- France is the fifth-largest donor country, spending US$9.5 billion on net official development assistance (ODA) in 2016 (in current prices). This represents 0.38% of its gross national income (GNI).
- Former President Francois Hollande had committed to increase ODA by €4 billion per year by 2020 in the form of loans, and by €400 million in the form of grants (compared to 2015). In 2017, France’s development budget is set to reach €9.7 billion (US$10.7 billion) or 0.41% of GNI, driven both by increases in budgetary allocations and in the revenues allocated to development from existing innovative financing mechanisms. The new President, Emmanuel Marcon, committed to reaching the 0.5% of GNI by 2022.
- France focuses its ODA loans increasingly on fighting climate change. Health is a traditional and ongoing focus of French development cooperation, particularly with regard to its multilateral engagement. Within overall foreign policy, internal security and terrorism-related threats are strategic priorities.
- The election of Emmanuel Macron as France’s new president in May 2017 may impact the strategic priorities of France’s development policy in the medium-term. However, based on Macron’s declarations during the election campaign, major shifts are not expected.
- Geographically, France takes a differentiated approach to allocating its ODA, providing grants mainly to 16 fragile and least-developed countries in sub-Saharan Africa. ODA loans focus on emerging economies.
- In December 2016, France’s main public investment institutions, the Deposit and Consignment Fund (CDC), and the French Development Agency (AFD) signed a ‘Strategic Alliance Charter’. This Charter aims to scale up the capacities of the AFD to finance and support public policies in a range of sectors, including support for ecological transitions. The Charter comes under the framework of the UN Sustainable Development Goals (SDGs), bringing together the two institutions’ national and international policies and activities related to the SDGs under a single umbrella.
- The additional €4 billion in ODA loans per year presents a major opportunity to leverage more funding for development, as much of this has not yet been earmarked for specific projects. Particular opportunities exist for climate-related programs, as half of the loans increase will be allocated to this area.
- Since 2014, France has continuously increased the proceeds generated from its financial transaction tax (FTT) allocated to development and climate funding, from €100 million in 2014 to almost €800 million in 2017.
the big six
- How much ODA does France provide?
France is the 5th-largest donor; ODA is expected to increase by more than €4 billion by 2020
France was the fifth-largest donor country in 2016. It spent US$9.5 billion (in 2016 prices; US$9.5 billion in 2015 prices), or 0.38.% of its GNI on net ODA. In recent years, cuts in public spending have put pressure on France’s ODA. However, at the UN General Assembly in September 2015, former President Hollande announced that France would provide an additional €4 billion (US$4.4 billion) in ODA in the form of loans per year by 2020. This would bring up French ODA to approximately €12 billion (US$13.3 billion) in 2020. Half of the increase is earmarked for climate-related programs. In addition, France will provide €400 million in additional ODA grants per year. In line with this commitment, and with the steady increases since 2014, net ODA rose by 5% between 2015 and 2016, driven by increases in bilateral loans.
In 2017, ODA is expected to increase to 0.41% of France’s GNI
In 2017, ODA is expected to increase to 0.41% of France’s GNI, to reach €9.7 billion (US$10.7 billion). To finance this increase, France draws on both innovative financing mechanisms and on budgetary sources. Allocations to the two main ODA-relevant budget lines increased by 5% between 2016 and 2017 (from €2.5 billion to €2.6 billion, including an €83.5-million increase in the form of grants). In parallel, proceeds of the French financial transaction tax (FTT) – a tax introduced in 2012 to generate more resources for development and climate programs – that are allocated to development are expected to increase from an estimated €528 million in 2016 to €798 million.
- What are France's strategic priorities for development?
Focus on climate change, peace and stability, and sub-Saharan Africa
In 2016, France’s Interministerial Committee for International Cooperation and Development (CICID) – the body in charge of setting the strategic direction of France’s development cooperation – committed to aligning France’s development policy to the sustainable development goals (SDGs).
