EU external aid: who is it for?

April 2011

Contents

Executive summary

2

Introduction

4

The key problems with EU aid

7

1. Lack of poverty focus

7

2. Effectiveness and accountability

9

3. High administrative costs and bureaucracy

11

4. Mismanagement, waste and a lack of transparency

13

5. The EU’s growing focus on budget support

16

Conclusions and recommendations

21

Open Europe
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London
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Tel: 0207 197 2333
Fax: 0207 197 2307
www.openeurope.org.uk

Research by Stephen Booth and Siân Herbert

1

Executive summary:



The UK currently contributes £1,424m to EU external aid spending, around 18%
of the UK’s £7,767m total aid budget. The UK Government has said that its
recent “plans to redraw the aid map will concentrate efforts on countries where
UK aid will, pound for pound, achieve the best results in fighting poverty and
building a safer world.” This redrawing of the map must also include EU aid.



Money spent as EU aid continues to be poorly targeted at tackling poverty. Only
46% of EU aid reached lower income countries in 2009, compared with 74% of
UK aid and 58% of EU member state governments’ aid.



Geographical proximity and ties with former colonies continue to determine the
destination of much of the Commission’s foreign aid. From 2000-2009,
developing European countries received $10.49 per capita, while Sub-Saharan
Africa received only $3.94 per capita. Turkey was the top recipient of EU aid in
2009 and other European neighbours Kosovo and Serbia were also in the top ten
recipients.



EU aid, which is managed by the European Commission, currently has
administration costs of 5.4%, which are higher than the UK’s Department for
International Development’s (DFID) costs of 4%, and the UK Government’s target
of reducing these to 2% by 2014-15. Some EU aid streams, such as the
programme for African, Caribbean and Pacific countries, have administration
costs as high as 8.6% - above the ceiling the UK imposes when giving grants to
NGOs.



€1.4bn or 10% of EU aid is needlessly passed on to other multilateral donors
every year, such as the UN and World Bank. This money is simply being recycled
between donors – up to three times in some cases – before it reaches a recipient
country and is subject to unnecessary administration and transaction costs. In
2009, the Commission also agreed to ‘delegate’ €242.7m worth of aid spending
back to the EU’s national governments, which begs the question why the money
was ever given to the EU by member states in the first place.



EU aid is too often not aligned with other EU policies. For example, in 2008, the
Commission established a migration centre in Mali to provide support to migrants
seeking temporary jobs in the EU. However, with only Spain having signed a
migration agreement with Mali, the €10m centre has helped only six Malians find
work in Europe, although the centre also served as an information and education
hub.



The EU’s current drive to transfer up to 50% of its aid directly to recipient
governments’ treasuries, through ‘budget support’, rather than pre-agreed
projects means that the EU risks donating money directly to discredited or
illegitimate regimes.



While budget support does offer benefits, such as better alignment of aid with
recipient countries’ national policies, the EU often lacks the proper controls and
monitoring to ensure money is not wasted or lost to corruption. The huge focus
on budget support risks an overreliance on an unproven development policy.

2



Some aid funding does not even leave the EU, or even Brussels. In 2009 alone,
the EU granted a Brussels-based communications agency nearly €500,000 to
produce various promotional brochures and campaigns. This included €90,000 to
co-ordinate an “I fight poverty” music contest amongst young people in Europe, to
increase “development awareness”. However, Open Europe also highlights
examples of EU aid well spent, which could be built on in the future, where the
link between aid and performance has been strong.

Conclusions and recommendations:
1. Despite some improvements, the EU’s ‘value added’ remains unclear. Despite
the moves towards a greater division of labour, the underlying principle in aid
financing continues to be centralisation in Brussels. It makes no sense for
national governments to pay into the EU aid budget only to receive some of their
funds back, under so-called ‘Delegation agreements’, or see them passed on to
another multilateral donor such as the UN.
2. Contributions to the EU aid budget should be made entirely voluntary, as the
European Development Fund (EDF) element already is. DFID has stated that the
EDF is far better targeted at reducing poverty than the rest of the EU’s aid budget
and that the UK has far more scope to improve performance, precisely because
its contribution is voluntary. The UK should therefore spend its aid budget directly
through DFID rather than via the EU, unless there is a demonstrable EU ‘value
added’ in which case it could opt into specific programmes such as the EDF.
3. The role of the EU should be to provide a forum for coordination between donors,
rather than to act as a ‘28th donor’, serving as an intellectual centre in
development issues and working to improve the aid effectiveness of the worst EU
donors, for example through benchmarking and monitoring of the progress
achieved. It would mean large savings in administration costs.
4. The EU needs to avoid overreliance on budget support for delivering its aid.
Because budget support is less bureaucratic it is a way of getting money out of
the door faster but, as the share of budget support increases, the risk is that
speed is traded for effectiveness and accountability. The Commission should
consider setting a 25%-30% limit on the portion of budget support as a total of EU
aid until the effects of this method are better understood and evaluated.
5. Aid works only when it is combined with good policies and institutions. A large
share of the responsibility lies with developing country governments, but the
policies used by donors also matter. In particular, the EU should open up to
globalisation and embrace the inflow of goods, people and ideas from the
developing world. A good first step would be the phasing out of the Common
Agricultural Policy, and a commitment to an ambitious opening of trade with
developing countries.

3

Introduction
In 2010 the EU, in combination with its 27 member states, spent €53.8bn on Official
Development Aid (ODA), making it the largest aid donor in the world.1 €9.7bn of this
aid was disbursed directly by the EU institutions.2 The question is whether it makes
sense for member states to provide so much of their aid via Brussels and whether it
is spent effectively?
The Commission’s external aid budget includes both Official Development Aid and
other external funding. In 2009, the entire EU external aid budget was €12,298m,
€11,764m of which was counted as Official Development Aid by the Commission.
Confusingly, aid to Turkey, for example, through the EU’s pre-accession funds is
counted as ODA, in the same way as EU development spending in sub-Saharan
Africa.3 This budgeted figure, or ‘commitments’, is higher than the amount of money
that is actually paid out in the given year.
The majority of EU development aid is spent as a portion of the EU’s central budget,
to which all member states contribute. The rest is spent via the European
Development Fund, to which member states contribute voluntarily.4 This aid is
managed by various departments within the European Commission, the EU’s newly
formed External Action Service and EU delegations in third countries.
The EU’s major aid instruments5
Aid funded directly from the EU budget
Amount
€16.9bn (2007-13)
The Development Cooperation Instrument (DCI)
covers country and regional programmes in Asia,
Central Asia, South America, the Middle East and
South Africa.
€11.2bn (2007-13)
The European Neighbourhood and Partnership
Instrument (ENPI) covers Eastern Europe, the South
Caucasus, the near Middle East (including the Middle
East Peace Process), the Palestinian Authorities and
North Africa. It is designed to support the
implementation of the European Neighbourhood
Policy.
€11.5bn (2007-13)
The Instrument for Pre Accession (IPA) covers all
countries that are candidates and potential candidates
for EU membership. Currently these include the
Western Balkan countries, Turkey and Iceland.
1

