EU Donor Profile
THE EUROPEAN UNION Donor Profile
FUNDING TRENDS
STRATEGIC PRIORITIES
KEY OPPORTUNITIES
The refugee crisis and Brexit will likely have a lasting impact on development cooperation.
The EU's development priorities include poverty reduction and human development.
Review of the Consensus and the renewal of the Cotonou Agreement may have an impact on budgets.
The EU supports the construction of the 932m Kazungula Bridge over the Zambezi river, connecting Zambia and Botswana. Infrastructure is the largest bilateral ODA sector of the EC.
EU Donor Profile
EU
at a glance Funding trends •• European Union (EU) institutions are the 4th-largest donor globally, with
total ODA at US$13.8 billion in 2015. Sector priorities are largely set for the current financing period 2014-2020.The refugee crisis and the Brexit will likely have a lasting impact on development cooperation between the EU and other countries.
•• In September 2016, the Council of the EU has proposed significant cuts to
development credits within the EU’s general budget (around 10%), to free up funding to address the migration crisis and to boost economic growth.
Strategic priorities •• The EU’s development strategy is set in the European Consensus on Devel-
opment. Its objectives are poverty reduction, rural development, agriculture, food security, and human development, which includes health.
•• The EU’s Agenda for Change outlines policy guidelines that complement
the Consensus. It stipulates increasing the effectiveness and impact of the EU’s development policy as key goals. It prioritizes human rights and inclusive growth and general budget support with stricter aid conditionality. It calls for a focus on the poorest countries and increased engagement with the private sector.
Key opportunities •• The European Consensus on Development is currently being reviewed and
a public consultation is underway. Findings from the consultation will be published in late 2016 to inform the mid-term reviews of both the Development Cooperation Instrument (DCI) and the European Development Fund (EDF) that take place in 2017.
•• The renewal of the Cotonou Agreement 1 is underway and may imply the
inclusion of the European Development Fund (EDF) into the general EU budget (‘budgetization’). This would allow the Parliament to scrutinize the EDF budget.
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KEY QUESTIONS the big six
How much ODA does the EU provide? The EU institutions are the largest multilateral donor and the only multilateral member of the OECD DAC The European Union is a multilateral organization that receives funding from its member states. At the same time, it is a donor that channels ODA itself: EU institutions are the 4th-largest donor of the Development Assistance Committee (DAC) of the Organization for Economic Co-operation and Development (OECD), after the United States, the United Kingdom, and Germany. The EU’s ODA stood at US$13.8 billion in 2015 (in current prices; US$16.4 billion in 2014 prices),2 decreasing slightly from 2014 levels. The EU’s current programming period runs from 2014 to 2020, and the allocation of development funding for this period has largely been concluded,
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except for reserves that are flexible. Development assistance is projected to increase moderately in the coming years, despite cuts to the EU’s general 7-year budget. The projected ODA increase in 2016 is largely driven by the response to the refugee crisis. The EU’s development funding comes mostly from two sources: the European Development Fund (EDF) and the EU’s general budget line for ‘Global Europe’, known as ‘Heading 4’. Heading 4 is part of the Multiannual Financial Framework (MFF) and includes the Development Cooperation instrument (DCI). In September 2016, the Council of the EU proposed to cut funds allocated to Heading 4 by 9% for 2017, to free up funding for migration issues, and economic growth within Europe. For more details, see question 4: ‘How is the EU’s ODA budget structured?’.
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Who are the main actors in EU development cooperation? Member states and the European Parliament decide on strategy and budget; DG DevCo develops policies and programs jointly with European External Action Service The European Council, currently chaired by President Donald Tusk and composed of heads of state and government, meets several times a year to set high-level political and budgetary priorities for the European Union. The Council of the European Union (Council) includes ministers of EU member states who vote on legal acts and coordinate policies. The Council meets in different formations, depending on the issue at stake. For development cooperation, the relevant institution is the Foreign Affairs Council. It includes ministers of foreign affairs or development who decide on strategic priorities and on the annual budget in cooperation with the European Parliament. The Foreign Affairs Council is chaired by the EU’s High Representative for Foreign Affairs and Security Policy, Federica Mogherini. She also heads the European External Action Service (EEAS) and is responsible for coordinating the EU’s foreign policy tools, including development assistance and humanitarian aid. Together with the Council, the Parliament (headed by President Martin Schulz), decides on the annual budget, which includes the Development Cooperation Instrument (DCI). The European Development Fund : (EDF) is not included within the UE’s general budget – it is one of the issues that will come up in the course of the negotiations of the renewal of the Cotonou Agreement. The Parliament also scrutinizes the Commission during policy and program implementation.