The committee reiterated the overarching priorities of French ODA policy: fighting poverty and inequality; the promotion of human rights, education, and health; accelerating transitions in energy, ecological sustainability, demographics, and governance; crisis response and prevention; and migration management. Under this framework, the CICID committed to strengthening its efforts in six specific areas: 1) education, 2) health, 3) the fight against malnutrition and the improvement of access to water and sanitation, 4) gender equality, 5) digital technology and development, and 6) culture as a medium for the SDGs.
France's key development priorities:
- Climate change: Increase in annual funding to combat climate change in developing countries from €3 billion to €5 billion by 2020; €1-billion pledge to the Green Climate Fund for 2015 to 2018; €2 billion for renewable energies in Africa between 2016 and 2020.
- Peace and stability: Increasing focus on development programs that promote peace and stability to fight terrorism; focus is on the Sahel region.
- Health: Strong support to multilateral organizations, particularly the Global Fund to Fight AIDS, Tuberculosis and Malaria, and UNITAID.
Currently, tackling climate change is the key priority of French development policy and will remain so. In 2015, France hosted the Conference of Parties ( COP21), and has made the implementation of the agreement reached in Paris in 2015 a top priority of its development policy. In the run up to the conference, France announced that half of the €4-billion annual increase in ODA loans by 2020 would be allocated to climate change-related programs. This brings up France’s total annual contribution to the fight against climate change in developing countries from €3 billion to €5 billion per year; €2 billion of this funding over the 2016 to 2020 period will be dedicated specifically to renewable energies in Africa.
Out of France’s six development focus areas, tackling climate change is the current key priority.
Within its overall foreign policy, France focuses heavily on fighting terrorism. This impacts development spending as France increasingly uses development cooperation as a way to promote peace and stability in partner countries to address terrorism-related threats. It does so particularly in the Sahel region of Africa, for example in Mali, where financial support to health and to water and sanitation projects accompanies France’s military and political interventions. From 2017 onwards, France will allocate €100 million per year to a facility for alleviating vulnerability and responding to crises, managed by the French Development Agency (AFD). The facility will focus on countries in crisis, post-crisis, or otherwise vulnerable situations.
France is a pioneer in using innovative financing mechanisms to fund development programs. France currently allocates half of the revenues from its financial transaction tax (FTT) to development and climate programs (reaching almost €800 million in 2017). In addition, it uses proceeds from an airline ticket tax to fund UNITAID, a global health initiative, and is the second-largest contributor to the International Finance Facility for Immunisation (IFFIm) (see ‘Deep Dive: global health’ for more details).
Most of France’s ODA is bilateral assistance, and one third of that goes to infrastructure and education
France delivers 62% of its ODA bilaterally.
The largest share goes to education: in 2015, education constituted 16% of French bilateral ODA (US$1.1 billion). However, 58% of this comprises costs for students from developing countries studying in France, which can be reported as ODA. Thus, the vast share of France’s education ODA does not go to actual projects in developing countries. The second-largest sector of French bilateral ODA is allocated to multi-sector projects (12%, US$834 million). The vast majority of these projects falls under the scope of urban development and management in developing countries (81% of the spending).
Infrastructure comes third, at 8% of ODA (US$564 million). This is comprised mostly of French Development Agency (AFD) loans for infrastructure projects in middle-income countries. Environmental protection and energy are other focus areas, each accounting for 8% of France’s bilateral ODA (respectively US$564 million and US$519 million). Both areas will gain further importance in the next four years: on the one hand, the government has pledged to step up its funding to support the fight against climate change by €2 billion by 2020; on the other hand, France has committed to support renewable energies in Africa alone by €2 billion between 2016 and 2020.
- Who are the main actors in French development cooperation?
President has a key role; decision-making is fragmented as several institutions are involved
France’s decision-making landscape for development policy is fragmented. The President, since May 2017 Emmanuel Macron (‘En marche’ movement), determines overall guidelines. He also engages in development issues through high-level commitments. The Prime Minister, Edouard Philippe since May 2017, chairs the Interministerial Committee for International Cooperation and Development (CICID), which sets long-term strategic priorities. The committee last met in November 2016.
The President determines overall development policy guidelines, while the Prime Minister-chaired CICID sets long-term strategic priorities.
