Somalia's Defence Minister, Abdikadir Mohamed Nur, said the funding is critical in supporting the efforts of ATMIS and Somali Security Forces.
The meeting further delved into the crisis in Sudan and its regional repercussions and the situation in Somalia.
The transition to a new mission is occurring at a critical time of tensions between Somalia and Ethiopia, which began in January this year and escalated in the months that followed.
The AU PSC had also confirmed that Djibouti had also offered to send troops to the mission that begins its operations in January 2025.
Somali forces are yet to occupy the two bases of Burahache and Gherile from where Kenyan soldiers withdrew in July last year
An August 1 communiqué from the AU Council, proposing an AU-led peace support operation to replace ATMIS, was welcomed by the Security Council.
This appeal arises amid concerns over regional dynamics, particularly after Egypt, Ethiopia's regional rival, proposed deploying its troops as part of the peacekeeping efforts.
The mandate of ATMIS is set to expire in December this year.
The Peace and Security Council of the AU announced that the decision was approved on August 1.
In June of this year, ATMIS began handing over its forward operating bases in Lower Shabelle to the Somali Security Forces (SSF) as part of this drawdown.
Friday's deliberations on the new mission's CONOPs will also delve into probable sources of funding for adoption in the hope that the new mission will not suffer the funding shortfalls that befell ATMIS.
Uganda has about 5,000 troops serving in Somalia under the African Union Transition Mission in Somalia (ATMIS) peacekeeping mission.
Presiding over the handover of the base, the Deputy Representative of the African Union Commission (AUC) for Somalia, Siyuvile Bam, assured continued support for the Somali-led peace and security efforts despite the transition.
In a post on X, Hussein said the government had put in place conditions that the terror group must adhere to before any talks can begin.
The council expressed concerns that the full implementation of phase three drawdown could lead to capability gaps that may have significant implications for the security of Somalia and the wider region.
The African Union peacekeeping mission said the transfer of the military facility is according to plans in Phase Three of ATMIS's drawdown efforts, aimed at enhancing local security capacity.
The third phase of the troop drawdown follows the successful completion of the first two phases, finalised in June 2023 and January 2024, respectively.
The discussions addressed serious crimes like homicide, trafficking in persons, smuggling of migrants, firearms and ammunition trafficking, illicit narcotics trafficking, piracy, financial crimes, and extortion.