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Within the European Commission (Commission; currently headed by President Jean-Claude Juncker), the Directorate-General for Development Cooperation – EuropeAid (DG DevCo) is responsible for the formulation of EU development policy. DG DevCo manages 69% of EU’S ODA. Other directorates general involved in ODA allocation include the Directorate General Humanitarian Aid and Civil Protection (ECHO) and Directorate General Research (R&D). In her role as Vice-President of the Commission, Federica Mogherini coordinates the Commissioners’ Group on External Action with the view to developing a joint approach to EU global activities. The European External Action Service (EEAS) is the diplomatic service of the EU. EU country offices (called delegations) are part of the EEAS structure and are co-responsible with DG DevCo for the programming of development funding. The Commission is responsible for management and implementation. The EDF is an extra-budgetary instrument funding development activities in African, Caribbean and Pacific (ACP) countries. Its programming and implementation structure is different from the instruments that are financed from the EU’s budget (e.g., the DCI). The EDF budget is agreed upon by the EU member states, and approved by a Joint Council of Ministers of ACP countries and EU countries. It is not renewed every year: the current EDF (11th) was adopted for the 2014-2020 period. Most of the funding has already been allocated (see question 4: ‘How is the ODA budget structured’). Management is delegated to DG DevCo and the EEAS, which take the lead on allocating funds to the specific countries and regions. Regarding implementation, each ACP country appoints a National Authorizing Officer who, together with the EU delegation, is responsible for all program-related matters.
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THE EU'S DEVELOPMENT COOPERATION SYSTEM
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What are the EU’s strategic priorities for development? Focus on poverty reduction and the SDGs; increased emphasis on human rights and inclusive growth The EU’s development strategy is outlined in the European Consensus on Development, signed by the three main EU institutions (the Commission, the Parliament, and the Council) in 2006. Its overarching objectives are poverty reduction and achieving the Millennium Development Goals (MDGs), which have been translated into nine focus areas: •• trade and regional integration; •• environment and sustainable management of natural •• •• •• •• •• •• ••
resources; infrastructure; water and energy; rural development and food security; governance and human rights; conflict prevention; human development; and social cohesion and employment.
As of July 2016, the Consensus is being revised and is undergoing a public consultation. A review will be published in December 2016 and is likely to influence the mid-term reviews of the two main instruments of EU’s development assistance, the European Development Fund (EDF) and the Development Cooperation Instrument (DCI). In 2012, the Council adopted the European Commission’s (Commission) Agenda for Change, which outlines policy guidelines that complement the Consensus. The main objective of the Agenda for Change is to improve the effectiveness of EU development policy, and as such it prioritizes human rights and inclusive growth, as well as general budget support with stricter aid conditionality. It calls for a focus on the poorest countries and increased engagement with the private sector. It also further highlights the use of innovative financing mechanisms such as the blending of grants and loans, including for health and agriculture. With regard to strategic priorities, the refugee crisis had a major impact on the EU’s external action, including with regard to its development policy. It is one of the EU’s biggest challenges. In 2015, EU Member States and Norway received more than one million asylum applications and, along with several initiatives by different countries and groups of countries, the Commission itself has also taken steps to address the crisis, within EU borders as well as beyond them. The Commission amended its 2015 and 2016 budget to increase spending on the refugee crisis by €4.7 billion, amounting to a total of €9.3 billion (US$12.2 6
billion). This included the establishment of the ‘Emergency Trust Fund for Africa’, aimed at tackling root causes of migration, to which the Commission contributed €1.8 billion. The draft budget bill for 2017 foresees a total of €2.2 billion spent on addressing the root causes of the refugee flow from outside of the EU. The ‘Cotonou Agreement’, a treaty signed in 2000 that governs relations between the EU and Asian, Caribbean and Pacific (ACP) countries, is set to expire in 2020. Principally, negotiations to renew and discuss the terms of the cooperation between the EU and ACP countries after the treaty’s expiration must begin no later than September 2018 (1.5 years before the treaty’s expiration). In practice, they are already under discussion as of August 2016. One of the main issues under consideration is that of the incorporation of the EDF into the EU’s general budget – the so-called ‘EDF budgetization’. This would allow for the European Parliament to have a say in the allocations made by the EDF. While the issue has already been debated during the negotiations of the current Multiannual Financial Framework (MFF), the decision was postponed. The Commission will host a consultation on the revision in December 2016.
The EU disburses nearly all of its ODA bilaterally; focus is on infrastructure, economic development, and humanitarian aid The European Union is itself a multilateral organization; it channels virtually all of its ODA bilaterally (99.7% in 2014).
‘Brexit’: the UK’s decision to leave the EU
In June 2016, the British people voted in favor of exiting the EU. It is still unclear how this decision will affect EU development policy. Brexit could potentially impact the EU’s development policy in these ways: •• Reduce financial resources for development
programs: The UK contributes around US$2 billion per year to EU development programs through the EU’s general budget and the EDF
•• Create a leadership gap: The UK has been a strong
supporter of value for money, evidence-based policy, and a strong results agenda within EU development policy
•• Reduce the focus on poorest countries: The UK
has advocated for a stronger focus on least-developed countries and fragile states within the EU’s aid programs.