Within the government, two ministries jointly manage French development policy: the Ministry for Europe and Foreign Affairs (MAE, previously Ministry of Foreign Affairs and International Development), and the Ministry of the Economy and Finance (Finance Ministry).
FRANCE'S DEVELOPMENT COOPERATION SYSTEM
The French Development Agency (AFD), currently headed by Director-General Rémy Rioux, is the key implementing agency. AFD has a dual status as a public agency and a development bank. It has 72 country offices and 1,837 employees (as of 2015). In 2016, AFD made a record €9.4 billion in new commitments, a 13% increase compared to 2015. AFD provides the vast share of its funding as loans (84% in 2016), and also takes part in equity investments/guarantee financing (5%). In 2016, grants made up 11% of AFD’s commitments. This includes debt-relief operations and budget support (the breakdown is not yet available for 2016; in 2015, they accounted together for 8% of AFD’s funding). AFD currently provides only small shares of its funding as grants for bilateral projects (around 3% in 2015) and funding for civil society organizations (CSOs; around 2%). Over half of AFD’s resources stem from bonds issued on international capital markets.
The French Development Agency (AFD) has a dual status as a public agency and a development bank.
The government plans to further expand the agency’s financing capacity to meet its pledge to increase ODA loans by €4 billion by 2020. AFD commitments are expected grow further to €12.7 billion per year by 2020. In addition, AFD plans to increase the volume of grants (currently around €200 million per year) provided for development projects by €400 million, by 2020. From this perspective, the government increased the AFD’s own funds by €2.4 billion in 2016.
In addition, the AFD signed a partnership convention with the Deposits and Consignments Fund (CDC), France’s main public-investment institution, in December 2016. The ‘Strategic Alliance Charter’ paves the way for strengthened cooperation between the two institutions, with the aim of bringing French policy and actions related to the sustainable development goals (SDGs) in France and abroad under a single umbrella. The Charter foresees strengthened intervention and financing capacity of both institutions for sustainable development, including in developing countries. To this end, an investment facility has been set up, focused on infrastructure for sustainable development, particularly in Africa. Initial financing from the CDC to the investment facility amounts to €500 million, topped up with €100 million contributed from by the AFD. The focus will be on renewable energies; water, sanitation, and hygiene (WASH), telecommunications and digital infrastructure; waste treatment; transport; territorial development; and health and education.
The French parliament’s two chambers, the National Assembly (Assemblée Nationale) and the Senate (Sénat), scrutinize, propose amendments to, and vote on the budget. Members of Parliament (MPs) can reallocate spending within budget lines but cannot change the budget lines’ overall amounts. They usually receive information on individual budget lines shortly before the vote, which limits their influence. However, MPs can influence overall ODA levels by allocating high amounts of extra-budgetary resources (resources that are not integrated within ministries' budget lines) to development cooperation. This happened in the negotiations on the 2016 and on the 2017 budget: MPs amended the government's budget draft to increase proceeds of the financial transaction tax allocated to development assistance.
In 2014, Parliament adopted France’s first-ever law on development cooperation. It aims to increase transparency and accountability, and foresees a review process of development policies by parliament every two years. However, it is not likely to simplify the way decisions on development policy and allocations are made, as the high number of actors involved remains unchanged (the President, the Prime Minister, the MAE, the Finance Ministry, and the AFD).
Civil society organizations (CSOs) play an influential role in France’s development policy as advisory bodies. Coordination SUD is the biggest CSO umbrella organization, gathering 140 French development NGOs. Its board of directors meets annually with AFD’s director. In 2013, the government created a ‘National Council for Development and International Solidarity’ (CNDSI) gathering representatives of CSOs, labor unions, local authorities, research institutes, and MPs. The Council is chaired by the MAE and meets twice a year to debate issues regarding French development policy. However, CSOs play a relatively minor role in implementing French ODA: they channeled only 3% of bilateral ODA in 2015, well below the average channeled by CSOs in other donor countries (17%).
- How is the French ODA budget structured?