European Commission press release, ‘Commissioner Piebalgs calls for EU to maintain its leadership
on official development aid as new figures reveal it spent a record €53.8 billion in 2010’, 6 April 2011;
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/410&format=HTML&aged=0&language
=EN&guiLanguage=en
2
OECD figures show that the EU institutions disbursed $13.5bn in ODA in 2010 (2009 prices and
exchange rate); http://www.oecd.org/dataoecd/54/41/47515917.pdf. Using the ECB’s 2009 $-€
exchange rate of 0.716949 this gives EU institutions a figure of €9.7bn disbursed ODA. Disbursements
are less than commitments, which in 2009 totalled €12.3bn.
3
European Commission, ‘Annual report 2010 on the European Union’s development and external
assistance policies and their implementation in 2009’, 2010, Tables 6.3, 6.4 and 6.5, p170-1;
http://ec.europa.eu/europeaid/multimedia/publications/documents/annualreports/europeaid_annual_report_2010_en.pdf;
4
DfID, ‘Multilateral aid review: assessment of European Commission budget’, 2011;
http://www.dfid.gov.uk/Documents/publications1/mar/ecbudg.pdf; and DfID, ‘Multilateral aid review:
assessment of the European Development Fund’, 2011;
http://www.dfid.gov.uk/Documents/publications1/mar/edf.pdf
5
EU aid is comprised of a total of 10 different “instruments” but we have only chosen to highlight the five
most significant in terms of funding here.

4

The Instrument for Stability (IFS) supports both
short term and longer term projects on conflict
prevention, crisis management and peace building.
Aid outside the central EU budget
In addition to aid spending from the EU budget, there
is also the separate European Development Fund
(EDF), a voluntary fund to which the UK contributes
14.8% of the total. It provides support to African,
Caribbean and Pacific (ACP) countries as well as the
EU’s Overseas Countries and Territories.

€2.1bn (2007-13)

Amount
€22.68bn (2008-13)

The EU is also a large provider of humanitarian aid, through the Commission’s
Humanitarian Aid & Civil Protection Directorate General (ECHO), with €930m spent
by the ECHO in 2009.6
The UK spent £7,767m on external aid in 2009/10, £1,424m of which via the EU. The
EU is by far the biggest recipient of UK multilateral aid spending, receiving over half
of the UK’s multilateral aid budget in 2009/10 and 18% of the UK’s total aid
spending.7
The UK Government has recently taken steps to achieve greater value for money
from its aid and has stated that its “plans to redraw the aid map will concentrate
efforts on countries where UK aid will, pound for pound, achieve the best results in
fighting poverty and building a safer world, and where Britain is in the best position to
deliver results”.8 Part of this “redrawing of the map” should include an evaluation of
UK aid that is spent via the EU.
Attempts to reform
Since 2000, in response to criticism about the effectiveness of EU aid, the European
Commission has embarked on a series of reforms.9 Oxfam has suggested that, “EC
aid for the large part is significantly more effective than it was a decade ago.”10
For the first time, the objectives of the Commission’s aid budget were spelled out:
there was to be a clear focus on poverty reduction; the EuropeAid office was
established within the Commission as a single implementing agency to handle
external aid; the bulk of aid management tasks were shifted from Brussels to the
EU’s 136 newly-upgraded delegations across the world; and Country Strategy
Papers were introduced as part of a greater focus on achieving results.
The European Commission has made progress in stream-lining some of the
bureaucracy involved in administering EU aid with the creation of the EuropeAid
Development and Cooperation Directorate-General in 2011. This brings together the
6

ECHO, ‘Breakdown of funding’;
http://ec.europa.eu/echo/files/funding/budget/funding_breakdown_2010_en.pdf
7
DFID, ‘Statistics on international development 2005/6 – 2009/10’, 2010, p19;
http://www.dfid.gov.uk/Documents/publications1/sid2010/SID-2010.pdf; This is the UK’s Gross Public
Expenditure on aid, which includes DFID’s aid budget and all other sources of UK aid.
8
DFID press release, “Mitchell redraws aid map to transform lives of millions”, 1 Mar 2011
http://www.dfid.gov.uk/Media-Room/Press-releases/2011/Mitchell-redraws-aid-map-to-transform-livesof-millions/
9
See Open Europe, ‘EU aid: is it effective’, 2007 for a more in depth discussion about the history of EU
aid; http://www.openeurope.org.uk/research/euaid.doc
10
Oxfam, ‘UK multilateral aid review’ august 2010, p9;
http://www.oxfam.org.uk/resources/policy/debt_aid/downloads/ogb-multilateral-aid-review-100111en.pdf

5

two former separate Directorates DG Development and DG EuropeAid and will act as
a ‘contact point’ for both the EU’s newly created External Action Service, which
oversees EU delegations, and the various other Commission DGs involved in
development policy, such as DG Trade and DG Enlargement.
The December 2005 ‘European Consensus on Development’ was agreed under then
Development Commissioner Louis Michel to increase aid effectiveness, proposing
greater co-ordination of procedures and policies to divide labour more effectively
between the Commission’s activities and member states’ bilateral aid programmes. A
2006 reform also consolidated a confusing 35 different aid instruments down into a
more manageable 10 – the most significant of which are set out in the table above.
However, despite these reforms it remains unclear whether the Commission’s role is
to act as an all-encompassing aid donor or as a niche player complementary to the
member states’ existing aid programmes. While the EU could fulfil a valuable
coordinating role, it makes no sense for the EU to be a ‘28th donor’ with a large
bureaucracy in parallel with the member states.
In the following section we outline the key problems with EU aid, which illustrate why
the EU’s role needs to be more narrowly and robustly defined vis-à-vis member
states.

