EU

EU

At a glance

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ODA Funding trends

  • The European Union Institutions’ (EUI’s) total ODA was US$19.4 billion in 2020 (current prices), making it the third-largest Organisation for Economic Co-operation and Development’s (OECD) Development Assistance Committee (DAC) donor. The European Union and its 27 member states together spent 0.50% of the EU’s GNI, representing 46% of global ODA. 

  • Between 2014 and 2020, the EUI utilized two key instruments for ODA:  1) the off-budget European Development Fund (EDF), capped at €30.5 billion (US$34.1 billion) ; and 2) the Development Cooperation Instrument (DCI), capped at €19.7 billion  (US$22.1 billion). The EUI’s ODA for 2020 is expected to remain stable at these levels.

  • In December 2020, the EU adopted its new long-term budget (2021-2027 Multiannual Financial Framework (current MFF). The current MFF makes €1.07 trillion (US$1.20 trillion) available for the EU budget during the next seven years . 
     

Strategic priorities

  • The EUI’s development focus is on interlinking sectors (such as development, peace, and humanitarian assistance), increasing the effectiveness of development assistance by increasing partner country ownership of development strategies, and combining traditional financing with private-sector and domestic resources. 

  • In July 2019, Ursula von der Leyen was elected as European Commission President. Her priorities for 2019-2024 include 1) further investments in research and innovation; 2) renewed focus on climate change; 3) increased investments in development cooperation focused on health, education, sustainable growth, and security; and 4) strengthened EU global leadership.

  • In March 2020, the EU unveiled a roadmap for its new strategy with Africa to serve as the basis for negotiations on a new partnership between the two continents. The EU’s priorities include 1) green transition and energy access; 2) digital transformation; 3) sustainable growth and jobs; 4) peace and governance; and 5) migration and mobility. 
     

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Outlook

  • The 2021-2027 MFF allocates €70.8 billion (US$79.3 billion) for the 'Neighbourhood, Development, and International Cooperation Instrument – Global Europe' (NDICI – Global Europe), which is the new instrument for EU cooperation and development with partner countries.
  • The EUI’s ODA from 2021 onwards is expected to decrease because of the UK’s exit from the EU (‘Brexit’). The EU has not yet decided (nor have member states agreed on their position) on whether and how non-EU countries can contribute to future EU development instruments.
  • At the EU-AU Summit, currently planned for early 2022, the EU hopes to agree on a joint EU-African Union (AU) strategy. The EU and the AU have converging interests in a number of areas including climate change, sustainability, and the promotion of job creation and economic growth in Africa. However, they still have to find common ground on other issues including migration and security management.

Policy Priorities

The EU is collectively committed to providing 0.7% of GNI as ODA by 2030  

The EU’s development strategy is outlined in the European Consensus on Development from 2017. Its overarching objectives are poverty reduction and alignment with the 2030 Agenda for Sustainable Development. The objectives have been translated into four frameworks for action:  
 

  1. People – human development and dignity, which includes education, nutrition, health, access to water, decent work, and human rights; 
  2. Planet – protecting the environment, managing natural resources, and tackling climate change; 
  3. Prosperity – inclusive and sustainable growth and jobs, which includes investment and trade, sustainable agriculture, and innovation; and  
  4. Peace – peaceful and inclusive societies, democracy, effective and accountable institutions, rule of law, and human rights for all, which includes humanitarian assistance. 

 
The Consensus aims to improve the effectiveness of EU development policy through performance-based budget support. It also underlines the EU’s intention to combine traditional development assistance with other resources, including private sector investments and domestic resource mobilization.  
 
The EUI aim to undertake an “integrated approach” toward external action, which includes taking a holistic view of policy approaches for advancing progress on sustainable development and working with a partnership approach, at the bilateral and multilateral levels. The key objectives of the EU’s development cooperation include: 1) Playing a key role in the achievement of the 17 Sustainable Development Goals (SDGs); 2) Promoting democracy, the rule of law, and the respect of human rights in partner countries; 3) Ensuring sustainable economic, social, and environmental progress in partner countries; and 4) Making development funding from different European countries more effective by deepening the cooperation between national governments. 
 