There are two main envelopes for France’s development budget; together they make up the ‘ODA mission’
French ODA (€9.7 billion or US$10.7 billion in 2017) stems from two main sources: ODA included in the general budget (€6 billion) and ODA from other sources, not included in the general budget (€3.7 billion). The latter mainly includes contributions to the European Commission, funding generated through the financial transaction tax (FTT, €798 million in 2017, up from an estimated €528 million in 2016), the airline ticket tax, and debt-relief mechanisms.
The two largest ODA programs of the general budget are included in what is called the ‘ODA mission’: program 110 of the Ministry of the Economy and Finance (Finance Ministry) and program 209 of the Ministry of Foreign Affairs’ (MAE).
- The Finance Ministry’s program 110 (‘economic and financial development aid’) includes three main funding envelopes: 1) contributions to international financial institutions (IFI), 2) bilateral aid (mostly for loans managed by the French Development Agency [AFD]), and 3) transfers to AFD and IFI to reimburse them for funds ‘lost’ when debt managed by them was cancelled.
- MAE’s program 209 (‘solidarity with developing countries’) encompasses four main funding envelopes: 1) the bilateral cooperation envelope, which mainly includes transfers to AFD (for bilateral grants, funding to CSOs, and technical assistance), Debt-Reduction Development Contracts (C2D), the MAE-managed Priority Solidarity Fund (FSP), 2) envelopes for voluntary multilateral contributions to UN agencies and other multilaterals, 3) contributions to the European Development Fund (EDF), and 4) staff costs.
For 2017, allocations to these two lines (‘programs’) together increased by €130 million compared to 2016, to reach €2.6 billion.
Other ODA-relevant programs sourced from the general budget include the Finance Ministry’s program 853, which is used to transfer additional funds to the AFD, allowing it to provide loans with concessional terms for recipient countries. AFD thus receives the funds that it uses to issue loans mainly from the Finance Ministry’s programs 110 and 853. However, AFD generates additional funds for ODA by leveraging these funds on the market; it is estimated that in 2017 these additional funds will amount to more than €1 billion.
Overview: 2017 ODA budget
ODA from the general budget 5,995 6,622 Treasury - program 110 988 1,096 01 - Multilateral economic and financial aid (mainly IFIs) 587 651 02 - Bilateral economic and financial aid, of which: 298 330 Transfers to AFD for loans 191 212 General budget support 37 41 Other (e.g., technical cooperation) 70 78 03- Compensation for debt relief (channeled through AFD and multilateral banks and funds) 104 115 MFA - program 209 1,597 1,772 02 - Bilateral cooperation, of which: 568 630 Transfers to AFD (bilateral grants, NGO funding) 305 338 C2D (AFD share) 53 59 Priority Solidarity Fund (FSP) 32 36 Other 178 197 05 - Voluntary multilateral contributions 156 173 07 - EDF 742 824 08 - Personnel 184 205 Funding from 02/05/07/08 that is not ODA-accountable -54 -60 Other ministries 3,410 3,754 Transfers from Treasury to AFD for loans (Program 853) 59 65 Additional ODA for loans leveraged 1,128 1,222 Higher education 1,044 1,158 Refugee costs 424 470 Others (amount of ODA coming from other relevant programs) 756 839 Extra-budgetary ODA sources 3,705 4,110 EC contributions 1,660 1,841 FTT (including a €270 million increase through MPs amendments) 798 885 Loans transactions (IMF, IDA, GCF) 340 377 C2D (state share) 277 307 Airline ticket tax 210 233 Debt relief (state) 40 44 Others (local and regional authorities, water agencies, AFD non-state resources) 380 422 Total 9,700 10,731
- What are important decision-making opportunities in France's annual budget process?
Amounts allocated to main ODA budget lines are determined in June and July
- The Finance Ministry defines general budgetary orientations: From February to April, administrative and technical staff within the Ministry of the Economy and Finance (Finance Ministry) and other ministries develop the economic forecast and measures to define the general orientation of budget policy.
- Prime Minister sends out budget guidelines: Around May each year, the Prime Minister sends three-year budget guidelines (‘lettres de cadrage’) to each Ministry. These guidelines include general orientations of the budget, such as objectives regarding budget deficit, staff payrolls, or major spending cuts or increases.
