary reforms, in parallel to the implementation of the decision on financing of the Union.

Amb. Kwesi noted that the golden rules had been fundamental in ensuring the AU budget is well scrutinized in joint sittings of the F15 technical experts, the Permanent Representatives’ Committee as well as at the ministerial level, to review the Union’s budget and to guarantee the highest standards of accountability and judicious utilization of the resources.

“In line with the golden rules, aspects of the new additions into the budget reforms is the introduction budget ceilings which have proven to be very effective in providing a clear framework for the deliberations on the budget, taking into account the revenues and expenditure capacities of the commission and the organs,” Amb Kwesi noted.

Budget ceiling are caps indicating the limit on the amount each department and organ of the Union should align their budget to, guided by analysis on their execution rate, ability to reach their targets and the impact of their programmes or projects in line the goals and objectives of the Union.

Of the total budget, $161.4 million will go into in financing the operational budget of the Union. $252.8 million will go into the program budget while $273.3 million will finance Peace Support operations. Member states will contribute 46% of the budget while the remaining balance of 54% is expected to be financed by development Partners; signaling a great shift from overreliance on external funding from about 70% in previous years.

Amb. Kwesi stated, “there is growing confidence in our ability to finance our agenda. The momentum in the implementation of the 0.2% levy decision is very positive and in fact, looking at the contributions to the peace fund using this mechanism, it is the highest we have had. With this trend, the percentage of member states contribution is expected to rise to a level where Africa takes full ownership of its development agenda. We are very optimistic.”

The programme budget will go to support the consolidation of the implementation of key flagship projects. These include the continental infrastructure development, driving the regional integration agenda through key projects such as the Continental Free Trade Area, the single air transport, the African passport and the free movement of persons.

The Focus on peace and security is on silencing the guns by 2020. More attention will also be given to education and skills development, energy, health, particularly the full operationalization of the Africa CDC as well as promoting gender equality.

Africa continues to make noteworthy progress in its quest to mobilise financial resources within the continent through the full implementation of the decision on financing of the Union, adopted by Heads of State and Government in July 2016, in Kigali, Rwanda.

At least 14 African Union member states are already collecting the 0.2% levy from eligible imported goods to meet their assessed financial commitments to the Union. These include Rwanda, Kenya, Ethiopia, Djibouti, Chad, Guinea, Sudan, Congo Brazzaville, Cameroon, Gambia, Gabon, Cote d’Ivoire and Sierra Leone and Ghana. Another 23 countries are at various stages of implementation.

With the efforts that have been put in place in the fight against corruption and Illicit Financial Flows, Africa can augment and enhance its prospects for adequate self-financing for its development agenda.

Source African Union
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Date 09 Jul 2018
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