Overall, the EU is collectively committed to providing 0.7% of GNI as ODA within the timeframe of the 2030 Agenda and, within this, the EU also aims to focus 0.15%-0.20% of its ODA/GNI on “least developed countries ” (which are a subset of low-income countries) and states affected by fragility and conflict to "target resources where the need is greatest". 
 
One of the EU’s top priorities is strengthening the partnership with countries in Africa. In December 2020, negotiators from the EU and the Organization of African, Caribbean, and Pacific States (OACPS) reached a deal on a new twenty-year treaty to govern EU-OACPS relations. The deal focuses on six key areas of cooperation: 1) Human rights, democracy, and governance; 2) Peace and security; 3) Human and social development; 4) Environmental sustainability and climate change; 5) Sustainable growth; and 6) Migration and mobility. The agreement also takes into account the SDGs and the Paris climate agreement. The new treaty is expected to enter force in December 2021.  
 
Similarly, the EU remains an important development partner to countries in Latin America. Key sectors of development cooperation with the region include: 1) Developing innovative cooperation approaches; 2) Reducing disparities between people; 3) Promoting sustainable development; 4) Mitigating climate change; and 5) Advancing higher education and research.  

In response to new global challenges (including climate change and migration) and changing economic and geopolitical interests, in May 2018 the European Commission proposed a new long-term budget for 2021-2027. Within it, the new Neighborhood, Development, and International Cooperation Instrument – Global Europe for 2021-2027 (NDICI – Global Europe) streamlines existing external financial instruments to deliver more efficiently on priority sectors and global challenges. NDICI - Global Europe's priority areas will include: 1) Human development, 2) Social inclusion, 3) Gender equality, 4) Climate change, 5) Environmental protection, and 6) Migration-related actions. Funding from NDICI – Global Europe will support regions and partner countries that are most in need to overcome long-term challenges and will also be focused on advancing progress toward the 2030 Agenda and the Paris Agreement. 
 
Since the onset of the COVID-19 crisis, the EU and its member states, acting together as ‘Team Europe’ have been adapting priorities and programs with partner countries to address the crisis, particularly in supporting efforts to guarantee equitable access to safe and effective vaccines around the world (see sector: ‘Global health’).

ODA Breakdown

The EU institutions have a strong preference for bilateral financing

The European Union institutions (EUI) rely most heavily on bilateral financing. In 2019, 77% of their ODA (US$13.8 billion) was disbursed as bilateral funding to partner countries. The EUI’s preferred channel is budget support, which, according to the European Commission, promotes country ownership and aligns EU funding with national development strategies. Though the EUI does not provide much core funding to multilaterals, in 2019, the EUI channeled one-fifth of its ODA (21%) or US$3.9 billion as earmarked funding to multilateral organizations. Earmarked funding through multilaterals is reported to the Organisation for Economic Co-operation and Development (OECD) as bilateral funding.

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Bilateral funding focuses on government and civil society, humanitarian assistance, and financial services

The largest share of the EUI’s bilateral ODA in 2019 supported government and civil society (13% or US$2.4) which includes public sector policy and administrative management, decentralization, and anti-corruption efforts. Humanitarian assistance was the second-largest sector receiving US$2.1 billion in 2019 (12% of bilateral ODA). Financial services and business support came next with US$1.8 billion in bilateral funding 2019 (11% of bilateral ODA in 2019). 

The EUI provides most of its ODA in the form of grants (81% or US$14.4 billion in 2019 (DAC average: 92%). The EUI’s preferred type of assistance is budget support (sectoral and general), which in 2019 accounted for 10% of bilateral ODA (US$1.8 billion; DAC average: 2%). The remaining 19% of the EUI’s ODA (US$3.4 billion) was channeled in the form of loans. A portion of EUI ODA is channeled as concessional loans from the European Investment Bank (EIB). According to EIB data, roughly 13% of EIB loans were channeled to countries outside Europe, including countries in the Mediterranean (4%), countries in Asia and Latin America (3%), and countries in Africa, the Pacific, and the Caribbean (2%). The EIB is increasingly positioning itself as a development bank, and it plans to increase its lending outside of the EU, particularly in African countries.  
 