6

The key problems with EU aid
1. Lack of poverty focus
Despite the Lisbon Treaty stating that the EU’s development policy “shall have as its
primary objective the reduction and, in the long term, the eradication of poverty,” not
enough EU aid reaches the world’s poorest countries. Geopolitical considerations
(immigration from and political stability in neighbouring countries) and old colonial
ties still dictate where much of the EU’s money is spent.
Concord, a group of European NGOs, has noted that although EU development
funding has increased in past years, the EU neighbourhood and enlargement
budgets are expanding much faster than the budget available for the poorest
countries. They note that, “Between 2004 and 2008 aid to Europe increased by 135%
in constant terms while aid to the world’s least developed countries only grew by
35%.”11 Turkey was the top recipient of EU development aid in 2009 and other
European neighbours Kosovo and Serbia were also in the top ten recipients.12
Where is EU aid spent? EU aid per capita ($) 2000-2009
$12

EU aid per
capita ($)
$10

$8

$6

$4

$2

$0
Europe

Oceania

North
Africa

Middle East Central
SubAmerica
Saharan
Africa

South
America

South &
Central
Asia

Far East
Asia

Average net ODA per capita 2000-2009, OECD DAC database; http://stats.oecd.org/index.aspx

The above regional breakdown of EU aid spent annually between 2000 and 2009
shows huge disparities, with developing European countries receiving $10.49 per
capita on average, while Sub-Saharan Africa receives only $3.94 per capita and
South and Central Asia only $0.46 per capita. Geographical proximity and, in the
case of the Oceanic countries of the Pacific ($7.73 per capita), ties with former
colonies, continue to determine the destination of the Commission’s foreign aid.

11
Concord, ‘Penalty against poverty: more and better EU aid can score Millennium Development Goals’,
p21, 2010; http://www.actionaid.org/assets/pdf/concordreportlight.pdf
12
OECD DAC Database; http://stats.oecd.org/index.aspx. Turkey received $787m, Kosovo $316m and
Serbia $293m from the EU in ODA in 2009.

7

In 2009, the latest figures available,13 only 46% of EU aid reached low income
countries, compared with 74% of UK aid, 58% of EU member state governments’ aid
and 56% of US aid.

Year

% of aid to low income countries
EU member states
UK
(DAC members14)

2009

74%

EU institutions

58%

46%

OECD DAC database, % of allocable net ODA disbursement to least developed and low income
countries; http://stats.oecd.org/index.aspx

% of aid to low income countries
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

United Kingdom
EU Institutions

OECD DAC database, % of allocable net ODA disbursement to least developed and low income
countries; http://stats.oecd.org/index.aspx

The graph above shows that although there has been some improvement in the
focus of EU aid on the lowest income countries since 2000, reaching around 50% in
2003, this has levelled out and stalled at between 45%-50%. The 46% of EU aid
reaching low income countries in 2009 is well below the OECD Development
Assistance Committee (DAC) average of 60% and, at the other end of the scale, the
19% of EU aid to upper middle income countries compares to a DAC average of just
9%.
For example, Barbados, with a GNI per capita of $21,673, receives over 35 times
more EU aid per person than Bangladesh, which has a GNI per capita of only
$1,587.15 Barbados, which is currently ranked a relatively high 42nd on the United
Nations Development Programme’s Human Development Index (HDI), received
13

At the time of publication the OECD had released its figures for overall aid spending for 2010 but not
a breakdown of where funds had been spent so we have used the 2009 figures.
14
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
Netherlands, Portugal, Spain, Sweden and the UK are members of the OECD’s Development
Assistance Committee.
15
2008 prices, 2010 United Nations Human Development Index, Table 1,
http://hdr.undp.org/en/media/HDR_2010_EN_Tables_reprint.pdf

8

€21.80 of EU aid per person while Bangladesh, ranked a lowly 129th on the HDI,
received only €0.58 per person.16
Various EU member states’ Overseas Territories also receive EU aid, despite often
being fairly well-off. For example, the UK’s Falklands Islands received €4.5m of EU
funding during the period 2004-2007,17 and are due to get another €4.6m18 for the
period 2008-2013, despite having a per capita GNP of €40,000 in 2007, well over the
EU average of €25,000 for the same year.19
Case study: Wealthy ex-colony New Caledonia given €50m in aid from
2000-2013
New Caledonia is a French overseas territory, a collection of tropical islands
with a population of just 244,600 in 2008. Rich in natural resources, New
Caledonia is home to a quarter of the world's nickel reserves. The EU itself
recognises that the standard of living is “similar to the EU”. In fact in 2004,
GDP per capita was nearly identical to the EU average, with an average of
€20,388 in New Caledonia, and €21,700 in the EU.20
Despite its relative wealth, the EU gave €30.2m in aid to New Caledonia
during the finance period 2000-2007 and it is receiving a further €19.8m for
2008-2013.21 This works out as roughly €16/person every year.

2. Effectiveness and accountability
The UK’s Department for International Development (DFID) has stated that there
have been some improvements in the effectiveness of EU aid. But Nemat Shafik,
DFID’s Permanent Secretary, speaking in November 2009, made “a big distinction”
between the European Development Fund (EDF), which focuses on low-income
countries, and the other programmes that make up the bulk of EU aid, which she
noted are “more politically driven and less poverty-focused with much less
supervision on the ground” (see table on page 3 for a breakdown of the EU’s main
aid streams).
This analysis has not changed since 2009. In its 2011 multilateral aid review, DFID
noted that, while the EDF (€3.6bn a year) has a strong poverty focus (85% of funds
are spent in low income countries), more than 85% of the EU’s other development
aid programmes’ budget (€7bn a year) is spent in middle income countries. The EDF
is rated “strong” on both its contribution to the “UK’s development objectives” and on
its “organisational strengths” but the rest of Commission’s aid budget is rated “weak”
and “satisfactory” on the same respective measures.22
16

See European Commission, ‘Annual report 2010 on the European Union’s development and external
assistance policies and their implementation in 2009’, Table 6.11, p180, 2010; UNDP’s HDI available at
http://hdr.undp.org/en/statistics/data/
17
European External Action Service (EEAS), http://eeas.europa.eu/falkland_islands/index_en.htm
18
EEAS, http://eeas.europa.eu/falkland_islands/index_en.htm
19
Eurostat, “Gross domestic product (GDP) at current market prices at NUTS level 2: 1997-2008”, 2011
http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=nama_r_e2gdp&lang=en
20
Eurostat, “Gross domestic product (GDP) at current market prices at NUTS level 2: 1997-2008”,
2011; http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=nama_r_e2gdp&lang=en
21
EEAS, Country profile: New Caledonia, http://www.eeas.europa.eu/new_caledonia/index_en.htm
22
DFID, ‘Multilateral Aid Review: Ensuring maximum value for money for UK aid through multilateral
organisations’, March 2011, p170-171;
http://www.dfid.gov.uk/Documents/publications1/mar/multilateral_aid_review.pdf; DFID also rates the
European Commission’s €800m humanitarian aid office, the ECHO, giving it scores of “strong” for
meeting the UK’s development objectives and “satisfactory” for organisational strengths.