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The largest share of the EU’s bilateral ODA is allocated to infrastructure projects: they represented 18% of all bilateral funding in 2014 (US$3.3 billion). Infrastructure projects largely benefit middle-income countries, which received 70% of ODA for such projects in 2014. Turkey alone received 22% of this funding. ‘Financial services and business support’ comes second; in 2014, 12% of bilateral ODA was allocated to it. Another focus sector is humanitarian aid (12% of bilateral ODA in 2014). The EU’s humanitarian assistance is mainly carried out by the Direc-
torate-General for European Civil Protection and Humanitarian Aid Operations (ECHO) to address humanitarian crises outside the EU. However, in response to the high influx of refugees in Europe, the EC provides increasing humanitarian aid within EU. In March 2016, the Commission committed €700 million to fund emergency support operations within EU borders for 2016 to 2018. The Commission will disburse €300 million in 2016, and €200 each year in 2017 and 2018.
How is the EU's ODA budget structured? EU ODA comes from the EU budget and the EDF The EU’s ODA comes from two sources: the European Development Fund (EDF; €31 billion or US$41 billion for 2014 to 2020) and parts of the EU’s general budget’s Heading 4 ‘Global Europe’ (€64 billion for 2014 to 2020). Heading 4 is part of the Multiannual Financial Framework (MFF). It includes funding instruments that are most relevant for ODA: the Development Cooperation Instrument (DCI), the European Neighborhood Instrument (ENI), and the Instrument for Pre-accession Assistance (IPA). •• The Development Cooperation Instrument (DCI; €18.9
billion for 2014 to 2020), whose prime objective is the reduction of poverty
•• The European Neighborhood Instrument (ENI; €15.4
billion for 2014 to 2020) is accessible to the EU’s neighbor countries only and is focused on promoting human rights, supporting the transition towards the market economy, and promoting sustainable development and policies of common interest
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•• The Instrument for Pre-accession Assistance (IPA;
€11.7 billion for 2014 to 2020) is restricted to EU accession candidates and focuses on capacity building (it aims at preparing EU candidates for the rights and obligations of EU membership).
The EDF – which is outside of the EU’s general budget – and the DCI are the EU’s funding instruments that place the strongest focus on developing countries. Together, they account for 54% of the EU’s ODA. For this reason, the following section focuses on these two funding sources. The European Commission manages funding from both instruments. The EDF is the largest funding instrument. It provides assistance to the African, Caribbean, and Pacific Group of States (ACP countries) and focuses on least-developed countries. Germany, France, the United Kingdom and Italy are its largest contributors. The EDF includes country and regional programs (€24.5 billion) and Intra-ACP Funds (€3.6 billion) that finance cooperation among ACP states. Intra-ACP funds are also used to finance contribu-
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tions to multilateral institutions: under the last MFF, 58% of support to the Global Fund to fight AIDS, Tuberculosis and Malaria (Global Fund) was sourced from there, as well as 60% of funding to Gavi, the Vaccine Alliance (Gavi). An estimated €3.9 billion of the EDF is kept as unallocated reserves: it is used to fund response to ‘unforeseen needs‘. For example, €1 billion has been sourced from EDF reserves to fund the Emergency Trust Fund for Africa, a funding facility set up in November 2015 to tackle root causes of migration in different African regions. Reserves include a total of €3.4 billion from country programs and €507 million from Intra-ACP Funds. The DCI includes €18.9 billion (US$25 billion) for 2014 to 2020 (30% of Heading 4), of which up to 5% (€950 million) is also kept as a reserve. The DCI covers country-program support to EU partner countries in Asia and Latin America, as well as ‘thematic programs’ that are open to all developing countries. The ‘Global Public Goods and Challenges’ (GPGC) program comprises €4.9 billion, of which at least €980 million will be allocated to health and €1.4 billion is allocated to food and nutrition security and sustainable agriculture. Within the GPGC, the Commission finances ‘EU flagship programmes’ that will address global challenges through multi-sectoral or cross-cutting approaches. No concrete funding amounts are earmarked for these programs. The currently proposed 12 flagship programs will focus on a range of strategic areas including climate change, health and inclusive growth. Moreover, the DCI’s €816 million ‘Pan-African Program’ will support the Comprehensive Africa Agriculture Development Programme (CAADP) under the Joint Africa-EU Strategy – the exact amount is not yet known.
