Official Development Assistance (ODA) is one of the most powerful tools for enabling both governments and civil society to support those left furthest behind. But since 2005, when CONCORD began its annual AidWatch report, the European Union (EU) has failed to meet internationally agreed-upon ODA targets.
Each year, the AidWatch report monitors the quantity and quality of EU ODA through the ‘four Es’: Is it enough? Is it employed correctly? Is it effective? And is it equality-focused? AidWatch, and its ongoing activities, holds EU institutions and Member States accountable to meet their own target of allocating at least 0.7% of Gross National Income (GNI) to ODA by 2030. It also provides recommendations for those funds to be used in a genuine and effective way.
The urgency of scaling up efforts towards more and better funding is only underscored in the current context of compounding global challenges.If we are to overcome the obstacles ahead, international cooperation will be paramount. And the EU, as the world’s largest donor of ODA, must do its part to move from a payer to player.
Every year the AidWatch Report analyses the EU’s performance against the target of spending 0.7% of GNI on ODA; and every year it is confirmed that the EU has not met this target. In 2021, the EU accounted for 43% of all ODA contributions reported to the OECD. This equates to 0.48% of their combined GNI as expenditure on ODA – a slight decline in relative terms from 0.50% in 2020, but a colossal miss in the context of compounding global crises.
These latest figures demonstrate once again that the EU, in common with other high-income economies, continues to fall far short of the 0.7% target to which it is committed in signing up to the UN’s Sustainable Development Goals (SDGs) by 2030. In fact, the UN first agreed to the 0.7% target of GNI over half a century ago in 1970. In October 1974, it was agreed that the target should be met by 1975, and in no case later than 1980. EU Member States in 2002 agreed to reach the target by 2015. In 2005, the 0.7% target also served as a reference for renewed political commitments to increase ODA, at the G8 Gleneagles Summit and the UN World Summit.
The commitment to meet the 0.7% target of GNI to ODA is essential to ensure governments remain accountable for their level of support to international partners, as well as to keep up the momentum to meet the demands of the UN 2030 Agenda. The target must not be missed, and EU efforts must be stepped up now.
The commitment to meet the 0.7% target of GNI to ODA is essential to ensure governments remain accountable for their level of support to international partners.
While this report looks at 2021, the impact of Russia’s invasion of Ukraine cannot be overlooked.
This graph shows the evolution of EU27 ODA as a percentage of GNI in a 8-year period (2014-2021). It shows the difference between total and ‘genuine’ ODA, that is, after discounting elements that, following CONCORD’s methodology, fall under the inflated aid category (see next section for more detail). Source: OECD
What is inflated ODA?
According to the OECD Development Assistance Committee’s (DAC) official definition, donors can report a number of financial flows as ODA, such as imputed costs of hosting international students, first year costs of receiving refugees in the donor country, interest repayments on concessional loans and, crucially for this year’s AidWatch analysis, the donation of in-excess COVID-19 vaccines. All of these issues are controversial, and CONCORD considers such areas as inflated aid, since they do not genuinely contribute to the objectives of development or international cooperation or do not represent a real effort on the
part of donors.
EU14 refers to the 14 EU Member States that are directly committed to reaching the 0.7% target. EU13 refers to the remaining Member States that are expected to reach an intermediate target of 0.33% GNI/ODA. Source: OECD
In 2021, levels of inflated aid reached 16% of all EU ODA, breaking a progressively downward trend over the last four years. The EU continues not to employ all ODA correctly.
Inflated aid only pushes further the date for the EU to meet its aid commitments. If only genuine aid would be counted, the EU will not meet the 0.7% target until 2039.
according to international commitment" data-highlight-color="rgba(232,191,60,0.12)"
These calculations are developed by CONCORD based on OECD data.
The scale of in-excess vaccine donations reported by EU Member States was a game-changer for 2021 ODA figures. For some Member States, the reporting of these donations was crucial to show an increase in the overall figures, or even helped offset real decreases in their ODA levels. The graph below shows the scale to which in-excess vaccine donations by EU Member States contributed to their overall levels of aid inflation.
This graph shows the contribution of in-excess vaccine donations in EU Member States’ inflated aid. These calculations are developed by CONCORD based on OECD data.
As the largest global donor of ODA, the EU requires an effective institutional framework to deliver development assistance. Over the past two years, the EU has announced and launched three major initiatives:
- A new budget instrument: the Neighbourhood, Development and International Cooperation instrument (NDICI)-Global Europe;
- A new approach to joint development assistance programming across the European Commission, EU Delegations and Member States: “Team Europe;”
- A new investment strategy: Global Gateway.
CONCORD is concerned that the EU’s progress so far remains strikingly weak in supporting the needs of its international partners.
What are the guiding principles of aid effectiveness?
The Busan Partnership for Effective Development Cooperation, agreed in 2011 by consensus among global development assistance organisations, established a set of principles to guide aid effectiveness. These include: focus on results; ownership of development priorities by partner countries; inclusive partnerships; and transparency and mutual accountability. The AidWatch report looks at whether any improvements have been made over the last year in terms of aid effectiveness. AidWatch interviewed several CSOs in partner countries and EU officials for their input.
Second, in May 2022, Team Europe was presented with a Partnerships Portal, an Estonian-created platform for development cooperation projects. Although this is a positive new initiative, it is geared to the needs of EU institutions and Member States and is not readily accessible to CSOs or the public. This does not respect the Busan transparency principle.