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EU’s key instruments for bilateral ODA differ in geographic focus

Under the previous long-term budget, the 2014-2020 Multiannual Financial Framework (previous MFF), the Directorate-General for International Cooperation and Development (DG DEVCO) was responsible for EU policy in the field of development and international assistance. DG DEVCO implemented most of the European Commission's external assistance through instruments such as the Development Cooperation Instrument (DCI). It worked in close coordination with the Directorate-General for Neighborhood Policy and Enlargement Negotiations (DG NEAR) and other Commission services. 


In 2019, funding from the DG DEVCO budget was mostly channeled to countries in Asia (34%), followed by countries in ‘sub-Saharan Africa’ (receiving 23% of the funding), and Latin America (13%). Of the top 10 recipients of DG DEVCO funding, seven were low- and middle-income countries.


In alignment with the DG NEAR’s mission of aiding Europe's eastern and southern neighborhood, funding from the DG NEAR was focused mainly on Europe (57%), though around one-third of the funding (35%) was channeled to the MENA region. A small portion (4%) was also provided to countries in Asia. Funding was mostly directed at low- and upper-middle-income countries.


The European Development Fund (EDF) was another main instrument for providing funding for development cooperation before 2021. The EDF did not fall under the EU general budget and was instead funded directly by the EU member states. Funding from the EDF was aimed mainly at the African, Caribbean, and Pacific Group of States, and the overseas countries and territories of the EU. Accordingly, in 2019, the majority of EDF funding (80%) was allocated to countries in sub-Saharan Africa. Funding was also directed toward low-income countries, which constituted eight of the top 10 recipients of EDF funding in 2019.


Overall, the EUI are committed to spending 0.15-0.2% of GNI on ODA in low-income countries in the short term and 0.2% of GNI to ODA to these countries by 2030; however, EU funding for low-income countries has remained stable at an average of 21% of total bilateral ODA between 2017 and 2019.


Given that a large share of EU ODA is provided to neighboring countries through the European Neighbourhood Instrument (ENI) and the Instrument for Pre-accession Assistance (IPA) much of the EU’s total ODA goes to middle-income countries (MICs). Upper MICs received 29% and lower MICS received 26% of the EU’s bilateral ODA in 2019 (DAC average: 17% and 24% respectively).


Note: From January 2021 onwards, under the 2021-2027 Multiannual Financial Framework (current MFF) the Neighbourhood, Development, and International Cooperation Instrument – Global Europe (NDICI – Global Europe) will merge several of the previous external financing instruments under the EU budget, including the EDF and DCI.
 

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One-quarter of bilateral aid is earmarked for multilateral organizations

While the EUI report virtually all their ODA as bilateral, they also fund other multilateral organizations through contributions that are earmarked for specific thematic or geographic priorities and are reported to the OECD as bilateral ODA. In 2019, the EUI channeled one-fifth of its ODA (21%) or US$3.9 billion as earmarked funding through multilateral organizations (DAC average: 14%). 


Major recipients of this earmarked funding were UN agencies, which collectively received US$2.5 billion in earmarked funds from the EU in 2019. The largest contributions went to the United Nations Development Programme (US$350 million), United Nations Children’s Emergency Fund (US$286 million), and the World Food Programme (US$606 million). Other multilateral organizations receiving earmarked ODA from the EU included the International Bank for Reconstruction and Development (US$249 million) and regional development banks (US$305 million).


Only a small share of the EUI’s ODA was channeled in the form of core contributions to other multilateral organizations (2% or US$353 million in 2019). This included US$142 million to the Global Fund, US$91 million to GAVI, and US$18 million to The United Nations Relief and Works Agency for Palestine Refugees in the Near East.
 

Unless otherwise indicated, all data in this section is based on the grant-equivalent measurement system. For more information, see our Donor Tracker Codebook. 

For more granular and up-to-date development finance data on EUI, including information on where and in which sectors they are spending both ODA and non-ODA funds, please consult the IATI d-portal. IATI is a reporting standard and platform on which organizations and governments voluntarily publish data on their development cooperation.

Main Actors

The Council of the EU and European Parliament approve strategy and budgets proposed by the European Commission; EU delegations define priority sectors for bilateral cooperation with partner countries

Member states are the most crucial decision-making actors in the EU. The European Council — currently led by President Charles Michel and composed of all EU heads of state and government — meets regularly to set high-level political and budgetary priorities for the EU. 