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The MFF as a whole will be subject to a mid-term review that is likely to begin in late 2016. In addition, the Commission will conduct mid-term reviews of the EDF and the DCI in 2017, after which it might revise their respective geographic and thematic allocations. EDF and DCI spending commitments 2014-2020 EDF programs
millions millions € US$ 30.7
40.8
24.5
32.5
EDF administrative expenditure
1.1
1.5
EDF resources for ACP Investment Facility (managed by the European Investment Bank)
1.1
1.5
0.4
0.5
EDF country and regional programs
EDF support to overseas countries and territories EDF Intra-ACP Funds DCI programs DCI country programs
3.6
4.8
18.9
25.1
10.7
14.2
DCI Global Public Goods and Challenges
4.9
6.5
DCI Pan-African Program
0.8
1.1
DCI CSO and LA Program
1.8
2.4
Other
0.7
0.9
Total ODA
49.6
65.8
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What are important decision-making opportunities in the EU's annual budget process? The Commission develops the draft budget in AprilMay; programming runs from November until July While the European Development Fund (EDF) is not broken down into annual budgets, the European Union’s general budget is negotiated and approved annually. However, the annual budget process takes place within the framework set in the Multiannual Financial Framework (MFF). The MFF is the EU’s ‘long-term spending plan’: it states expenditure ceilings for a period of at least five years. The current MFF covers seven years, from 2014 to 2020. The annual budget can only be adopted within the spending limits set in the MFF. ••
••
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tween April and June, the Commission presents the annual draft budget to the Council and the European Parliament. It is developed without any external input, and in accordance with MFF’s spending ceilings. The annual draft budget includes DCI country and thematic programs.
Council and Parliament prepare positions on draft budget: Once the Commission has presented its draft
Parliament votes on amendments to Councils's position: Once Parliament has received the Council’s
position, it has 42 days to approve or amend it. The Budget Committee prepares the Parliament’s position, based on the previous inputs from the thematic committees. Usually in late October, a plenary of Parliament votes on the Council’s position, including the proposed amendments.
The Commission presents its draft budget: Be-
budget, the Council prepares its position on the draft budget between July and September, and proposes amendments. The Council forwards its position to the Parliament by October 1st. However, the committees
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of the European Parliament already start holding internal discussions on the draft budget between July and September. This includes the Committee on Development, which delivers its opinions – along with proposed budgetary amendments on funding to DCI country and thematic programs – to the Budget Committee. This period is thus a key opportunity for engaging with MPs around budget allocations to the DCI.
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Conciliation procedure between Parliament and Council: Between October and November, Parliament
forwards the amended text to the Council. If the Council approves all amendments, the budget is considered adopted. If not, a conciliation committee is convened to reach an agreement.
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How is EU’s ODA spent? The EU disburses nearly all of its ODA bilaterally The EU reports virtually all of its ODA as bilateral ODA (99.7% in 2014). However, this does not mean that European institutions do not provide support to other multilateral organizations: they often do so through funding that is earmarked for specific thematic priorities or countries/regions and is thus reported as bilateral ODA. For example, a large share of EU contributions to the Global Fund to fight AIDS, Tuberculosis and Malaria (Global Fund) are reported as bilateral ODA: in 2014, core contributions amounted to US$20 million, whereas US$93 million was earmarked for ACP countries and thus formed part of the EU’s bilateral cooperation. The EU provides 27% of it bilateral ODA in the form of loans or equity investments (the remaining 73% is given as grants). This share is much higher than donors of the Development Assistance Committee (DAC) of the OECD (17% in 2014), and has increased enormously in past years: in 2010, loans and equity investments accounted for only 0.5% of the EU’s bilateral ODA. This increase is due to the fact that the EU started to report unsubsidized loans by the European Investment Bank (EIB) as ODA in 2011. The EIB is the European Union’s bank: it provides finance for investment projects. More than 90% of investments support activities within Europe. However it also supports the EU’s development policy. EIB loans focus almost exclusively on middle-income countries (MICs). MICs received 95% of EIB’s total volume of ODA loans in 2014. As a result of a change in OECD reporting rules for ODA loans, the amount of loans reported as ODA by the European Union may considerably decrease. From 2018 onwards only the grant element, i.e. the concessional part of a loan, will be counted as ODA. Currently the full face value of loans is counted as ODA. This change in reporting may lead to a considerable decrease in EU ODA.
Who are the EU’s ODA recipients? Large shares of ODA go to EU neighborhood and accession countries Due to the large share of ODA funding delivered to neighboring countries through the European Neighborhood Instrument (ENI) and the Instrument for Pre-accession Assistance (IPA) (see question 4: ‘How is the EU’s ODA budget structured?’). TheEU’s total bilateral ODA focuses on middle-income countries. They received an average of 58% of the EU’s bilateral ODA between 2012 and 2014. Least-developed countries and low-income countries together were allocated 25%.As the EDF and the DCI have the strongest focus on developing countries and poverty alleviation, this section analyzes the recipients of these two funding instruments in more detail.