Third, interview evidence reveals issues around effective collaboration among stakeholders engaged in “Team Europe.” Although some stakeholders are experienced in joint programming, one official notes ‘the key issue is trust’, adding that larger Member States want to maintain their influence and that “it is more difficult to achieve a ‘virtuous cycle’ of trust and cooperation.” A fourth, related challenge appears to be the coherence and coordination of data management on data management of TEIs." data-inclusive-title="Very weak and concerning" data-inclusive-description="There is a clear and ongoing lack of ownership by EU partner countries in programmes specifically aimed at addressing their needs. The EU describes the programming process of TEIs as a “joint analysis of the challenges and opportunities in a partner country and [...] a joint response at country level based on the EU’s values and interests and in support of that country’s development priorities and associated financing strategy”. This ‘joint’ approach, however, is largely excluding CSOs when and where their inputs are most needed, and the EU is still not following the principle of partner country ownership. This mindset and operational approach need to change."
The eradication of poverty has been an external relations’ objective of the EU, since its explicit inclusion in the 2007 Treaty of Lisbon, which also promotes equality as one of the European Union’s founding values. The EU commits to “uphold and promote” these values “in its relations with the wider world”. Yet latest evidence on the EU’s performance in 2021 shows that:
- EU ODA to Least Developed Countries (LDCs) is still far too low;
- more ambitious programming is needed for gender equality;
- climate financing has provided not much new, and even less additional money;
- support to civil society needs real commitment, backed by more core funding and the removal of constraints on civil society organisations’ (CSOs) ability to operate in fragile and conflict environments.
EU ODA to LDCs: Still far too low
ODA financing is crucial for LDCs. Yet, according to the latest consolidated data (from 2020), only 0.12% of EU Member State GNI was donated to LDCs. This is well below the 0.15-0.2% target agreed by the EU and demonstrates a continuing trend of lagging behind. Only five EU Member States reached the target in 2020: Luxembourg, Sweden, Denmark, Belgium and Germany.
It is clear that there is still a long way to go in order to ensure that EU ODA is allocated where it is most needed. When comparing the top 10 recipients of EU collective ODA against the world’s 46 LDCs, only three countries were in both lists in 2020: Ethiopia, Somalia and Afghanistan. On the other hand, in 2021 Turkey – an upper-middle income country – remained the largest recipient of EU ODA (EUR 1.67 billion), followed by Syria (EUR 690.3 million) and Somalia (EUR 306.21 million).
Supporting gender equality: More ambitious programming needed
The EU has committed to addressing gender equality, both in the EU and in its wider international engagement in its series of Gender Action Plans, the third of which (GAP III), was published in November 2020. In 2020, 44% of bilateral aid was allocated to projects with gender equality components. In percentage terms, this figure is unchanged from 2019. Broken down into ‘principal’ and ‘significant’ support, however, spending where the ‘principal’ as opposed to ‘significant’ focus fell from 5.57% to 5.13%.
Clear and ambitious targets are essential for achieving demonstrable and sustained improvements on gender equality. The present target applied by the European Commission is to ensure that 85% of the projects it supports have a gender equality focus. CONCORD believes that this does not capture sufficiently the level of change needed to lift funding levels decisively, not least because the target does not include a specific measurement of financing. The Commission should develop its approach further by requiring and achieving that at least 85% of all the project funding provided includes gender equality measures. On top of this, 20% of the funding should specifically have gender equality as its principal objective.
Climate finance: Not much new, even less additional money
Partner countries are particularly vulnerable to the adverse impact of the climate crisis. In the vast majority of cases, their geographical positioning exposes them more seriously to the climatic effects of global warming.
Climate financing accounted for 14% of bilateral ODA for EU Member States and the EU institutions in 2020, amounting to EUR 12 billion. This has doubled the bilateral ODA spent on climate finance over the past eight years from 7.3%(2012), and represents an increase from an average share of ODA on climate financing of around 9.5% since 2014. Climate financing spending in most Member States is on an upward trajectory. However, only four Member States (Belgium, France, Germany and Netherlands) spent over 10% of their ODA budgets on climate finance in 2020.
The most significant pledge to date is the commitment to reach annual funding of USD 100 billion, agreed by the COP-15 Climate Conference in 2009 with a 2020 deadline. However, this pledge had not been delivered by the time of the COP-26 meeting in Glasgow in October/November 2021.
Support to civil society: Real commitment needed, backed by more core funding
CSOs in EU partner countries are best placed to reach people in communities, in both urban and rural areas. They engage with and advocate for specific groups in their local communities, especially those who are marginalised, underrepresented or disadvantaged.
In 2020, the EU and Member States contributed just 12.7% of their total bilateral ODA to CSOs, accounting for EUR 7.7 billion, which is down from 14.6% in the previous year. However, this overall figure has to be examined in greater detail: only EUR 1.5 billion was core funding, that is, funds that can be used by the organisations to cover organisational costs, as well as to achieve their desired results without being specific attached to a project or programme. This type of funding is key to ensure independence, long-term stability and the right of initiative of CSOs. However, the vast majority of EU ODA to CSOs is usually ‘earmarked,’ that is, projects implemented by the organisations, but initiated by the donor; in 2020, this accounted for 81% of all EU ODA to CSOs, while the remaining 19% was for core funding.
Recommendations to the EU
TO ENSURE ENOUGH ODA...
TO EMPLOY ODA CORRECTLY...
TO ENSURE EFFECTIVE ODA…
TO ENSURE EQUALITY FOCUSED ODA...
EU ODA aimed at supporting gender equality
The European Commission should adopt the target of dedicating 85% of EU ODA to gender as a principal and significant objective, and reach the target of earmarking 20% of EU ODA for projects directly addressing the root causes of gender inequalities and having gender equality as a principal objective.