9

Despite this varying performance, in 2009/10, the UK contributed £397m to the better
performing EDF but a much higher £789m to the poorly targeted and less effective
central Commission budget.23
DFID suggested that the UK had been able to “drive much better performance with
the EDF” rather than other EU aid because the latter was an “assessed contribution
over which we have very little choice over the amount.”24 This illustrates the need for
accountability: a clear link between aid priorities and member state contributions.
The EDF relies on voluntary funding from national governments, which gives member
states much greater power to push for reform and a greater poverty focus – a key
objective of UK aid spending. The rest of EU aid is simply taken as a percentage of
the EU’s total budget, to which member states have no choice but to contribute.
Although the destination of this centralised EU aid is still decided primarily by national
governments, decisions at the EU level necessitate compromise and there is no
method for member states to withdraw funding if they feel money is being spent
inappropriately or wastefully. Once the link is broken between member state
contributions and the management of funds, it is far harder for the better performing
member state donors to push for EU reform.
Very few donors’ aid is completely development focussed, but the huge proportions
of aid spent under the EU’s ‘neighbourhood policy’ (ENPI) and ‘pre-accession
agreements’ (IPA) illustrate the role the broader aims of political stability, security,
enlargement and stemming the flow of immigration play in determining EU aid.
Crucially, according to both the Commission and the OECD, most of this aid counts
as ‘development’ aid.
Even the Development Cooperation Instrument (DCI) – the most development
focussed instrument in the EU’s central aid budget – has been used to fund projects
aimed at tackling illegal immigration from neighbouring countries rather than purely
for development.
Case study: €10m to train Libyan law enforcement authorities to halt
illegal immigration to Italy
Between 2007 and 2009, €10m of EU aid funding under the Development
Cooperation Instrument was earmarked to train Libyan law enforcement and
authorities to combat illegal immigration to Europe. The project, which started
in February 2010 was due to finish in January 2013,25 was implemented by
the Italian Ministry of the Interior.
The project’s expected results included: “Special units trained/able to gather
intelligence information by debriefing the illegal migrants detected”; “Capacity
of surveillance along the borders and along the main routes leading from the
border crossing points towards the internal parts of the country and the
coastal areas enhanced”; and “Technical equipment provided to improve the

23

DFID, ‘Multilateral Aid Review: Ensuring maximum value for money for UK aid through multilateral
organisations’, March 2011, p170-171;
http://www.dfid.gov.uk/Documents/publications1/mar/multilateral_aid_review.pdf
24
HoC International Development Committee, ‘DFID's Performance in 2008–09 and the 2009 White
Paper’, 2010, p39-40; http://www.publications.parliament.uk/pa/cm200910/cmselect/cmintdev/48/48i.pdf
25
A EuropeAid official confirmed to Open Europe by telephone on 4 April 2011 that the project had
started in February 2010 and was terminated at the start of the Libyan conflict.

10

operational capacity of the relevant Libyan agencies in charge of border and
migration management, search and rescue operations, investigation”.26
Deciding to use EU funds to train the Libyan police force and law enforcement
agencies, in what was clearly an oppressive regime, as recently as 2010,
highlights that the EU was willing to prioritise domestic fears over illegal
immigration over the potential danger for human rights abuses that this
project represented.
The Commission and the European Parliament in particular have been strong
proponents of incorporating the voluntary-funded EDF into the main EU budget,
which would give MEPs and the Commission more power over how it is spent. This is
a demand likely to be made in negotiations on the EU budget post-2013.27 However,
the greater effectiveness of the EDF, precisely because contributions to it are
voluntary, is in fact an argument for making more, if not the entire amount, of
member states’ contributions to EU aid spending voluntary.
Case study: EDF-funded EU aid to Uganda improving access to water
supply
Between 2001 and 2007, the European Commission provided €14.75m to the
Ugandan towns of Hoima, Mubende and Masindi as part of its Mid-Western
Towns Water and Sanitation Project, reaching around 25,000 people, through
the voluntary-funded European Development Fund.28 DFID notes that “With
the water now flowing in Hoima and in neighbouring towns, thousands of
people have a chance to lead cleaner, healthier lives.” 29 Aid funding for
improved water supply has made significant improvements to the lives of
Ugandans. According to the World Health Organisation/UNICEF joint
monitoring programme for water supply and sanitation, access to improved
drinking water in Uganda increased from 57% in 2000 to 67% in 2008.30

3. High administrative costs and unnecessary bureaucracy
Under the terms of the UK’s Comprehensive Spending Review, DFID, which
manages around 86% of the UK’s development aid, is committed to reducing its
running costs, which include administration and frontline staff, from 4% to 2% of the
total budget by 2014-15.31

26

EuropeAid, ‘Thematic Programme on cooperation with Third Countries in the Areas of Migration and
Asylum’, 2009; http://ec.europa.eu/europeaid/what/migrationasylum/documents/migration_and_asylum_2007-2008.pdf, p74
27
European Parliament press release, ‘MEPs scrutinise work done by ACP-EU assembly in 2009’, 23
November 2010; http://www.europarl.europa.eu/en/pressroom/content/20101123IPR98009/html/MEPsscrutinise-work-done-by-ACP-EU-assembly-in-2009
28
EU delegation to Uganda website;
http://www.deluga.ec.europa.eu/index.php?option=com_content&view=category&layout=blog&id=97&Ite
mid=307
29
DFID website, ‘Clean water makes for good living in Uganda’, http://www.dfid.gov.uk/MediaRoom/Case-Studies/2009/Uganda-sanitation/; Commission aid to Uganda is funded from the EDF, see
Country Strategy Paper here: http://ec.europa.eu/development/icenter/repository/print_ug_csp_en.pdf
30
WHO and UNICEF, ‘Progress on sanitation and drinking water: 2010 update’, 2010, p50;
http://www.wssinfo.org/fileadmin/user_upload/resources/1278061137-JMP_report_2010_en.pdf; DFID
puts access to drinking water at 65% in 2008-9.
31
HoC International Development Committee, ‘Department for International Development Annual
Report & Resource Accounts 2009–10’, 2011, p5;
http://www.publications.parliament.uk/pa/cm201011/cmselect/cmintdev/605/605.pdf

11

In contrast, the EU’s administration costs, as a percentage of its official development
aid disbursed, currently stand at around 5.4%.32 However the costs of administering
specific programmes seems to vary, with the cost of administering the EU’s aid to the
African, Caribbean and Pacific (ACP) countries standing at a much higher 8.6%.33 To
put this into context, DFID only allows NGOs receiving UK aid a maximum spend on
administration of 8% of total budget.34
In addition to this internal bureaucracy, the EU channels a huge amount of money
through other international multilateral organisations. In 2009, agreements for a total
of €935 million and €469 million were signed with the UN and the World Bank Group,
representing around 10% of total EU aid commitments.35 This means a wasteful
chain of transfers: national agencies administering a transfer to the EU, which then
administers a transfer to either the UN or World Bank, which then administer the final
transfer of aid to the recipient country – with administrative costs and delay at each
stage. The result is that less aid reaches the people that need it.
Since the EU’s 2005 ‘Consensus on Development’, the Commission has placed more
focus on co-ordinating the division of labour between itself and member states and
among member states. Such coordination is beneficial because, by reducing the
number of donor countries present in a given country, it reduces the amount of
bureaucracy the recipient country needs to deal with.
However, the logic underpinning the EU’s coordinating role is still centralisation and,
in particular, the centralisation of financing. Under so-called “Delegation
agreements”, national governments’ contributions to the EU aid budget are now, in
some cases, being sent back to member states because they, rather than the
Commission, are judged to be the best conduit to deliver aid to a given country.
In 2009, there were 48 Delegation agreements (from the Commission to a member
state) under preparation or signed for a total of €242.7 million.36 For example, in
2008, the Dutch governmental aid body SONA was awarded two contracts by the
Commission, worth €43.5m over six years, to carry out urban infrastructure work in
the Netherlands Antilles. On award of the contracts, the Commission noted that,
“Implementation of the 9th EDF and previous EDFs had been slow (underspending
and bureaucracy). Given the positive results that SONA had achieved with bilateral
financing from the Netherlands, indirect centralised management seemed an efficient
instrument for EC funded activities with SONA as implementing agency”.37 This

