Speaking at the African CEO Forum in Kigali on May 17, Kenyan President William Ruto who is also African Union (AU) Champion for Institutional Reform laid out an ambitious plan to transform the AU to better meet the continent's current needs with emphasis on reforming the union to enhance its role in economic negotiations, peace and security, and infrastructure development.

Ruto was speaking at the Africa CEO Forum in Kigali, a week before the AU’s Sub-Committee in charge of budget, administration, and finance matters convened for an annual retreat to adopt the 2025 budget.

For over twelve days (May 13-24, 2024), AUC leadership, Ambassadors, and finance experts from AU member states, comprising the Committee of Fifteen Ministers of Finance (F15), deliberated on the Union-wide 2025 budget proposal and reviewed the execution rate for the 2024 budget.

The 2025 African Union proposed budget, as presented by AUC Deputy Chairperson Dr. Monique Nsanzabaganwa, amounts to nearly $629 million for operational costs, programmes, and peace support operations.

The operational budget primarily covers the administrative, utility, service delivery, investment, maintenance, and statutory costs for all AU organs.

In June 2015, African Heads of State and Government decided at their assembly in Johannesburg, South Africa that AU members would fund 100% of the operational budget, 75% of the program budget, and 25% of the peace support operations budget.

This was to be achieved by applying a 0.2% levy on eligible taxable goods imported into AU member states from outside the continent.

However, nine years since the Johannesburg Decision and nearly seven years after the Kigali Decision on Financing the Union, member states still struggle to meet their assessed contributions. This shortfall creates a funding gap, leaving the African Union reliant on international partners.

Unsurprisingly, the biggest highlight of this year’s budget retreat is that member states' assessed contributions stand at only 34% of the nearly $629 million budget. In contrast, 57.2% will come from international partners, and only 7.4% from African institutions.

AU’s foreign dependence

The proposed budget raises concerns about the growing imbalance between member states' contributions and those of international partners. The primary concern is that reliance on partners' funds might lead the African Union to prioritize partners' agendas over the African Blueprint Agenda 2063.

Delegations and F15 experts emphasized the need for the AU to reduce dependency on external funding. They specifically requested that the AU ensure strategic organs and departments, such as the offices of the Chairperson and Deputy Chairperson, peace support, and other critical departments, be fully funded by member states or African partners.

This move aims to protect the Union's interests and integrity from undesirable foreign influence.

However, the reality is that most AU departments and organs cannot operate without partners’ funds due to insufficient contributions from member states.

Some departments at AUC Headquarters and AU organs, which cover areas of high interest to the continent, receive less than 10% of their funding from African member states.

These include the Strategic Planning Department, the Agriculture and Blue Economy Department, Infrastructure and Energy, Political Affairs, Peace and Security, the Secretariat for the Continental Free Trade Area (AfCFTA), the African Centre for Disease Control, the Gender, Women and Youth Department, the Interafrican Bureau for Animal Resources (AU-IBAR), and the Union Institute for Statistics (Statafric).

A review of the 2024 budget execution rate indicates that, due to budget restrictions, some AU institutions have been unable to hold their statutory meetings, such as the Pan African Parliament, the African Commission on Human and People's Rights in Banjul, and the African Court on Human and People's Rights in Arusha.

Some institutions, like the AfCFTA, were unable to recruit for key managerial positions, which should not be left at the mercy of international partners.

Innovative funding solutions

One interesting development during this year’s budget retreat was the proposal that member states pay their assessed contributions to the African Union in their respective currencies instead of the US dollar, as has been the practice.

This proposal, met with enthusiasm, aims to mitigate the impact of dollar fluctuations and could be a step towards monetary union. However, skepticism remains about the proposal's practicality.

Another effective measure to optimize AU funds and ensure the continental body is fit for purpose would be to accelerate the implementation of AU institutional reforms initiated in 2016 under President Paul Kagame’s leadership and currently being championed by President Ruto.

These reforms would consolidate institutions with similar mandates and functions or located in the same region, enabling them to share support services, thereby reducing operational costs and eliminating mandate overlaps.

Also, the Union should prioritize investment in robust preventive diplomacy initiatives, such as appointing diplomatic mediators and peace envoys, to enhance the capacity of the Department of Political Affairs, Peace, and Security.

This would significantly reduce the amounts spent on peacekeeping missions across the continent.

The African Union's financial sustainability and independence are crucial for the realization of its Agenda 2063. Member states must commit to fulfilling their financial obligations to reduce dependency on external partners and ensure the Union's ability to uphold and implement its agenda autonomously.