It is more important than ever before to defend an adequate budget for development cooperation

Interview with Murielle Laurent, Member of European Parliament. Ms. Laurent is originally from Yonne. She was Vice-President of the Metropole de Lyon and then Mayor of Feyzin (Rhône) from 2017 to 2024. In 2024, she was elected Member of the European Parliament and joined the Progressive Alliance of Socialists and Democrats. Within the European Parliament, and as a member of the Committee on Development, Ms. Laurent works to strengthen the EU’s commitment to development cooperation and the fight against global injustice.

In recent years, the European Union has been changing its approach to development cooperation, moving from traditional development aid to international partnerships that supposedly benefit both the EU and partner countries. The new European Commission is expected to move further in this direction in the next few years. Do you believe this approach is helping to rebuild trust with partner countries? What else can the EU do differently to assert itself as a trusted partner?

In this time of conflict, climate and health crisis, and growing inequalities, the EU’s commitments are more crucial than ever before. It is essential for the EU to maintain a very ambitious EU agenda in development policy and effective humanitarian assistance. Investing in development policies with a forward-looking budget will benefit both EU citizens and people worldwide. It will reinforce global stability and security for all. I am convinced that the shift from donor-recipient dynamics towards mutually beneficial partnerships will help to rebuild trust and brings benefits to the local population. 

Other players, such as the BRICS countries, have become more assertive and it is crucial for the EU to maintain the trust of its partners at a time when strong alliances are vital. To remain credible and relevant on the world stage, the EU must listen to partner countries, truly support their interests, and deliver now on its international commitments. 

Furthermore, to assert itself as a trusted partner, it is essential for the EU to enhance transparency from the very beginning of development projects and to seriously take needs and priorities into consideration. We must also closely monitor implementation and results to ensure real, tangible benefits to local populations. 

To this end, the EU must engage in an ongoing and genuine dialogue with state actors, but also from civil society, both within the EU and from partner countries.  

There is a broad consensus that grant-based support is not enough to achieve the SDGs. The EU’s new offer for international partnerships, the Global Gateway, heavily focuses on mobilising the private sector for big infrastructure projects. Do you believe the EU is moving in the right direction with this approach? What is the added value of investing in other sectors, such as human development?

Time is running out for the UN 2030 Agenda and the achievement of the Sustainable Development Goals (SDGs). While Global Gateway and the Team Europe approach are important to increase funds from the private sector for our partnerships, we must make sure that these funds are actually used to reach the SDGs, and more specifically in the interest of human development and for the fight against poverty and inequality. 

The development and adoption of the Inequality marker (I-Marker), introduced during the last mandate by Commissioner Urpilainen, is an important tool to ensure the targeted use of EU development funds. The I-Marker ensures that poverty and inequality reduction are the principal objectives of development cooperation (as laid down in Article 208 TFEU), favouring projects that benefit the poorest and most vulnerable to a greater extent, including women. I would like to see the European Commission fully implement the I-Marker by allocating sufficient resources to conducting Impact Assessments, which are crucial for planning programs that adequately target these groups and evaluate the social impact of development cooperation. 

In my opinion, it is also of utmost importance to invest largely in the education sector. Education plays a key role in eradicating poverty and inequalities as well as in preventing man-made humanitarian crises. Access to quality education is vital to ensure peaceful, inclusive, and prosperous life for all societies. Currently, more than 52 million children in countries affected by conflict are estimated to be out of school. Children in the Gaza Strip, and a significant number of children in Sudan, have missed more than a year of school. Numerous schools have been damaged or destroyed in Ukraine, the Democratic Republic of the Congo, and in Syria, leaving millions of children without access to learning. Hence, an adequate part of global humanitarian aid must be allocated to education and more actions have to be taken to ensure access to education for all. In order for children to be able to fully focus on their education, they must be healthy. I would also therefore like to see greater EU support for global health.

Although the EU, together with other world actors, has agreed on ambitious SDGs and development principles, finding the finances to achieve these objectives remains a challenge that the EU must rise to.

President Von der Leyen has expressed her desire to develop a future EU budget that is more focused, simpler, and more impactful. She also highlighted the need to revamp the EU’s external action financing. In your view, what should this new external action instrument look like? What level of priority should human development be given in this new instrument?

The current context of worldwide instability generates more and more inequalities. Global disparities are increasing and crises such as wars and climate change, extreme poverty, and hunger are worsening and affecting people around the world. Meanwhile, the far right has gained considerable weight in national and European elections, which has led to shifts in the distribution of priorities. This represents a danger for development budgets, both at EU and Member State level. Hence why, it is more important than ever before to defend an adequate budget for development cooperation to enable us to deliver our commitments of poverty eradication. In particular, we will have to pay particular attention to the next Multiannual Financial Framework (MFF).