- MAE starts developing its budget request: In parallel, around May/June, the Ministry of Foreign Affairs (MAE) starts developing its budget request for the following year, including for the development budget. It does so in consultation with the Finance Ministry. Negotiations and arbitrations between the different ministries take place.
From June to mid-July, the Government presents its general budgetary guidelines to Parliament, in the ‘debate on budgetary orientation’.
- Debate on budgetary orientations: From June until mid-July, the government presents its general budgetary guidelines for the next year to Parliament; the ‘debate on budgetary orientation’ takes place. This debate provides an opportunity for CSOs to advocate for funding increases for ODA.
- PM sends expenditure ceilings: Usually by mid-July, the Prime Minister (PM) presents expenditure ceilings (‘lettres-plafond’) to each Minister, fixing the maximum allocation for each major public-policy area. This includes funding for the ‘ODA mission’ (‘Politique francaise en faveur du développement’), jointly managed by the MAE (program 209) and the Finance Ministry (program 110).
- Ministries review their budget requests and decide allocations: From mid-July to October, the MAE and the Finance Ministry review their ODA budget requests in light of the expenditure ceiling, and develop budget documents. Allocations to the two main ODA programs 209 (MAE) and 110 (Finance Ministry) for development policy, and budget lines within these programs, are decided upon during this period.
- Parliament examines, amends, and votes on budget bill: In October, the government submits its draft budget bill to parliament, which has 70 days to examine, amend, and vote on it. Members of Parliament only receive information on individual budget lines shortly before the vote, which inhibits any real influencing at that stage. In 2015 and 2016, however, Members of Parliament were able to influence budget allocations to development by voting to increase the amount of the financial transaction tax dedicated to development. After being voted on by the plenary, the budget is signed by the President before Christmas.
- How is France's ODA spent?
France channels most ODA bilaterally, but is also a strong supporter of multilaterals
France channels around two thirds of its ODA through bilateral channels (61%, or US$6.8 billion in 2015). France provides much of its bilateral ODA as loans. This is because they are a relatively easy way for France to increase its overall ODA level while minimizing the impact on actual budget transfers. In 2015, loans represented almost half of France’s bilateral ODA (44%, a high proportion in comparison with other donors of the OECD development assistance committee: 10% on average).
Debt relief used to account for a large part of French bilateral ODA, but has sharply declined in recent years (to reach 3% in 2015, from 14% in 2013). However, the Ministry of the Economy and Finance (Finance Ministry) and the French Development Agency (AFD) still implement programs called Debt- Reduction Development Contracts (C2D) that France signs with some of its partner countries: a portion of the debt relieved is allocated to sectors related to development such as health and agriculture. For example, in June 2016, Côte d'Ivoire and the AFD signed a new C2D agreement for a new maternal, newborn and child health program amounting to €68 million.
It is worth noting that figures on bilateral ODA reported by France also include a range of other items categorized as grants that do not represent actual cash transfers from France to a recipient country. The best example is imputed costs for students from middle- and low-income countries studying in France (US$658 million in 2015). These costs artificially place China as one of the top recipients of French bilateral ODA (see section below: ‘Who are France’s ODA recipients?’).
Contributions to multilaterals account for one third of France’s total ODA, while loans are prioritized within bilateral ODA.
Core contributions to multilaterals account for more than a third of France’s total ODA (38%, or US$4.1 billion). Almost half of this consists of binding contributions to the European Union (47% in 2015). Health is a key sector of France’s multilateral engagement: France provides particularly strong support to the Global Fund to Fight AIDS, Tuberculosis and Malaria, to Gavi, the Vaccine Alliance, and to UNITAID (for more details, see ‘Deep Dive: global health’). France provides 1% of its ODA to multilaterals as earmarked funding (US$113 million). This is a very low share compared to the average amongst members of the Development Assistance Committee of the OECD, which stands at 11%.
Who are France’s ODA recipients?