32

European Commission, ‘Annual report 2010 on the European Union’s development and external
assistance policies and their implementation in 2009’, 2010, p186, Table 6.14 shows total ODA at
€9,799.7m and administration costs of €524.48m.
33
This figure was confirmed by the European Commission via email on 17 March 2011. ACP
administration spending totals €434m, while the budget managed under this team totals €5.1bn
(including money from the European Development Fund).
34
Action Aid, ‘Real Aid 2: making technical assistance work’, 2006, p12;
http://www.actionaid.org.uk/doc_lib/real_aid2.pdf
35
European Commission, ‘Annual report 2010 on the European Union’s development and external
assistance policies and their implementation in 2009’, 2010, p12 and 162;
http://ec.europa.eu/europeaid/multimedia/publications/documents/annualreports/europeaid_annual_report_2010_en.pdf
36
European Commission, ‘Annual report 2010 on the European Union’s development and external
assistance policies and their implementation in 2009’, 2010, p25;
http://ec.europa.eu/europeaid/multimedia/publications/documents/annualreports/europeaid_annual_report_2010_en.pdf
37
Commission, “Annex 6 to the Annual Activity Report Implementation through national or international
public-sector bodies”, p2, 2008,
http://ec.europa.eu/atwork/synthesis/aar/aar2008/doc/aidco_annex6.pdf

12

division of labour seems sensible given SONA’s better track-record in, and
knowledge of, the Netherlands Antilles compared to the Commission.
However, what in theory is a good idea (simplifying the number of donors and
prioritising the most effective donors operating in recipient countries), under the
current system in practice, simply generates greater bureaucracy and cost at the EU
level. It makes no sense for member states to hand over money to the Commission
only to get it back again before delivering it to recipient countries.
The system does also work the other way, with member states delegating additional
amounts of their bilateral aid to the Commission. But delegating aid to the EU in such
a way involves one less transaction and is potentially a good model for providing aid
voluntarily through the EU. And, in contrast to the 47 agreements worth €242.7m to
delegate aid back to member states in 2009, there were only 17 agreements worth
€123.3m where member states handed extra aid to the Commission. This begs the
question of why the net difference (€119.4m) was ever handed over to the EU in the
first place.
If you combine the €1.4bn of EU aid that is passed onto other multilateral donors,
such as the UN and World Bank, with the €243m of EU aid delegated back to
national governments, this gives a total of €1.65bn that is subject to unnecessary
transactions. This money, which is simply being recycled between donors up to three
times before it ever reaches a recipient country, is subject to unnecessary
administration and transaction costs, which can only reduce the amount of aid that
reaches those in need of it.
There is no obvious reason why European aid financing cannot be coordinated
before these needless transactions take place – it should be the EU’s role to act as a
forum for member states to decide where their aid is best spent and by which donors
in a specific recipient country rather than acting as banker managing a central pot of
money.

4. Mismanagement, waste and a lack of transparency
Mismanagement
It is difficult to get a quantitative measure of whether EU administered aid is more
susceptible to mismanagement than the aid spent by member states. However, there
is clear evidence of problems with fraud and waste in the EU’s aid programmes. Less
than 9% of the total EU budget is spent on overseas aid, but aid programmes
account for 25% of active fraud investigations by OLAF, the EU’s anti-fraud agency –
so fraud in this area is far higher than the Brussels average.
OLAF’s 2009 annual report explains that, “In the external aid area, OLAF
investigators often encounter modus operandi typical of organised fraud”, identifying
the “allocation of grant aid, auditing, monitoring, evaluation and the operation of
warning systems” as particular shortcomings.38
The UK has also identified fraud as a problem with EU aid. UK International
Development Secretary Andrew Mitchell warned in December 2010 that British
contributions could be held back unless problems of fraud were adequately

38

OLAF, ‘Annual report’, 2009, pp.41-42; http://ec.europa.eu/anti_fraud/reports/olaf/2008/EN.pdf

13

addressed. “We want to bring the level of scrutiny up to British levels”, he said.39
Mitchell’s threat of withholding Britain’s contribution illustrates the influence national
governments can potentially have over the performance of the voluntary-funded EDF.
But the absence of this influence over the much larger portion of the aid budget that
is spent directly via the EU budget is more noteworthy.
Waste
We have also found evidence of poor project selection; projects that either fail to
effectively target poverty or are inconsistent with other EU policies, for example on
immigration. 40
Case study: A migration centre that facilitated six jobs
In 2008, the Commission established a migration centre – CIGEM – in
Barnako, the capital of Mali, to help facilitate Malians seeking temporary jobs
in the EU. The idea was that providing support to find legal jobs would serve
as an incentive for Malians not to try to enter the EU illegally. Another task of
the centre was to spread information and boost knowledge in the area about
the consequences of illegal migration. The centre has so far registered 3,545
migrants to receive information and support from the centre and a further
1,380 for “emergency reception”. The EU has spent around €10 million on the
centre so far, via the European Development Fund, but three years since its
creation, the migration centre has only facilitated six jobs.41 The
Commissioner responsible for migration, Cecilia Malmstrom, has admitted
that the project has failed. “Unfortunately, it hasn’t turned out the way we
hoped it would, but I still think the ideas are worth building on also in future,”
she said.
One of the biggest reasons for this is that only one country, Spain, has
actually signed an agreement with Mali to allow for labour migration, making
the prospect of the centre ever facilitating legal migration very small. In total,
only 29 Malian workers have come to Spain under the migration programme
– and only six of them have entered via the migration centre. Richard Hands,
an official at the EU’s delegation in Mali, admitted: “We must realise that it
wasn’t realistic, that the demand for workers doesn’t exist in Europe.” Mr.
Hands also said that the centre’s information campaigns had had little impact.
“People say ‘we know, but we’ll still take the risk’,” he said.42
Besides an incompatibility with other EU policies, other projects selected for funding
do not always seem the best targeted at reducing poverty. While they may have a
benign impact, projects aimed at promoting ‘culture’ or other vague objectives are
likely to do less for poverty reduction than those focussed on education or
infrastructure for example. At a time when funds are tight and EU governments are
struggling to meet their current aid targets, the primary focus must be on effectively
eradicating poverty.