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•• EDF: The EDF focuses on providing development as-
sistance to countries of the African-Caribbean-Pacific group (ACP countries): of those 79 countries, 48 are in sub-Saharan Africa. Subsequently, the majority of EDF funding is allocated to countries in the region (84% of total EDF funding in 2014). Funding is also directed towards low-income and least-developed countries: nine of the top 10 recipient countries of the EDF belong to one of those categories.
•• DCI: When considering both geographic and thematic
programs of the DCI, countries in South and Central Asia receive the largest share (28% in 2014). DCI’s geographic programs focus on South and Far East Asia as well as Latin America: all top 10 recipients are in these regions, with the exception of South Africa. The thematic fund, however, is more focused on sub-Saharan Africa, as 35% of it is allocated to countries in this region. The DCI focuses rather heavily on middle-income countries: with the exception of Afghanistan, all top 10 recipients belong to this category.
Under the Multiannual Financial Framework (MFF) for 2014 to 2020, the EU will close 16 bilateral programs with middle-income countries in Asia and Latin America; this will increase funding to least-developed countries.
How is bilateral funding programmed? The Directorate-General for International Cooperation and Development (DG DevCo) and the European External Action Service (EEAS) are jointly responsible for approving the EU’s seven-year strategy with partner countries regarding EDF and DCI allocations. These documents, referred to as ‘multi-annual programs’ (for cooperation under the DCI) and ‘national/regional indicative programs’ (for cooperation under the EDF) are developed by EU delegations on the basis of pre-existing national development plans or strategies and with instructions from DevCo and the EEAS. They define priority sectors of bilateral cooperation between the EU and the partner country, and state indicative amounts allocated to each sector. Both instruments undergo midterm reviews that offer possibilities to reshuffle programmed EDF and DCI funding, within a country as well as between different countries. On a yearly basis, DG DevCo and EU delegations jointly prepare Annual Action Programs (AAPs) that set budget allocations and goals for each country and for the DCI’s thematic programs. AAPs are usually adopted by the Commission leadership during the summer following agreement over the budget. DevCo may also adopt ‘addendums’ to the AAPs towards the end of the year for additional financing of programs.
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The decision-making process on ‘flagship programmes’ (see question four: ‘How is the EU’s ODA budget structured?’) is unclear as of August 2016. DG DevCo proposed to focus on 12 initiatives that should be partially funded
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through the thematic GPGC program. In addition, the Commission could, for example, open new ‘flagship programmes’ on global health and earmark funding for these purposes.
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THE EUROPEAN UNION outlook
How will the EU's ODA develop? •• The EU has largely concluded its multi-year programming for the 2014-
2020 period, and sector priorities and allocations are set. However, in 2017, the Commission will conduct mid-term reviews of the EDF and the DCI. According to the results, it might revise respective geographic and thematic allocations of both instruments.
•• The refugee crisis will likely continue to have an impact on the EU’s official
development assistance and on how much of the EU budget is still available for development. In September 2016, the Council suggested cuts in budgetary allocations to global development, to address the migration crisis and boost development growth.
•• The upcoming review of the Consensus and renewal of the Cotonou Agree-
ment may lead to a substantial shift in development priorities as well as to changes to the EU-ACP (Africa, Caribbean, Pacific) relationship.
What will the EU’s ODA focus on? •• Funding for health will likely remain stable, while funding for agriculture
will increase.
•• Focus on least-developed countries will increase as the EU is closing bilat-
eral programs with 16 middle-income countries in Asia and Latin America.
What are key opportunities in 2016 and 2017 for shaping the EU’s development policy? •• The result of the British referendum to leave the European Union will likely
have significant consequences on development cooperation within the EU, and with the United Kingdom, especially. It is, however, unclear exactly how this will unfold.
•• The renewal of the 2000-2020 Cotonou Agreement is underway and may
carry with it the inclusion of the budget of the European Development Fund (EDF) into the European Union’s general budget (the so-called ‘EDF budgetization’). This would allow the Parliament to scrutinize the EDF budget.
•• A review of the European Consensus on Development is currently being
developed and is undergoing a public consultation. The review of this consultation will be published in December 2016 and will likely influence the mid-term reviews of the Development Cooperation Instrument and of the European Development Fund.
