17 July 2016
The African Union (AU) Commission has projected to raise 1.2 billion dollars from member countries in its new resolve to begin to fully fund its activities.
This is the decision reached by Heads of State and Governments of the Commission during its retreat at the ongoing 27th Ordinary Session of the AU summit in Kigali, Rwanda.
Amb. Claver Gatete, Rwanda’s Minister of Finance and Economic Planning, on Sunday at a media conference said that the decision was to help the AU sustainably fund its activities and operations.
He said many proposals had come up in the past on how to go about the revenue generation, but that the heads of state were determined to find a final solution to it.
“The normal way of financing the AUC activities had been a formula that was used on accessed contributions taking into consideration the key principles, equitable payment, capacity to pay and ensuring that no single country is left behind.
“They use a proportional and indexed Gross Domestic Profit (GDP) kind of formula to determine how much each country is supposed to contribute,’’ he said.
Gatete said that the main issue had been defaults in payments and sometimes delay to dispense the amount of money and that it had affected the functioning of the AU.
He said that because of the lapse, a big chunk (76 per cent) of the AU’s financing had been by donors.
Gatete said many suggestions had come up but that what was adopted would ensure that all member states were carried along in the revenue generation.
“There is a formula of the 0.2 per cent of the eligible levy on imports; all of us have the imports and we have what we call eligible goods that are coming to our countries.
“The formula is a levy that is equal to 0.2 per cent. It is simple because it has worked in West African states and Central African states within their own economic operations and it can work in every country,’’ he said.
Gatete said that when the module was adopted, it was discovered that the budget that was voted for the AU in 2015 and this year was 447 million dollars, but that the present formula was capable of generating more than the projected 1.2 billion dollars.
“It will be predictable, very easy and it will be collected by the revenue authorities of each of our countries and an account of the AU will be opened in the central bank so that the central bank will be the one dispersing the money.
“Part of this money goes to the peace operations of which also the heads of states said that of each region, it has at least 65 million dollars for each region made for peace operations and that comes to about 320 million dollars for peace operations on the continent.
“This really helps to achieve the 25 per cent for the peace support operations and the 100 per cent support on the activities of the AU and it helps achieve 75 per cent funding for the AU’s programmes.
“This was the decision that was adopted by the heads of states themselves and so we are glad that this issue is going to be resolved and its implementation will in 2017,’’ Gatete said.
He explained that the money would not be managed by any country’s treasury because each country’s treasury had many demands on it.
“The money would be managed by the revenue collecting agencies and it would go to an escrow account in the central bank with clear directives on how it would be disbursed.
“This means that there will be no issue because it is not combined with the normal budget resources of other activities.
“The heads of states also agreed on the proper accountability mechanism and promised to follow up on the ministers of finance to make sure that the money is efficiently used,’’ he said.
The summit, which has its theme as “Year of the Human Rights’’ with particular focus on the rights of women began on Saturday.