39
Telegraph, “Britain warns EU over corruption in its aid programmes”, 7 Dec 2010,
http://www.telegraph.co.uk/news/worldnews/europe/eu/8185403/Britain-warns-EU-over-corruption-in-itsaid-programmes.html
40
Recipients of EU development aid can be found using a database on the European Commission
website; http://ec.europa.eu/europeaid/work/funding/beneficiaries/index.cfm
41
See European Commission, ‘Presentation du project CIGEM’, received from the EU’s Mali delegation
by email on 15 April 2011, p5 and p10; http://www.openeurope.org.uk/research/cigempresentation.pdf
42
Quotations cited in Europaportalen, ‘EU-projekt i Mali gav få jobb’;
http://www.europaportalen.se/2011/03/eu-projekt-i-mali-gav-fa-jobb

14

Case study: €462,700 of EU funds given to a Belgian organisation to run
“I dance therefore I am” project in Burkina Faso and Mali
In 2009 the EU awarded €462,700 to Belgian cultural organisation ‘Africalia’
to run a project in Burkina Faso and Mali called “I dance therefore I am”,
which gave local teenagers artistic dance training. The project, partnered with
two local organisations, aimed to offer “an artistic training course which fuses
tradition and modernity and promotes social and socio-cultural integration”.43
Africalia justified its project claiming “Dance is a very effective means of
communication which allows young people to express themselves using their
bodies. The expression of feelings through the spoken word is often difficult
and complicated. As a type of body language, dance has a therapeutic
effect”. On its website, Africalia notes, “When art and culture flourish, people
are concerned with more than simply surviving”.44 Given that according to the
UN’s Human Development Index 56.5% of people in Burkina Faso live on
$1.25 a day,45 this does not seem to be the best targeted aid funding in a
country where the priority must be to eradicate poverty.46
EU aid is not only wasted through poor project selection in the field. Huge sums of
money do not leave the EU, or often even Brussels, but are handed to EU-based
consultancies or NGOs which does little or nothing to help those in need. Crucially,
most of this money is counted as part of the EU’s aid budget.
Case study: €500,000 in EU aid that didn’t leave Brussels
In 2009 alone, the EU granted the Brussels-based Tipik Communications
Agency47 nearly €500,000 to produce various promotional brochures and
campaigns. This included €115,000 to design EuropeAid’s annual report on
EU aid and €90,000 to co-ordinate an “I fight poverty”48 music contest, to
increase “development awareness”. Entrants were encouraged to “join our
fight with your music” and the winners selected to record their songs in a
music studio and perform at the EU’s “Development Days”, held on 6-7
December in Brussels.49
Lack of transparency
Transparency is often lacking when it comes to recording how EU aid is spent on
particular projects selected for grants. In December 2010, Andrew Mitchell, the UK’s
International Development Secretary, called for greater transparency in how EU aid
is spent:
“Britain is leading the way on clear and transparent aid spending, ensuring
taxpayers can see how UK funding is directly helping people. As a recipient of
43

The Courier, ‘Je danse donc je suis’ (I dance therefore I am)’, 2010; http://www.acp-eucourier.info/Jedanse-donc-je-su.1189.0.html
44
Africalia, ‘The way we work’, http://www.africalia.be/?page=way_of_working
45
UN Human Development Index 2010, ‘Multidimensional poverty index’, p3;
http://hdr.undp.org/en/media/HDR_2010_EN_Table5_reprint.pdf
46
CIA Fact Book, Country Comparison, GDP - per capita (PPP), 2010;
https://www.cia.gov/library/publications/the-worldfactbook/rankorder/2004rank.html?countryName=Burkina%20Faso&countryCode=uv&regionCode=af&r
ank=204#uv
47
See website here; http://www.tipik.eu/references/
48
This includes €30,478 to coordinate the contest and a further €62,000 to translate the campaign’s
website into different EU languages. See “I fight poverty” website here;
http://www.ifightpoverty.eu/act/music-contest/prizes
49
http://www.eudevdays.eu/?lid=E48B22DF64F546169AC88D65AB7D2BC5

15

British aid money, I want to see the same standards adopted by the European
Commission, with a greater commitment to openness.” 50
Greater transparency is vital for taxpayers and NGOs to ensure that the targeting and
effectiveness of EU aid is held properly to account. However, transparency at the EU
level is often sorely lacking.
Case study: The EU’s “confidential” aid projects
A search of the European Commission’s “Financial Transparency System”
reveals several projects selected for funding marked “confidential”.51 A budget
line and recipient country is provided but there are no details for EU citizens
to determine how the money was spent or which organisation(s) spent it.
Examples include:
- €7.7m grant in 2007 to a confidential recipient in Switzerland for “European
Neighbourhood and Partnership financial cooperation with Mediterranean
countries”.
- €3.8m grant from EuropeAid to a confidential recipient in Belgium for the
budget line “Education, Audiovisual and Culture Executive Agency — Subsidy
for External Relations programmes”.
- €4m grant in 2009 to a confidential recipient in France for “European
Neighbourhood and Partnership financial cooperation with Mediterranean
countries”.
This lack of transparency gives EU taxpayers little chance of holding the aid
spending to account.

5. The EU’s growing focus on ‘budget support’
The EU has placed an increasing emphasis on delivering its aid as ‘budget support’,
which, rather than funding specified individual projects, transfers aid directly to the
treasuries of recipient countries. Budget support comes in the form of either ‘general
budget support’ or ‘sector-specific budget support’, designated to a particular sector.
According to its own figures, the Commission has committed over €13bn in budget
support between 2003 and 2009 (about 25% of all commitments in this period).
About 56% of commitments were made in Africa, Caribbean and Pacific (ACP)
countries, 24% in neighbourhood countries, 8% in Asia, 6% in Latin America and 5%
in South Africa.52
The Commission argues that the use of budget support promotes “local ownership”
and ensures “alignment of aid with national policy”. It is argued that such support has
“had a positive impact for instance on dialogue with partner countries, donor
50

DFID, “Mitchell pushes for EU aid transparency”, 9 Dec 2010; http://www.dfid.gov.uk/MediaRoom/News-Stories/2010/Mitchell-pushes-for-EU-aid-transparency/
51
European Commission, “Financial Transparency System”,
http://ec.europa.eu/beneficiaries/fts/index_en.htm
52
European Commission, ‘Green Paper on the Future of EU Budget Support to third countries’, 19
October 2010;
http://ec.europa.eu/development/icenter/repository/green_paper_budget_support_third_countries_en.pd
f