France focuses on sub-Saharan Africa for grants, and on MICs for loans
France places a strong focus on sub-Saharan Africa: between 2013 and 2015, it allocated more than a third of its bilateral ODA to the region (34%). This focus is likely to continue: In January 2017, French President Francois Hollande announced increased ODA funding for Africa, bringing total investments to €23 billion over the next five years.
France takes a differentiated approach to ODA depending on the partner country’s level of income: loans focus largely on emerging economies whereas grants are primarily allocated to low-income economies.
For ODA grants, France has identified 16 fragile and least-developed countries to focus on (‘Pays Pauvres Prioritaires’, also known as ‘PPPs’), all in sub-Saharan Africa: Benin, Burkina Faso, Burundi, the Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Djibouti, Ethiopia, Guinea, Madagascar, Mali, Mauritania, Niger, Senegal, and the Togo. With the exception of Ethiopia, they are all francophone. France seeks to allocate at least half of all grants and two thirds of AFD grants to these countries.
France’s ODA loans focus on emerging economies. Because of France’s emphasis on loans to deliver ODA, middle-income countries (MICs) receive the largest share of France’s bilateral ODA, amounting to almost 60% between 2013 and 2015. All top-10 recipients of France’s bilateral ODA are middle-income countries.
How is bilateral funding programmed?
Embassies develop Partnership Framework Documents that shape programming
Under the supervision of the Ministry of Foreign Affairs (MAE) and in collaboration with partner countries, embassies develop the ‘Partnership Framework Documents’ (‘Documents Cadre de Partenariat’, or ‘DCPs’). DCPs detail the work of all French actors involved in development programs in the partner country. They provide overall guidance for French cooperation over a period of three years, for up to three priority sectors per country. Since 2011, DCPs are only mandatory for France’s 16 priority countries.
The AFD develops projects according to partner country demands. AFD is responsible for the formulation, management and supervision of projects. The MAE is consulted and involved in various stages of policy development and monitoring of projects. In practice, AFD benefits from a large degree of autonomy to allocate funding to specific sectors depending on recipient countries’ requests.
How will French ODA develop?
- France will significantly scale up its development assistance over the coming years. By 2020, France plans to provide an additional €4 billion per year as loans through the French Development Agency (AFD) and an extra €400 million per year as grants. Half of the €4-billion increase will be allocated to programs related to climate change, strengthening France’s engagement in environmental issues.
- Extra-budgetary allocations to ODA are set to increase even further: The budget for 2017 foresees an extension of the scope of the financial transaction tax (FTT) to ‘intraday’ transactions, starting from 2018. The FTT continues to increase its funding to French ODA: in 2014, €100 million of the FTT was allocated to ODA rising to an estimated €798 million in 2017.
What will France’s ODA focus on?
- Security concerns are strongly shaping political debates in France around its international activities. The fight against terrorism is a top priority of French foreign and security policy. France also increasingly uses development programs to contribute to political and economic stability, particularly in the Sahel region. From 2017 onwards, France will allocate €100 million per year to a facility for alleviating vulnerability and responding to crises, managed by the AFD. The facility will target countries in crisis, post-crisis, or otherwise vulnerable situations.
- Tackling climate change and its impact will also be a major focus of France’s development policy in the coming years. The French government will strongly increase funding for development programs related to climate-change issues, including for related areas such as agriculture and sanitation. This includes €2 billion of the €4-billion increase in ODA loans, to be allocated to programs related to climate change. In addition, €2 billion will benefit renewable energy projects in Africa between 2016 and 2020.
- Health will remain an important focus of France’s multilateral engagement: In September 2016, France announced at the Fifth Replenishment Conference of the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) in Montreal that it will maintain its high level of contributions to the Global Fund, amounting to €1.1 billion between 2017 and 2019.
What are key opportunities for shaping France’s development policy?
- France’s new president Emmanuel Macron, committed to reaching the 0.5% of GNI by 2022, with increases in ODA based on economic growth. Trajectory however remains unclear. Over all, the change in leadership provides an opportunity to push development issues high on the agenda as the new government takes office, and to emphasize that development programs help to promote peace by addressing the fundamentals of stability.