The African Union has over the past two years recorded an impressive implementation rate of the 2016 decision on financing of the Union. As of the 20th of December 2018, there were 25 countries, representing about 45% of AU membership, that were at various stages of domesticating the Kigali Decision on Financing the Union.

Of the 25 countries, 16 countries have adopted the new revenue collection mechanism by imposing the 0.2% levy on eligible imports to meet the financial obligations of the African Union. With the exception of Chad and the Gambia, all the other 14 countries paid their 2018 contributions to the AU, either in full or in part, through the new financing mechanism.

Six (6) member states are in the process of domesticating the Kigali Decision, the progress update on the status of implementation is yet to be established. These are Nigeria, Comoros, Senegal, Mauritania, Ethiopia and Libya.

There is flexibility built into the implementation of the Kigali decision on financing the Union which allows Member States determine the appropriate form and the means, to implement the decision in line with their national and international obligations. The flexibility is allowed on the basis that member states ensure the principles of predictability and compliance, as underlined in the decision on financing of the Union, are adhered to.

The implementation of the Kigali decision calls for the strengthening of the financial and budgetary reforms to ensure financial discipline within the Union to 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. This has led to the realization of some quick wins as listed below;

i) The Union has adopted new approaches of programme planning and budget process, to ensure greater accountability. This has led to the joint sittings between the Committee of Finance Ministers (F15) technical experts and the Permanent Representatives’ Committee sub-Committees of General Supervision and Coordination on Budget, Finance and Administrative matters and of Programs and Conferences, deliberate on the budget prepared by the AU Commission. The Committee of Ministers of Finance has since assumed responsibility for oversight of the African Union budget and Reserve Fund.

ii) Eight of the nine ‘Golden Rules’ are fully operational. These rules are financial management and accountability principles adopted to ensure financial discipline within the Union to enable the Union 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.

iii) AU has also introduced budget ceilings for departments and organs based on their track record on prudent execution rate, the ability to reach their targets and aligning their programmes strictly to the priorities of the Union. This has enhanced the budget execution and ensure the expenditure is linked to results. The ceiling also aligns the budget of the Union with member states capacity to pay.

iv) With these enhanced efforts, the Assembly adopted the 2019 budget for the Union at a total of USD681,485,337 which reflected a significant decrease of the annual budget by 12%, compared to the 2018 budget.

v) The share of AU member states financing the budget has also substantially increased compared to the partner funding in previous years. Excluding the peace support operations, in 2019, member states will contribute 66% of the budget while 34% will be secured from development Partners.

With the progress made so far in the implementation of the decision on financing of the Union, the African Union is gradually realizing its vision of reliable, predictable and sustainable funding of its agenda. This, not only, demonstrates an enhanced process of domestic resources mobilization but most importantly, stringent measures are now in place to ensure the prudent use of these resources to meet the development needs of the Continent.

To reinforce these efforts, the African Union, in November 2018, adopted a new sanctions regime to ensure its 55 member states meet their financial obligations to the Union in time. The new sanctions regime stipulate the short, intermediate and long term measures member states will face for defaulting to pay partly or in full, their assessed contributions, within a period of six months to two years. The African Union strengthens its sanctions regime on payment of dues.

The African Union, during the 32rd Ordinary Session of the Assembly of the African Union adopted the revised scale of assessment that stipulates the percentage share of any given budget that each Member State will pay to the regular budget of the Union for Period 2020-2022. The review of the scale of assessment is undertaken every three years to provide a scale that improves the burden sharing of the budget appropriations guided by the principles of the ability to pay; solidarity; and equitable burden-sharing among members to avoid risk concentration.

The revised scale of assessment stipulates the percentage of member states contribution to the Union’s budget, according to their respective “Tier classification”;

i) Tier 1 is assessed at 45.151% percent of the Union’s assessed budget;

ii) Tier 2 is assessed at 32.749% of the Union’s assessed budget; and

iii) Tier 3 is assessed at 22.100% of the Union’s assessed budget.

Each member state shall not pay less than USD350,000 or more than USD35,000,000 as a contribution for the regular budget and peace fund combined. The Union is also reviewing the 2020 regular budget to reduce it by USD32 million.

Currently, the AU High Representative for Financing the Union and the Peace Fund Dr. Donald Kaberuka, supported by the Commission, is undertaking regional consultations on the matter of assessing the Peace Fund and will report back to the Executive Council in June 2019 in Niamey, Niger for the consideration and adoption of the new scale of assessment for the Peace fund.​