In New EU Aid Agenda, Emphasis on Governance, Growth

By Ivy Mungcal –

The European Union should focus its development assistance on countries where it can have the biggest impact and on initiatives that support human rights, democracy, good governance, and inclusive and sustainable growth, the European Commission said in its proposal for increasing the impact of the bloc’s development policy.

The commission was set to formally unveil the proposal, dubbed “Agenda for Change,” on Thursday, Oct. 13, but a leaked copy was circulated within the European development community. Initial reactions indicate that leading Europe-based non-governmental organizations find the agenda lacking.

Based on the commission’s proposal, the EU would provide more funds and support to its country and regional aid programs, and projects related to human rights, democracy, governance and growth. More aid is also expected to be channeled to “countries most in need and where the EU can have a real impact, including fragile states.”

Despite this shift in focus, the commission maintained that the EU’s overarching goal of poverty eradication will not be weakened and that the bloc’s commitments to the Millennium Development Goals and to aid effectiveness remain firm.

EU Commissioner for Development Andris Piebalgs told Devex last year that Europe is “very much focusing” on the MDGs, especially the areas that are most off track. In a new interview to be published by Devex next week, Piebalgs further fleshes out this new EU aid reform agenda.

Value for money

The European Commission proposed a “differentiated EU approach to aid allocation and partnerships” that considers country needs, local capacity and potential EU impact in determining where to send EU funding. This approach, according to the commission, is key to ensuring “best value” for EU aid, which stands at €53.8 billion ($73.94 billion) in 2010.

In addition, the commission also called for better coordination between the EU and its member states, and for improved policy coherence. In line with this, the commission proposed the development of a common EU results reporting framework, use of joint EU and member states response strategies, and launch of new thematic programs focused on improving links between poverty eradication and global interest.

The need to support private sector development in aid recipient countries is also highlighted in the commission’s proposal.

“The EU should develop new ways of engaging with the private sector,” the leaked copy of the proposal reads. “It should explore up-front grant funding and risk-sharing mechanisms to catalyze public-private partnership and private investment. The EU should only invest in infrastructure, where the private sector cannot do so on commercial terms.”

Development community reacts

Concord, the largest network of Europe-based NGOs, welcomed the Agenda for Change’s recognition of the need to support human rights and good governance and of coordinated EU action as well as of the role of civil society. But the group said it was disappointed with the lack of concrete actions in the proposal and its outline of “self-interest policies.”

“Unfortunately the most important change in [EU Commissioner for Development Andris] Piebalgs’ new agenda is that aid to the world’s poorest is being cut, diverting funds towards energy and private sector investments which are in the interest of the EU only, not the developing world,” Concord Director Olivier Consolo said in a statement.