16

coordination, public financial management and policy reforms in the beneficiary
countries,” although it admits these findings “cannot be generalised.”53
In 2009, EU budget support reached €2.4bn: 38% for aid delivered as part of the
European Neighbourhood Policy (countries in Eastern Europe and the Southern
Mediterranean) and 32% for the African, Caribbean and Pacific countries covered by
the European Development Fund. In 2008, then European Development
Commissioner Louis Michel argued, “Budget support and more of it is the only
answer”, and committed to increasing budget support up to 50% of the EU’s total
aid.54
European Commission breakdown of budget support 2009
General
Sector
Total
Total
Budget
Budget
Budget
ODA
Support
Support
Support
European Neighbourhood
597
597
1 576
Partnership Instrument
(ENPI)
Development Cooperation
497
497
1 410
Instrument - Geographic
Development Cooperation
145
79
225
1 009
Instrument -Thematic
European Development
723
384
1 107
3 502
Fund (EDF)
Total
869
1 557
2 425
7 497

€ millions

Budget
support/
ODA
38%
35%
22%
32%
32%

European Commission, ‘Annual report 2010 on the European Union’s development and external
assistance policies and their implementation in 2009’, 2010, p195;
http://ec.europa.eu/europeaid/multimedia/publications/documents/annualreports/europeaid_annual_report_2010_en.pdf

In a 2010 report, the EU’s auditing body, the European Court of Auditors, looked at
the use of budget support in ACP, Latin American and Asian countries. It concluded
that while the use of general budget support has various “potential benefits in terms
of aid delivery”, there are several weaknesses in the Commission’s approach, which
we explore below.
The risk of propping up illegitimate regimes
The European Report on Development, which is EU-funded, has noted that the use
of budget support can become problematic in ‘fragile’ or ‘difficult’ countries, “where
state institutions are either incapacitated or illegitimate”.55 The recent events in North
Africa and the Middle East illustrate the dangers of directly supporting illegitimate
regimes rather than civil society groups for example.

53

European Commission, ‘Annual report 2010 on the European Union’s development and external
assistance policies and their implementation in 2009’, 2010, p12-13;
http://ec.europa.eu/europeaid/multimedia/publications/documents/annualreports/europeaid_annual_report_2010_en.pdf
54
European Commission, ‘Budget support: a question of mutual trust’, 2008, p4;
http://ec.europa.eu/development/icenter/repository/LM_budget_support_en.pdf
55
2010 Report on European Development, ‘Social protection for inclusive development’, 2010, p95;
http://erd.eui.eu/media/2010/Social_Protection_for_Inclusive_Development.pdf

17

The EU had planned, for example, between 2011 and 2013 to grant 50% of its
€149.76m a year funding to the now-discredited Egyptian government as budget
support.56
In a recent consultation on the Commission’s use of budget support the Dutch
government stated that, “the Commission sometimes underestimates the risks and
sensitivities associated with this aid modality. As a result, the Commission may, in
certain cases, provide budget support too readily.” It stated that that due to the lack
of regard to “good governance, human rights and fighting corruption” the Dutch
government could not support the Commission’s recent proposals to grant budget
support in the DR Congo, Namibia, Armenia, Algeria and Nicaragua.57
Inadequate monitoring
Budget support naturally entails an increased risk that recipient countries will divert
the funds away from development purposes. Therefore, if the advantages of greater
simplicity and ownership of development in partner countries are to outweigh the
greater vulnerability to misuse of funds, direct budget support must be made
conditional on reforms to improve financial management in the recipient country. Aid
will only work if monitoring systems are fit for purpose.
The Commission has recognised that the success of its budget support depends on
an adequate risk assessment being carried out,58 however, as the ECA recognises,
“The Commission has not yet developed a sound risk management framework to
assess and reduce the risks of its programmes”. They go on to warn that this is “of
particular importance in view of the high risks involved for bad financial management,
corruption, etc. when large sums are channelled directly through public budgets in
developing countries. Better protection against leakage, waste and inefficiency is
needed”.59
Other criticisms include the fact that, “The Commission’s external reporting on
general budget support tends to focus on its potential benefits to improving aid
delivery but there is relatively little information on its actual impact on poverty
reduction.” 60
Poor linking of funds and objectives
The Commission rarely gets a good ‘bang for its buck’ in terms of influencing
recipient governments’ performance. The ECA noted that, “the Commission often

56

European Commission, ‘European Neighbourhood and Partnership Instrument Arab Republic of
Egypt National Indicative Programme 2011-2013’, p7 and p27;
http://ec.europa.eu/world/enp/pdf/country/2011_enpi_nip_egypt_en.pdf
57
Dutch Government, ‘The Dutch government’s response to the European Commission’s Green Paper
‘The future of EU budget support to third countries’, COM(2010)586, of 19 October 2010’, p2;
http://ec.europa.eu/development/icenter/files/green_paper_contributions_future_eu_budget/Public%20A
uthorities/gp_pa_NL_en.pdf
58
Commission, “Better, Faster, More: Implementing EC External Aid 2004-2009”, p15, 2009
http://ec.europa.eu/europeaid/infopoint/publications/europeaid/documents/europeaid_better-fastermore_en.pdf
59
European Court of Auditors, “The effectiveness of the Commission's management of General Budget
Support in ACP, Latin American and Asian Countries”, p1, 2011,
http://eca.europa.eu/portal/pls/portal/docs/1/7106723.PDF
60
ECA, ‘The Commission’s management of general budget support in ACP, Latin American and Asian
countries’, 2010, p39; http://eca.europa.eu/portal/pls/portal/docs/1/7036731.PDF

18

does not play the role in dialogue that could be expected, given its significant
financial contributions.”61
Meanwhile, the ECA also warns that the “rationale followed by the Commission in
deciding on the amount of funds to be allocated to general budget support in each
country is not clear”, and calls for the Commission to “demonstrate that the amount
allocated to individual programmes is appropriate in view of the objectives and the
framework for dealing with risks and benefits”. 62 In recent years the EU has made
some progress in improving the link between aid funds and objectives, for example
through the so-called Millennium Development Goal (MDG) Contracts. However,
issues of transparency continue (outlined below), particularly regarding the decision
not to publish MDG Contracts in full.
Case Study: EDF’s innovative use of MDG contracts to measure and
produce results in Rwanda and Zambia
DFID has noted the voluntary-funded European Development Fund’s
innovative Millennium Development Goal (MDG) contract pilot scheme. DFID
notes that, “The MDG Contracts clearly link EDF funding to results. In
Rwanda, primary school completion rates increased from 52% to 75.6% –
and 80% for girls – between 2006 and 2009/10, and, in Zambia, the
proportion of HIV pregnant women receiving anti-retroviral treatment
increased from 40% in 2007 to 66% in 2009.”63
The use of MDG contracts to clearly link funding with anti-poverty goals is
clearly a major step forward.
‘Picking winners’ risks overreliance on budget support at expense of other
development policies
By aiming to increase budget support to 50% there is clearly a risk of the
Commission ‘picking winners’ when it comes to development policies.
The Finnish government stated in a recent EU consultation on the use of budget
support that, “Finland has launched a country-specific ceiling for GBS of 25% of all
bilateral country-specific aid. This is to avoid overreliance on one development policy
instrument and for risk management purposes.” It went on, “It is very important for
the Commission, too, to soundly balance the aid flows through various aid
modalities.”64
Because budget support is less bureaucratic it is a way of getting money out of the
door faster but, as the share of budget support increases, the risk is that speed is
traded for effectiveness and accountability.