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DEEP DIVES topics
The EU’s global health ODA Health is not a priority sector; however, support to the Global Fund is substantial EU institutions are the 7th-largest donor to global health in 2014, spending US$656 million.3 This corresponds to 4% of its total ODA, which is less than half of the 10% average among members of the Development Assistance Committee (DAC) of the Organization for Economic Co-operation and Development (OECD). The Commission has indicated that health ODA will remain largely flat until 2020, but will concentrate on fewer partner countries. The Commission agrees on three priority sectors with each partner country, in line with the country’s own priorities. Only 15 partner countries (of which 10 are in sub-Saharan Africa) requested health as a priority sector – down from 40 in the previous programming period. In 2014, the Commission channeled 4% (US$25 million) of its health ODA as multilateral assistance (the DAC average is 52%), with the largest recipient being the Global Fund to fight AIDS, Tuberculosis and Malaria (Global Fund). Contributions to Gavi, the Vaccine Alliance (Gavi) and most of the funding to the Global Fund are reported as bilateral funding because they are earmarked by donors for specific country groups; they come thus on top of the US$25 million mentioned above. O ver the 2001-2016 period, the Commission contributed a total of US$1.7 billion. At the Fifth Global Fund Replenishment Conference in Montreal (September 2016), the Commission announced that it will contribute €475 million for the 20172019 funding period. This represents almost a 30% increase relative to the pledge by the EC in 2014. The Commission also provides funding to Gavi: after having contributed US$93 million in the 2000-2012 period, the EU did not fund Gavi in 2013 and 2014: Gavi funding that had been provided for within the Multiannual Financial Framework (MFF) ended in 2013, and budget negotia-
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tions were ongoing into 2014. The Commission resumed funding to Gavi in 2015 with a contribution of US22 million, and pledged US$240 million for 2016 to 2020. The EU institutions’ support to the Global Polio Eradication Initiative (GPEI) stands at US$126 million for 2006 to 2015. It increased its funding level in the past two years to reach US$11 million in 2014 and US$13 million in 2015. Funding for the remaining years of the financing period until 2020 is unclear. The Commission has announced that it will continue to provide support to polio-endemic Afghanistan and Nigeria through its bilateral health programs, which might be reported as contributions to GPEI. The EU disbursed US$630 million as bilateral health ODA in 2014, equaling just 3% of total bilateral ODA. Funding focused on basic health care (37% of bilateral health ODA), basic nutrition (18%), and health system strengthening (HSS; 15%).4 Apart from the funding that is reported as health ODA, the EU channels substantial funding as general budget support (US$1.2 billion in 2014) that also benefits the health sector – meaning that actual funding provided for health is higher than the reported ‘health’ ODA.
DevCo Directorate Human Development and Migration leads policy development on health High-level decisions around global health are made jointly by the Commission and the Council (see section ‘Who are the main actors in EU development cooperation?’). The Commission’s DG DevCo is in charge of developing EU’s policies and thematic programs around global health. Within DG DevCo, global health is covered by the Unit B4 (Education, Health, Research, Culture) within DG DevCo Directorate B (Human Development and Migration).
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DEEP DIVES topics
The EU’s global health R&D The EC is the 3rd-biggest provider of global health R&D funding
The EU has three main programs for global health R&D
In 2014, the European Commission provided US$126 million for research and development (R&D) on poverty-related and neglected diseases (PRNDs), referred to as ‘global health R&D’ in this profile. This makes the EC the 3rd-biggest public funder of R&D for PRNDs in 2014, after the UK and the US. These figures are based on the G-FINDER survey conducted by Policy Cure. The Commission’s funding for R&D increased steadily since 2012, going from US$104 million in 2012 to US$126 million in 2014.
The Directorate-General for Research and Innovation defines and implements the European Research and Innovation policy, which includes global health R&D. The European Union funds research and innovation through so-called framework programmes that cover six years. ‘Horizon 2020’, the EU’s eighth Framework Programme for Research and Innovation, was launched in 2014. It has a total budget of US$95 billion for the period 2014-2020, and focuses on three key areas: Excellent Science (32% of the total budget), Industrial Leadership (22%), and Societal Challenges (39%). The latter includes Societal Challenge 1, ‘Health, Demographic Change and Wellbeing’, which aims to improve health and represents 9.7% (US$10 billion) of Horizon 2020’s total funding. It is estimated that approximately US$120 million will be spent on R&D for PRNDs. The exact share for global health R&D is not known yet since the Work Programme 2018-2020, which outlines funding opportunities for that period, is currently being developed.
The Commission reported US$484 million in commitment to global health R&D for 2014-2015. This figure refers to commitments rather than actual disbursements, which may be distributed across several years. Commitments focused on Tuberculosis (TB) (34%), Ebola (29%), and HIV/AIDS (21%) and include a range of activities that go beyond laboratory R&D and development of new medical tools, such as building capacities in different regions to conduct research, as was the case during the response to the Ebola epidemic. It is worth noting that the Commission takes a broad approach to account for global health R&D funding, while G-FINDER data strictly focuses on actual expenditure for product development R&D only. Given the Commission and G-FINDER’s contrasting approaches, G-FINDER’s figure for EU investments into global health R&D is much smaller.
