AFRICAN UNION
الاتحاد الأفريقي
UNION AFRICAINE
Addis Ababa, ETHIOPIA
P. O. Box 3243 Telephone: 011-551 7700 Fax: 011-551 7844
website: www.au.int
FAQS (FREQUENTLY ASKED QUESTIONS) ABOUT FINANCING OF THE UNION
WHAT IS FINANCING OF THE UNION
Financing of the Union is a historic decision adopted by Heads of State and Government (HOSG) in a "Retreat on Financing of the Union" during the 27th African Union Summit held in Kigali, Rwanda in July 2016. The Decision directs all African Union Member States to implement a 0.2% levy on eligible imports for to finance the African Union.
The Retreat was attended by over 30 Heads of State and Government, Ministers of Foreign Affairs, Ministers of Finance and other representatives of Member States.
The purpose of the decision is:
I. To provide reliable and predictable funding for continental peace and security though the Peace Fund;
II. To provide an equitable and predictable source of financing for the Union;
III. To reduce dependency on partner funds for implementation of continental development and integration programs; and
IV. To relieve the pressure on national treasuries with respect to meeting national obligations for payment of assessed contributions of the Union
The decision will enter into operations for each Member States from January 2017.
WHY INTRODUCE A LEVY?
The continued and successful implementation of the Union's programmes require adequate and predictable, sustainable funding. However under previous arrangements, the Union's budget was underfunded by both the Member States and Development Partners.
On average, 67 percent of assessed contribution was collected annually from Member States. About 30 Member States defaulted either partially or completely on average, annually. This created a significant funding Gap between planned budget and actual funding, which hindered effective delivery of the African Union's agenda.
The figure below reflects the trend of the Gap between the planned Commission budget and actual budget that is funded by both member States and the Partners between 2011 and 2015.
THE UTILIZATION OF THE LEVY
The levy is derived from 0.2 percent of the value of the eligible goods imported into a Member State from a non-Member State (therein stated as from outside the continent).
The levy is applicable and is to be instituted in 2017 to finance 100% Operational Budget, 75% Program Budget and 25% Budget of the Peace Support Operations of the African Union as well as any other expenditure of the Union that may be determined by the Assembly.
The taxable base of the AU import levy is the value of eligible goods originating from a non-Member State imported into the territory of a Member State to be consumed in the Member State. The Revenue collected under the import levy is then remitted in accordance with each Member State's approved assessed contribution including the Peace Fund.