In my opinion, the EU new external action financing instrument should have as its primary objective to contribute to a more equal world where human rights and the environment are respected.

In addition, any new external action instrument must be transparent. The European Parliament must be involved and have a say on the allocation of funds for specific countries, thematic areas, and on the choice of priorities. The European Parliament’s powers of scrutiny over the Commission must be exercised as appropriate 

Finally, constant dialogues with civil society are of the utmost importance. This new instrument must be guided by the human development impact of its actions with particular attention paid to the most vulnerable. It must also allow for new priorities leading to the sustainable development of our partner countries. 

Our promise to leave no one behind must come true.

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Originally published by Global Health Advocates: https://www.ghadvocates.eu/important-to-defend-adequate-budget-development-cooperation/

ODA needs to be linked to the development needs of partner countries

Interview with Paul Okumu, Head of the Secretariat of the Africa Platform (AP). AP is a Pan African Platform working with societies, governments, and businesses to rebuild the social contract and re-establish the society as the source of state legitimacy and the final authority to whom all development actors, businesses, and development partners-are accountable. Paul Okumu is also a member of the Steering Committee of the Global Gateway Civil Society and Local Authorities Advisory Platform.

In recent years, the European Union has been changing its approach to development cooperation, moving from traditional development aid to international partnerships that supposedly benefit both the EU and partner countries. What are the consequences for African partners of the EU scaling up this approach? Are African partners convinced that the EU’s offer is indeed a better offer compared to other global players?

The change in approach is ironically positive, but not for the reasons you would think. This change will not help our continent. However, with the EU making it clear what it wants and not hiding its intentions – by no longer pretending that they are providing grants instead of investments – the conversation with African partners will become more honest.

At the end of the day, there is not much difference between what the EU offers, and what China offers. The difference was in semantics and honesty. The change in the EU’s approach will force an honest conversation on what qualifies as aid, investment, or blended finance. Why should it be blended finance for EU corporations in Africa, but not for African companies? European companies have been using blended finance to kick local companies out of their own markets. The shift towards a more right-wing Europe is also due to the fact that EU citizens think their tax money is going to Africa, without having any real effect. In reality, this money has been going to EU corporations instead of benefitting the African people.

European multinational corporations (MNCs) are taking over African countries, and investment to these MNCs is being marketed as aid, despite not being aid in the original sense of the term. China is exploiting the breach of trust between Africa and Europe. China is upfront about its intentions, and openly offers loans, without pretending that these loans are aid. This allows true negotiations to happen with African partners, which we Africans find to be a relief. With China, we can openly negotiate interest rates without pretending it is aid.

In changing its approach, we would like to see a “moral” EU, which practices what it preaches. Trying to conceal its interests behind aid and other forms of assistance is only perpetuating the problems. The Global Gateway, for example, is going to leave Africa with a EUR 627B debt that it never planned for and never wanted. It has killed economies across Africa, leading to the very migration that the EU claims it wants to stop. 

The main objective of Official Development Assistance (ODA) is to support the economic development and welfare of low- and middle-income countries, it is connected to objectives linked to human development, access to healthcare, and basic education. How do you think the EU can improve its ODA and support the growth of partner countries? How can ODA be more transformative?

First of all, ODA needs to be linked to the development needs of partner countries. The biggest challenge raised by nearly all countries over the years is that donor countries provide ODA for things they want done, and how they want them done, not what the so-called partner countries want. ODA is always linked to a specific agenda that the donor country wants to achieve. For instance, the EU directs a lot of its ODA into supporting governance and democracies, but they support only a form of democracy and governance that makes African countries become more like Europe so that it can expand its market for products. Another share of EU ODA is given to create the environment that makes it easier for European corporations to operate in Africa, especially in the agricultural and resource rich countries of the DRC and Ethiopia. This idea of providing ODA that only meets the interests of donors is not only self-serving but adds little value to countries that receive it.