The Council of the European Union includes ministers of EU member states, who coordinate policies and define strategic priorities for the EU. The Council meets in different configurations, depending on the issue at stake. The Foreign Affairs Council includes ministers of foreign affairs and/or development from all member states. They meet once a month and vote on legislative acts, coordinate policies, and decide on the annual budget, usually in collaboration with the European Parliament.

Meetings are chaired by the EU’s High Representative of the Union for Foreign Affairs and Security Policy and Vice-President of the European Commission (HR/VP), currently Josep Borrell. The HR/VP is assisted by the European External Action Service (EEAS) to coordinate the EU’s foreign policy tools, including development assistance and humanitarian assistance. 


Together with the Council, the Parliament (currently headed by President David Sassoli) decides on the annual EU budget, which includes the Neighborhood, Development, and International Cooperation Instrument (NDICI - Global Europe).


The European Commission is currently headed by President Ursula von der Leyen. Within the European Commission, the Directorate-General for International Partnerships (DG INTPA; formerly the Directorate-General for Development and International Cooperation or DG DEVCO) is responsible for the implementation of the EU’s development policy. DG INTPA is led by the Commissioner for International Partnerships (currently Jutta Urpilainen) and by its Director-General (currently Koen Doens).

Other Directorates-General involved in ODA allocation and implementation include the Directorate-General for Neighborhood and Enlargement (DG NEAR, covering the EU’s enlargement process and the European Neighborhood Instrument) and Directorate-General for European Civil Protection and Humanitarian Aid Operations (DG ECHO).


EU country offices (called delegations) are part of the EEAS structure and are responsible for the programming of development funding, together with the European Commission. EU delegations develop seven-year strategies with partner countries or regions regarding NDICI- Global Europe allocations. These ‘multi-annual indicative programs’ within NDICI – Global Europe are developed based on pre-existing national development strategies and with instructions from DG INTPA and EEAS. They define priority sectors of bilateral cooperation between the EU and the partner country and state indicative amounts allocated to each sector.


Every year, DG INTPA and EU delegations jointly prepare Annual Action Programs (AAPs) that set budget allocations and goals for each country and NDICI - Global Europe’s thematic programs. AAPs are usually adopted by the European Commission leadership during the summer following an agreement over the budget.
 

 

THE EU'S DEVELOPMENT COOPERATION SYSTEM CHART

 

Budget Structure

EU ODA comes primarily from the EU’s budget, particularly from Heading 6, as well as from the EIB

The EU’s long-term budget – the Multiannual Financial Framework (MFF) – sets political priorities and provides a framework for financial programming for a period of five to seven years. The current MFF covers 2021-2027. 


The MFF is subdivided into headings that cover broad policy areas and reflect the EU's political priorities. Under the current MFF, external action will be financed under Heading 6: 'Neighbourhood and the World' (one of the headings under the MFF), which is allocated €98.4 billion (US$110.2 billion), including €85.2 billion (US$95.4 billion) for external action and, within that, €70.8 billion (US$79.3 billion) for the 'Neighbourhood, Development, and International Cooperation Instrument – Global Europe' (NDICI – Global Europe). The new NDICI – Global Europe consolidates several of the EUI’s previous development instruments, including the EDF and the DCI, and is now the main instrument for EU cooperation and development with partner countries. NDICI – Global Europe will also receive additional funding from the reflows of the EDF, with an indicative allocation of €1.0 billion (US$1.1 billion).

NDICI – Global Europe’s budget breaks down into the following pillars: 

  1. A geographic component that will receive €53.8 billion (US$60.2 billion). Under this, the EU ‘Neighbourhood’ will receive €17.2 billion (US$19.3 billion) and 'Sub-Saharan Africa' will receive €26.0 billion (US$29.1 billion); 
  2. A thematic component comprising of global challenges, human rights and democracy, civil society organizations, and stability and peace, which will receive €5.7 billion (US$6.4 billion);
  3. A rapid response component which will receive €2.8 billion (US$3.1 billion); and
  4. A flexibility cushion for emerging challenges and priorities will receive 8.5 billion (US$9.5 billion).

NDICI - Global Europe will particularly support countries that are most in need to overcome the long-term developmental challenges and will thereby contribute to achieving the international commitments and objectives that the European Union has agreed to, particularly in terms of the Sustainable Development Goals (SDGs) and the Paris Agreement. 