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The European Commission contributes to global health R&D through three main funding mechanisms, all of them funded through the ‘Societal Challenge’ section of Horizon 2020: the Work Programmes implemented directly by the Commission, the European and Developing Countries Clinical Trials Partnerships (ECDTP 2), and the Innovative Medicines Initiatives 2 (IMI 2).
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•• Under Horizon 2020, the Work Programmes of Societal
Challenge 1 focus on health challenges faced by Europe and also cover diseases with high global disease burden. In 2014-2015, relevant Work Programmes provided €1.2 billion (US$1.6 billion) and will provide €668 million (US$860 million) for 2016-2017, according to the Commission. Global health R&D is not a major priority of the two current Work Programmes. However, calls for proposals were issued for the development of vaccines against TB (2014), HIV/AIDS (2015), malaria and/or other neglected infectious diseases (2016), and urgent research needs for the Zika virus (2016). Lastly, the Commission published a call to improve the control of infectious epidemics and foodborne outbreaks through rapid identification of pathogens (2014).
•• EDCTP’s objective is to accelerate the development of
health technologies for poverty-related and neglected diseases in sub-Saharan Africa. EDCTP 2 is in its second business cycle, which runs from 2014 to 2020, and has a budget of approximately €1.4 billion (US$1.9 billion), yet only half of it comes from the EU budget. The remaining €683 million (US$846 million) is provided by EU Participating States, in cash or in kind. In general, this means that donor governments can report ex-
isting investments in national research as in-kind contributions to EDCTP 2. According to data provided by the Commission, €85 million (US$113 million) was disbursed from 2014 to 2015 through EDCTP 2 on a range of activities, such as the clinical validation of diagnostics tools and research capacity development during the Ebola crisis, for example. Alongside TB, HIV/AIDS and malaria, neglected tropical diseases are now also eligible for R&D funding. •• IMI is a ‘joint undertaking’ between the EU and the
European pharmaceutical industry that is represented by the European Federation of Pharmaceutical Industries and Associations (EFPIA). Under IMI 2 (20142020), the Commission provides €1.6 billion (US$2.1 billion) under the Strategic Initiatives under Societal Challenge 1. €1.4 billion (US$1.9 billion) is provided as in-kind contributions by EFPIA. An additional €213 million (US$283 million) is provided as in-kind contributions by other life-science industries or organizations that are not part of EFPIA. €114 million (US$151 million) was invested into global health R&D through IMI 2 between 2014 and 2015 according to the EC, mostly allocated for research on Ebola, including vaccine clinical trials.
DEEP DIVES topics
The EU’s agriculture ODA Agriculture among top priorities for 2014 to 2020; funding is almost exclusively bilateral The Commission spent US$1.3 billion on ODA for agriculture and rural development (including forestry and fishing) in 2014. This makes it the 3rd-largest donor in absolute terms. It corresponds to 7% of total ODA, which is just below the OECD’s Development Assistance Committee (DAC) average of 8%. Virtually all agricultural ODA is channeled bilaterally. Sustainable agriculture is highlighted as one of five key priorities of EU’s development cooperation for 2014 to 2020 and funding is therefore likely to increase in this area. The priority areas set out for 2014 to 2020 are small-holder agriculture, the formation of producer groups, the supply and marketing chain, as well as government efforts to facilitate responsible private investment. The Commission allocated US$1.9 billion of the Programme on Global Public Goods and Challenges (GPGC), funded through the Development Cooperation Instrument (DCI), to this sector. In line with commit17
ments at the 2014 Africa-European Union Summit, the Pan-African Program under the Joint Africa-EU Strategy funds the Comprehensive Africa Agriculture Development Programme (CAADP). In 2014, bilateral funding focused on agricultural policy and administrative management (23% of bilateral ODA for agriculture), rural development (21%), agricultural development (15%) and forestry development (11%). Multilateral support in 2014 was limited to core multilateral contributions to the United Nation’s Food and Agriculture Organization (FAO, US$1 million). In addition, the Commission co-finances different programs that are reported as bilateral ODA. In 2014, US$ 183 million went to the FAO via bilateral ODA. Agricultural research amounted to US$55 million in 2014. The EU provides funding for the Consultative Group for International Agricultural Research (CGIAR). The Commission’s contributions to the Consortium of International Agricultural Research Centres have declined
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under the new Multiannual Financial Framework (MFF). The latest commitment – financed from the GPGC’s envelope for food security and sustainable agriculture – includes only US$6 million per year for 2015 to 2019. This only includes funding that is managed by the Commission headquarters in Brussels. EU delegations in developing countries are likely to contribute additional funding directly to local CGIAR centers and bring overall contributions to a similar level as in previous years. In the past, the Commission has also directly supported the Committee on World Food Security (CFS).