61
ECA, ‘The Commission’s management of general budget support in ACP, Latin American and Asian
countries’, 2010, p39; http://eca.europa.eu/portal/pls/portal/docs/1/7036731.PDF
62
European Court of Auditors, “The effectiveness of the Commission's management of General Budget
Support in ACP, Latin American and Asian Countries”, p1, 2011,
http://eca.europa.eu/portal/pls/portal/docs/1/7106723.PDF
63
DFID, ‘Multilateral Aid Review: Ensuring maximum value for money for UK aid through multilateral
organisations’, March 2011, p33;
http://www.dfid.gov.uk/Documents/publications1/mar/multilateral_aid_review.pdf
64
Finnish government, ‘Finland’s contribution to the consultation: “Green Paper on the Future of EU
Budget Support to third countries’, 29 December 2010, p6;
http://ec.europa.eu/development/icenter/files/green_paper_contributions_future_eu_budget/Public%20A
uthorities/gp_pa_FI_en.pdf

19

Conditions for support are not published in full
The MDG Contract is an enhanced form of budget support designed to be measured
against indicators linked to education, health and other MDGs aimed at tackling
poverty.65 So far, as it is still a pilot scheme, the Commission has signed MDG
Contracts with eight countries – Burkina Faso, Ghana, Mali, Mozambique, Rwanda,
Tanzania, Uganda and Zambia – in return for budget support agreements.
The MDG Contracts are meant to place a stronger focus on results, as funding can
be increased or decreased depending on whether objectives are met and, for this
reason, have been praised by NGOs for making aid more responsive to local
performance.66 However, there are concerns over the lack of transparency
surrounding the contracts, and therefore the measureable objectives used to allocate
funds, as they have not been published.67 Concord, Oxfam and Alliance2015 have
called on the EU to publish the MDG contracts and other budget support
agreements, so that objectives and outcomes can be clearly monitored.68

65

Commission, “The EU and the Millennium Development Goals”, 2011,
http://ec.europa.eu/europeaid/what/millenium-development-goals/index_en.htm
66
Former OECD DAC Chairman Richard Manning writing on the GMF Blog, 20 Dec 2010,
http://blog.gmfus.org/2010/12/can-results-based-approaches-escape-obsessive-measurement-disorder/
67
Commission Spokesperson for Development Catherine Day pointed out to Open Europe by email on
13 April 2011 that although the MDGs are not published in full they are based on Financing Agreements
which “contain the essential elements”.
68
Concord, ‘Penalty against poverty: more and better EU aid can score Millennium Development Goals’,
p21, 2010; http://www.actionaid.org/assets/pdf/concordreportlight.pdf; Alliance2015, “The EU's
Contribution to the Millennium Development Goals: Keeping the Goals Alive”,
http://www.alliance2015.org/fileadmin/user_upload/The_EU_s_Contribution_to_the_Millennium_Develo
pment_Goals_Keeping_the_Goals_Alive.pdf

20

Conclusions and recommendations
1. Despite improvements the EU’s ‘value added’ remains unclear
Despite some significant improvements since 2000 in terms of reduced bureaucracy
and better management, the EU’s role remains unclear. Despite the moves towards a
greater division of labour, the underlying principle in aid financing continues to be
centralisation in Brussels. It makes no sense for national governments to pay into the
EU aid budget only to receive some of their funds back, under so-called ‘Delegation
agreements’, or see them passed on to another multilateral donor such as the UN.
2. Contributions to the EU aid budget should be voluntary
Contributions to the EU aid budget should be made entirely voluntary as the
European Development Fund (EDF) element already is. The UK should spend its aid
budget directly through DFID, which performs better as a donor than the Commission
on most measures, especially regarding the targeting of poverty, unless there is a
demonstrable EU ‘value added’ in which case it could opt into specific EU
programmes, such as the EDF.
3. The EU’s role should be to facilitate the co-ordination and division of labour
It is widely acknowledged that greater co-ordination of member state development
programmes is crucial to increase aid effectiveness. Currently, developing countries
have to deal with 27 different EU donors, plus the Commission, each with their own
policies. Therefore, to reduce the administrative burden on aid recipient
governments, a strong case can be made for greater harmonisation of procedures.
The role of the EU should be to provide a forum for coordination between donors,
rather than acting as a 28th donor. This would allow it to provide a resource for small
member states with limited diplomatic networks to coordinate their spending, and
divide up responsibilities if they wish. It would mean large savings on administration
costs.
A common EU framework for aid conditionality and the objectives of member state
aid could ensure high standards of aid effectiveness are met. In terms of financing, it
should be the EU’s role to act as a forum for member states to decide where their aid
is best spent and by which donors in a specific recipient country, rather than acting
as banker managing a central pot of money.
4. The EU needs to avoid overreliance on budget support for delivering its aid
The recent consultation with national governments on the Commission’s use of
budget support is a welcome step. But the concerns expressed by the Finnish and
Dutch governments, as well as the European Court of Auditors, must be heeded.
Because budget support is less bureaucratic it is a way of getting money out of the
door faster but, as the share of budget support increases, the risk is that speed is
traded for effectiveness and accountability.
Due to the inherent uncertainty and risks involved in providing budget support directly
to recipient governments, the Commission should consider setting a 25%-30% limit
on the portion of budget support as a total of EU aid. Development funding is a
complex exercise that entails risks of waste and inefficiency; therefore the
Commission should avoid picking winners when it comes to particular aid policies.

21

5. Aid is not the only way to foster development – the EU needs to be more
open to trade and remove internal subsidies
Aid works only when it is combined with good policies and institutions. A large share
of the responsibility lies with developing country governments, but the policies used
by donors also matter. In particular, the EU should open up to globalisation and
embrace the inflow of goods, people and ideas from the developing world. A good
first step would be the phasing out of the Common Agricultural Policy, and a
commitment to an ambitious opening of trade with developing countries.

22