Commission acts to boost efficiency of EU development aid

Summary: March 11, 2004: Commission acts to boost efficiency of EU development aid through better coordination and harmonisation (Brussels)

The European Commission has today adopted its second annual report on Member States' efforts to deliver on their commitments taken in the context of the Financing for Development Conference in Monterrey (2002). The report concludes that Member States remain firmly on target to significantly increase their volume of Official Development Assistance (ODA) by 2006. Based on the current forecasts and road maps, a total of over € 19 bn of additional EU ODA will be made available during 2003-2006. The annual ODA effort will progressively increase to € 38.5 bn or 0.42 % of the total EU GNI in 2006. This is € 10 billion more per year in comparison with 2002, and equivalent to a 35 % increase. The estimates also cover the countries that join the EU this year. But the report also concludes that the EU has still failed to significantly strengthen co-ordination of its development policies and to harmonise aid procedures. In an attempt to boost efficiency of EU development aid and reduce the administrative costs linked to its implementation, the report therefore outlines a number of concrete recommendations on how to improve the current situation. This includes a Commission proposal to establish a common framework for aid implementation procedures.

Commissioner for development co-operation and humanitarian aid, Poul Nielson, said: "We have been talking about coordination of aid policies and procedures at EU level since 1974. It has been 30 years of good intentions. It is now high time to act on our intentions. We owe it to our partner countries to simplify development aid management and we owe it to our tax payers to make the best use of the funds that are available to us."

Increasing Official Development Assistance - A key aspect of the Monterrey conference was the commitment of the donor community to significantly increase Official Development Assistance. The EU took the lead in this effort when member states took it upon themselves to collectively increase their average ODA from 0.33 % of GNI in 2002 to 0.39 % in 2006. This was coupled with an individual commitment for member states that had not yet reached the UN target of 0.7 % of GNI to reach at least 0.33 % in 2006. The European Commission concludes that Member States for the second year running remain firmly on target to deliver on - and even exceed - this key commitment. Based on current achievements and road maps outlined by individual Member States, it is estimated that EU ODA will increase every year and reach € 38.5 billion or 0.42 % of the total EU GNI by 2006. This would represent an additional € 10 billion in ODA in 2006 compared to 2002.

Year	2002	2003	2004	2005	2006	Total
EU ODA (Euro bn)	28.5	30.2	31.5	33	38.5	162
EU ODA as % of GNI	0.35	0.35	0.36	0.37	0.42	'
Additional resources compared to 2002 (Euro bn)	'	1.7	3	4.5	10	19.2

Importantly, this roadmap covers the EU as a whole, including the ten accession countries. The Union would thus actually exceed the Barcelona targets, in spite of the changing landscape for development policy due to the 2004 enlargement.

Making efficient use of scarce funds - The increase of ODA is good news for efforts to eradicate poverty. But more needs to be done to ensure an efficient use of the available funds that remain scarce. Today most member states insist on applying their own national procedures when they manage their development aid in recipient countries. Many recipient countries are therefore faced with a multitude of different reporting requirements, accounting standards etc. This is imposing an administrative burden on these countries which is at times crippling for their already weak administrative capacity. Member States themselves are foregoing important efficiency gains in their administration by duplicating efforts for instance in analysing the policy framework in recipient countries. Unfortunately the Commission once again concludes that in spite of the evident potential efficiency gain from closer co-operation, and in spite of the numerous commitments to act, few concrete steps have been taken to achieve closer co-ordination of policies and harmonisation of procedures.

The Commission is therefore now proposing a series of concrete measures to make harmonisation efforts a reality. Most importantly it is proposing to outline a directive which would offer a common legal framework for aid implementation procedures. Other suggestions include improving coordination of multi-annual programming and analytical work and outlining local EU Action Plans for coordination and harmonisation in partner countries where two or more EU donors have a co-operation programme.

With enlargement 10 new countries will join the ranks of international donors. By acting now and promoting real harmonisation of policies and procedures it will be easier to integrate the 10 new Member States into the donor community. This window of opportunity should not be missed.

Background

The International Conference on Financing for Development (FfD) in Mexico, 18-22 March 2002, adopted an ambitious resolution - known as the Monterrey Consensus - to address the challenges of financing for development around the world, particularly in developing countries. The EU - responsible for more than 50 % of the worldwide Official Development Assistance (ODA) - took a leading role in ensuring the positive outcome of the FfD conference.

The EU defined its contribution to the FfD at the European Council in Barcelona on 14 March 2002 by making eight clear commitments. In addition to the targets for increasing the volume of ODA and strengthening co-ordination, the commitments refer to further untying aid, debt relief, Global Public Goods, trade related assistance and innovative sources of financing (see Memo/04/54).

The EC makes an annual report where it takes stock of the implementation of these eight commitments. For the first time, the contribution by the future Member States that will join the Union on 1 May 2004 is also covered.

For further information contact:

http://europa.eu.int/comm/development/index_en.htm

Ref: EC04-046EN
EU source: European Commission
UN forum:
Date: 11/3/2004

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