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DevCo’s directorate ‘Sustainable Growth and Development’ leads policy in agriculture ODA High-level decisions are made jointly by the Commission and the Council (see section ‘Who are the main actors in EU development cooperation?’). Within the Commission’s DG DevCo, the Directorate ‘Sustainable Growth and Development’ is in charge of policies related to agriculture ODA. Two units are relevant: Unit C1, ‘rural development, food security and nutrition’, and Unit C2, ‘environment, ecosystems, biodiversity and wildlife’.
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DEEP DIVES topics
The EU’s nutrition ODA The EU is a strong supporter of multilateral initiatives Nutrition is an important priority for the European Institutions. The European Union has three important strategic priorities that it has outlined in its 2014 Action Plan for Nutrition. First, the EU aims for stronger commitment and mobilization for nutrition on country and international levels through initiatives such as the Scaling Up Nutrition (SUN) movement. To this end, the EU has pledged €3.5 billion (US$4.6 billion) for 2014 to 2020 for nutrition programs, in the framework the SUN movement. Second, nutrition interventions at country level are targeted to facilitate sustainable improvements in nutrition. Third, the EU intends to invest in research and to support information systems, as well as providing technical support for the implementation of nutrition initiatives. A variety of initiatives were set up by the Commission in order to work towards its nutrition goals. The Food Facility, for example, was set up in 2008 with a budget of €1 billion (US$1.3 billion) to tackle hunger. The scheme is said to benefit 150 million people around the world. Of the 232 projects that were conducted through the scheme, 80 specifically addressed nutrition and safety net measures. The EU also intends to tackle ‘hidden hunger’, which refers to vitamin and mineral (micronutrient) deficiencies that are often undetected as they do not manifest as more recognizable ‘chronic hunger’. Specifically, the EU aims to significantly reduce the number of children under five who suffer from wasting and stunting and associated cognitive under-development. The EU is also very active in driving support for nutrition multilaterally. The EU and the FAO launched a partnership in July 2015 to support food and nutrition security in some 35 countries around the world. The EU is contributing €50 million (US$66 million) to this initiative (FAO’s contribution is €23.5 million or US$31.2 million) that is
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comprised of two five-year programmes. The Food and Nutrition Security Impact, Resilience, Sustainability and Transformation (FIRST) facility aims to enable national governments to improve food security. It entails an information program (the Information for Nutrition Food Security and Resilience programme), designed to increase the ability to cope with food crises by supplying the necessary information and data to policy-makers in individual countries.
•• Nutrition-specific: interventions with primary
objective to improve nutrition (i.e. support for exclusive breastfeeding, supplementary feeding, etc.)
•• Nutrition-sensitive: interventions addressing
underlying causes of malnutrition and consider cross-sector impacts (i.e. improve access to diverse diet, etc.)
At the Nutrition for Growth Summit, the Commission announced it would invest US$4 billion to fight malnutrition through projects in the agriculture, education, water and social protection sectors. US$533 million will be spent on nutrition-specific programs.
DevCo's ‘Sustainable Growth and Development’ directorate is most relevant for nutrition issues The Commission and the Council jointly set orientations with regards to priorities of the EU’s development policy on nutrition (see question 2: ‘Who are the main actors in the EU’s development cooperation?’). Within DG DevCo, Directorate C ‘Sustainable Growth and Development’, entails the Unit relevant for nutrition: Unit C1 ‘rural development, food security, and nutrition’.
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ENDNOTES 1
‘The Cotonou Agreement governs relations between the EU and Asian, Caribbean and Pacific (ACP) countries. It began in 2000 and is set to expire in 2020. 2
‘2015 prices’ refers to the actual ODA amount disbursed in 2015. This figure is commonly used when comparing ODA across donors in 2015. To compare ODA levels in 2015 with ODA levels provided in previous years, figures need to be measured in constant prices. This means that the ODA amounts for each year are adjusted to take into account the effect of inflation and of exchange rate fluctuations. The OECD provides ODA data in constant prices using 2014 as the base year (i.e. ‘2014 prices’). In this profile, we thus generally state ODA figures in ‘2014 prices’ to ensure data is comparable over time. 3
The OECD does not report multilateral imputed contributions to the health sector for the EU institutions. This figure was calculated based on Commission’s contributions to the Global Fund, UNRWA, UNICEF, and WHO, in accordance with the OECD’s methodology for calculating multilateral imputed contributions to health.
About the Donor Tracker The Donor Tracker seeks to advance and support progress in global development by providing advocates with easy access to high-quality quantitative and qualitative strategic information to support their work. The Donor Tracker is a unique online resource that offers free, independent, up-to-date analysis of 14 major OECD donors. Covering 90% of the world’s official development assistance (ODA), the Donor Tracker provides data-driven insights on strategic priorities, funding trends, decision-making and key opportunities. Website: www.donortracker.org E-mail:
[email protected] SEEK Development landline: +49 (0)30-4202 5211
4
This includes health policy and administrative management and basic health infrastructure.
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