Ethiopia: African finance ministers work on African Union import tax plan

Addis Ababa, Ethiopia (PANA) - A select committee of 10 ministers of finance have ended discussion on the implementation of a new African Union (AU) Summit proposal to apply a nominal levy of 0.2% on selected imports into Africa in order to raise funds for the continental body, the AU said Friday.

The landmark deal on how to raise funds for AU projects was made during the July Summit of the organisation's Assembly in Kigali, overcoming more than 10 years of debate and opposition to proposals to tax air tickets and hotel rooms.

According to the AU Commission (AUC), the organisation faces mounting financing requirements as a result of new projects.

Most projects run by the organisation, with an annual budget of US$500 million, are financed by foreign partners with member states footing just a tiny component of the overall budget.

"This therefore underscores the need for reliable and predictable self-financing mechanisms of the AU operations and programmes," the AUC said in a statement.

Ministers of Finance met on 15 September 2016 to discuss how the new taxation measures could be implemented.

They discussed the “Financing of the Union” decision taken by Heads of State and Government during the 27th AU Summit in Kigali, Rwanda, in July 2016.

In a briefing note issued after the meeting, the Commission said that the Committee of 10 Finance Ministers (F10) representing the five African regions --  East, Southern, West, North and Central -- met to discuss a draft proposal prepared by the AU.

The ministers discussed proposals including a new mandate for the ministerial Committee which among others include, the review and evaluation of the annual budget of the AU before submission to the Assembly of Heads of State and Government.

The draft focuses on collection of the funds, transfer of the collected funds and Peace Fund Management arrangements.

The AU formed the Peace Fund and appointed Donald Kaberuka, former President of the African Development Bank to chair it.

The F10, tasked with defining a roadmap for the implementation of the decision, did not immediately announce an implementation roadmap.

However, their task includes reviewing the status of the implementation of the 0.2 percent levy on all eligible imported goods into the continent to finance the AU operational, programme and peace support operations budgets.

The funds are expected to be channeled to the AU starting from 2017 while ensuring the effective use of these resources.

At the same time, the F10 will review the compliance and adoption of the policies as well as propose the various resources mobilisation strategies for the Union.

Dr. Nkosazana Dlamini Zuma, Chairperson of the AUC expressed appreciation to all member states, central bank governors and officials present for the milestone achieved.

She described the achievement as a great deal for the Union to be at the implementation stage of the decision that was made in Kigali by the Heads of State and Government.

Kenya's Cabinet Secretary for Finance,  Henry Rotich, who chaired the meeting, emphasized that the growing scope of activities of the AU does not match with the availability of the Union’s resources.

“Our goal as ministers is to ensure we come up with implementation procedures for sustainable financing of both the Union and its programmes. This we shall do through brainstorming discussions as well as shared experiences from other countries and economic regions” he said.

AUC Deputy Chairperson Erastus Mwencha presented the draft guidelines for the implementation of the Assembly decision on financing for the Union.

Mr. Mwencha encouraged the ministers to be more involved in the budget-making process of the Union, the scope of how the 0.2 levy will apply and also identify areas in which the peace fund shall be applied.

-0- PANA AO/AR 16Sept2016

16 september 2016 19:08:12




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