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Scrutiny of budget a first for the AU
17 July 2018

The 31st African Union (AU) summit in Nouakchott earlier this month for the first time saw a vigorous interrogation of the organisation’s proposed budget. Issues of corruption and mismanagement were also brought to light as part of the process – seen as one of the spin-offs of the reforms led by Rwandan President Paul Kagame.

Positive steps were taken at the 31st AU summit in Nouakchott, from 25 June to 2 July, to make the 2019 AU budget more credible and transparent. Although this new process is not stipulated in the current institutional reform process, it is in line with one of its main priorities, namely to ‘manage the business of the AU efficiently and effectively at both the political and operational levels’.

The 2019 budget was also lower than that for 2018.

Member states’ finance ministers participated in the budgeting process alongside members of the Permanent Representatives Committee (PRC) and officials, focusing on what they termed the ‘golden rules’ of budgeting, including sustainability and predictability.

The 0.2% levy to finance the AU, adopted at the 27th AU summit in Kigali, was aimed at achieving such sustainability and predictability, especially for countries with smaller national budgets or weak fiscal capacity.

AU Commission Deputy Chairperson Kwesi Quartey at the opening session of the PRC meeting on June 25 said the golden rules were there so that ‘AU budgets are well-scrutinized to ensure the highest standards in accountability and judicious application of AU resources and that AU budgets are in line with the goals and objectives of the Union as agreed by the leadership’.

The introduction of budget ceilings brought with it a level of scrutiny and rigour previously unknown
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He said the introduction of ‘budget ceilings’ brought with it ‘a level of scrutiny and rigour previously unknown’ in the AU budgeting process.

Cuts to big money items

A high-ranking AU official involved in administrative issues told the PSC Report at the summit: ‘The budget process this year was tough. The committee even rejected the budget, which was good.’

It was revised with cuts to big money items such as the travel budget. ‘You have to stop it from the budgetary process,’ he said. ‘Missions can be addictive.’

He said AU policy restricted travel to 21 days per quarter and under, but some officials spent 150 days of the year travelling. ‘The cost is not just the cost of travel, but also the cost of absence,’ he said.

A tighter budgeting process also saw the budget committee eliminate duplication among AU organs for campaigns, increasing the savings.

A tighter budgeting process saw the budget committee eliminate duplication among AU organs
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Kagame, the current AU chairperson, at the opening plenary of the Assembly said that, ‘thanks to the outstanding work of the Committee of 15 Finance Ministers (F15), together with the Executive Council, the AU has applied the “golden rules” and adopted the most credible and transparent budget in our history’.

He praised states for their contributions to the Peace Fund, which, he said, were the highest ever and now stood at US$45.5 million. Ultimately the AU wanted a US$400 million endowment in place by 2021 to enable African countries to drive their own peace and security agenda.

Greater contribution by member states

The new budgeting process cut the 2019 budget by 12%, to a total of US$681 million, compared to US$790 million in 2018. The 2019 operational budget of US$158.5 million will be fully financed by member states, while 44% ($110.3 million) of the programme budget of US$249.8 million will be financed by member states, with the rest coming from partners, according to a statement by  Quartey.

For the US$273.3 million peace support operations budget, 95% (US$261.9 million) will come from international partners. Ultimately the aim is to reduce donor funding and have member states fund 100% of the operational budget, 75% of the programme budget and 25% of the peace support operations budget.

More flexibility on 0.2% levy

Meanwhile, one year after the deadline for AU member states to implement the 0.2% levy on eligible goods, and with a low uptake, the continental body has resolved to allow more flexibility. Only 23 countries are reported to be ‘at various stages of’ implementing the levy, and there will be another extraordinary summit, in November, to discuss this sticking point in the AU reforms.

Only 23 countries are reported to be at various stages of implementing the levy
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Kagame in a closed session on the progress of the reforms told the Assembly that ‘a good amount of the controversy surrounding the 0.2% levy, adopted at the Kigali 2016 summit, has dissipated, as member states have come to appreciate the flexibility with which it can be applied. And also that they will not necessarily be paying more, and certainly not more than their fair share.’

Kagame said options for a new scale of assessment for 2019–2021 for member state contributions have been prepared in line with budget caps.

Options for a new scale of assessment for member state contributions have been prepared
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The Assembly decided at the 28th summit in 2017 that ‘the current scale of contributions should be revised based on the principles of ability to pay, solidarity, and equitable burden-sharing, to avoid risk concentration’, and the sanctions regime for defaulters should be strengthened.

Kagame in his report said member states ‘have the ability to determine the appropriate form and the means they will use to implement the 0.2% decision in line with their national and international obligations’.

Member states belonging to the World Trade Organization could do so ‘without contravening their international trade obligations’, he added.

Officials are interpreting the flexibility around the 0.2% levy to mean that member states that are able to do so could pay their assessed shares from their treasuries. The Southern African Development Community, for one, has raised objections against the levy because it could clash with the trade obligations of its members.

Pan-African Parliament brought to book

There was also scrutiny of money already spent – a step that could bolster the confidence of member states that their contributions will not go to waste. The Executive Council resolved to hold back the Pan-African Parliament’s (PAP) US$18.5 million budget for 2019, pending an ‘urgent, independent audit of [the] PAP’, set to be completed by October 2018. The PAP is the second-most financed organ of the AU after the AU Commission.

The Executive Council resolved to hold back the Pan-African Parliament’s budget for 2019
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The Executive Council also said PAP President Roger Nkodo Dang ‘shall refrain from adopting decisions with regard to staff disciplinary measures without prior approval from the Chairperson of the AU Commission until the audit is completed’. This follows media reports on questions by PAP staff about Dang’s official expenses for accommodation and transport, as well as alleged irregularities in appointments and recruitment in the PAP.

The funding overhaul has, however, not yet benefited all. The African Peer Review Mechanism’s (APRM) contributions are reported to be ‘at their lowest since 2007’, with only five countries paying their full contributions of US$200 000 and 31 countries in arrears totalling US$21 million.

Chief Executive Officer Eddy Maloka said this was because, as a result of the re-assessment of countries’ contributions in 2016, some of the APRM’s biggest funders, including Nigeria and South Africa, had to pay significantly more to the AU. ‘They were unable to cope with demands’ from the APRM, he said, and could not pay their usual additional contributions to prop up the budget.

‘We are now starting to feel the pain of countries not paying,’ he said. The APRM could be moved to the AU’s core budget as part of the institution’s reform process.

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