Other external funding instruments covered by Heading 6 include:

  • Humanitarian Aid instrument (€10.3 billion, or US$11.5 billion for 2021-2027), which is designed to respond to humanitarian crises outside of the EU and to provide assistance, relief, and protection to people affected by natural or manmade disasters and similar emergencies, focusing on the most vulnerable victims;
  • Common Foreign and Security Policy (CFSP; €2.4 billion, or US$2.7 billion, for 2021-2027), which aims to preserve peace, strengthen international security, promote international cooperation, and develop and consolidate democracy, the rule of law, respect for human rights, and fundamental freedoms;
  • Pre-Accession Assistance (€12.6 billion, or US$14.1 billion, for 2021-2027), through which the EU provides financial and technical help to support reform in countries. The funding is restricted to EU accession candidates and focuses on capacity-building; and
  • Overseas Countries and Territories (OCTs; including Greenland; €444 million, or US$497 million, for 2021-2027), which is for external action toward 25 islands that are not sovereign countries but depend on four EU member states: Denmark, France, the United Kingdom, and the Netherlands. From 2021 onwards, due to UK withdrawal from the EU, only 13 OCTs linked to Denmark, France, or the Netherlands will be counted.

Once adopted, the EU's long-term budget, coupled with the Next Generation EU recovery fund, a temporary instrument to help drive Europe’s recovery from the economic impacts of the COVID-19 crisis, will be the largest EU financial package ever.
 

Heading 6: Neighbourhood and the World spending, 2021-2027, in billions

billions
€

billions
US$
External Action 85.2 95.4
Neighbourhood, Development and International Cooperation Instrument (NDICI) 70.8 79.3
In addition, indicative use of reflows from the European Development Fund 1.0 1.1
Humanitrian Aid 10.3 11.5
Common Foreign and Security Policy (CFSP) 2.4 2.7
Overseas Countries and Territories (including Greenland) 0.4 0.5
Other 1.4 1.5
Pre-accession assistance  12.6 14.1
Pre-accession assistance  12.6 14.1
Margin 0.6 0.7
Total Heading 6: 'Neighbourhood and the World' 98.42 110.2

 

Budget Process

The European Commission develops the draft budget in April-May; programming runs from November to July 

EU Budgetcircle

The EU’s annual budget process takes place within the priorities and spending limits set in the Multiannual Financial Framework (MFF). The following process is indicative of how the annual budget is usually determined. 

  • European Commission presents draft budget: Usually, by the end of May, the European Commission presents its annual draft budget to the European Council (Council) and the European Parliament (Parliament). This budget is developed in a closed process, without consultation from external stakeholders, and must abide by the MFF’s spending ceilings. The annual draft budget includes geographic and thematic programs within NDICI - Global Europe (see note at the end of this section).
  • Council and Parliament prepare positions on draft budget: Once the European Commission has presented its draft budget, the Council prepares its position and proposals for amendments on the draft between July and September. The Council forwards its position to Parliament by mid-September; however, the committees of Parliament begin holding internal discussions on the draft budget between July and September. This includes the Committee on Development (DEVE), which delivers its opinion along with proposed budgetary amendments on funding to NDICI - Global Europe’s geographic and thematic programs, and the Budget Committee (BUDG). This period represents a key opportunity for engaging with Members of the European Parliament in the relevant committees around budget allocations to the NDICI - Global Europe. 
  • Parliament votes on amendments to Council’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, the Parliament votes in plenary on the Council’s position, including the proposed amendments. 
  • Conciliation procedure between Parliament and Council: Parliament forwards the amended text to the Council. If the Council approves all amendments, the budget is considered adopted. If not, a ‘Conciliation committee’ consisting of an equal number of representatives from the Council and Parliament is convened to reach an agreement. The Conciliation Committee has 21 days to find a compromise, after which Parliament and Council must adopt the agreed budget.

Note: From January 2021 onwards, the Neighbourhood Development and International Cooperation Instrument (NDICI - Global Europe) will merge several of the previous external financing instruments under the EU budget including the Development Cooperation Instrument (DCI) and the off-budget European Development Fund (EDF). The process described above applied also to DCI, but not to EDF, which was funded directly by the EU’s member states.