ODA faces three fundamental challenges:

1. First, contrary to some belief, most ODA never reaches the so-called partner countries. If you look at the detailed calculations by the OECD/DAC (made up of countries that provide ODA) you will be surprised that most of money marked as ODA ends up benefiting the multinationals and the governments that provide it. This is done through a creative mechanism known as ‘tied aid’, which has two components. First, the money earmarked as ODA is used to underwrite risks associated with European corporate investments in Africa. This is money literally given to European corporations to have an advantage in procurement and contracts over local players. And yet, this is classified as ODA. The second, is money that is given as loans. The OECD has come up with a complex set of calculations where the EU can get money from its own central bank at 0.4% interest, lend it to Nigeria at 5% interest, and classify it as aid. That is what many European countries did during COVID-19 pandemic. Germany, for example, literally printed money and gave it out as loans. The first step is to stop lying over what constitutes ODA and be honest with citizens on both sides.

2. Secondly, the bulk of ODA is linked to specific changes and demands that end up harming the countries that receive it. For example, Ghana’s economy nearly collapsed because the ODA given was tied to a mandatory opening up of its industries and minerals and overall economy to multinationals and European products. ODA to Kenya and Nigeria in 2023/2024 was conditional on removing subsidies on fuels, which has a knock-on effect on the entire economy, an effect whose financial implications wipes out the entire value of any ODA given to these countries. Countries providing ODA will tell you that they are attaching these conditions so that partner countries can raise money to pay back any loans that they owe. However, this creates a vicious cycle. Why would a European country insist on a partner country removing a social support programme that ends up increasing the very poverty the EU claims it is trying to alleviate? This negates the whole purpose of ODA, in that it actually ends up weakening partner countries’ economies.

3. Finally, the bulk of ODA is given to a very small group of countries. It will surprise many that over the past 15 years, ODA has traditionally gone to the same usual countries. For a long time, it was Afghanistan, Turkey, and Ethiopia as well as Egypt. According to the OECD figures for 2023, most of the ODA went to just six countries: Ukraine, Syria, India, Ethiopia, Bangladesh. The reason behind this is that these are the countries with the largest number of European corporations, or where the EU has clear military and/or economic interest.

The European Union has started to develop its proposal for its next multiannual budget (MFF post-2027) and its future external financing instruments, which will frame its partnership with third countries. What would you like to see coming out of these proposals? 

We should use the development of these proposals to have an honest discussion. For that, there are a few points I would like to raise:

1. Open clarity, away from the OECD, on what development cooperation actually is in financial terms: the OECD definition of what constitutes “aid” is problematic. It is important to be transparent about ODA and its purpose. If it is a grant, let it be a grant, and let us make it clear it is a grant. Otherwise, we can talk about investments on equal terms, but let us not pretend it is aid.

2. Better terms for financing: more predictable financing, and clear, consistent financing. The EU is notorious for recycling money. We need the right financing, at the right time, consistent, and on favourable terms. This is also linked to the development financial architecture, and who sets the interest rates. Credit agencies, based in the Global North, have immense power to put African partners in very difficult positions when they downgrade them, making access to development finance very, very, expensive.

3. If we decide to work with the private sector, we should get rid of the term “blended finance”: we should not call it investment either, if it is actually a subsidy to European companies. We should create a level playing field for all actors on the market. This cannot happen if developed countries subsidise their own companies in developing countries.

4. An opportunity for independence in domestic resource mobilisation: right now, OECD countries, especially EU Member States and the US, make it very difficult for African governments to collect taxes from MNCs, which are often based in the Global North. In one meeting, I recall an ambassador saying that if only his government could collect the taxes that they were owed by MNCs, they would not need development aid. 

5.  The principle of policy coherence must be at the heart of external financing structures: We want to know how much money Germany is giving, where it is going, and how/if it complements EU funding. This allows synergies to be created with limited resources. A lot of money gets lost because of policy incoherence. Team Europe should be increasing it. The challenge is that members of Team Europe have different priorities internally.

6. Interconnectedness: the EU should be financing the Sustainable Development Goals (SDGs) by supporting national development strategies. In recent years, the EU has put a lot of money into education in Africa. But here is the catch: they are putting it into Technical and Vocational Education and Training (TeVT), not in basic or higher education. This is not a coincidence: the EU has assessed the average age of migrants, and it is providing technical skills that will keep them in their countries of origin.

More transparency is needed, especially at recipient level. I would also underline transparency on how the EU supports CSOs. A lot of money goes into “black boxes” of civil society, which only donors know about, and local governments are unaware. We did a study in 2016 that showed that 97% of grants given to NGOs in the South went to International NGOs. Only 2,7% ended up with NGOs in the South. More transparency is also needed on financing from the European Investment Bank (EIB) and Development Financial Institutions, which should be working closely with partner countries and ensure financing is actually benefiting partners. We need transparent development cooperation, to the last euro.

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Originally published by Global Health Advocates: https://www.ghadvocates.eu/oda-linked-development-needs-partner-countries/