At a glance
- Germany is the second-largest donor country, spending US$25.0 billion on official development assistance (ODA) in 2018. This corresponds to 0.61% of its gross national income (GNI), making it seventh-largest donor relative to the size of its economy.
- According to the Organisation for Economic Co-operation and Development (OECD), Germany’s ODA in 2018 decreased by 4% compared to 2017. This is due to lower in-country refugee costs, which fell from US$6.5 billion to US$3.9 billion. When excluding these expenditures, ODA actually increased by 8%.
- While total ODA is expected to drop due to further decreasing in-country refugee costs, the Ministry of Economic Cooperation and Development’s (BMZ) budget, which stands at €10.9 billion (US$12.8 billion) in 2020, is planned to maintain this level in 2021. BMZ’s budget accounted for 34% of total ODA in 2017 (latest year for which data is available) and its share is expected to rise as refugee costs decrease.
- Germany frames its development policy under an overarching narrative of “fighting the root causes of displacement”, with a focus on the Middle-East and North Africa (MENA).
- During its Group of 20 (G20) presidency in 2017, Germany demonstrated strong leadership on global health by including health on the G20 agenda for the first time.
- Thematically, Germany’s development policy is expected to maintain its focus on migration, forced displacement, food security, and climate protection. It is also likely going to continue targeting Africa and the MENA region.
- Germany is assuming the Presidency of the EU Council in the second half of 2020. Due to the ongoing COVID-19 outbreak, Germany is likely going to feature global health and crisis response as central themes of its Presidency.
- In 2020, the Federal Ministry of Health is expected to publish Germany’s new cross-ministerial global health strategy.
- The BMZ is currently revising its strategy for collaboration with bilateral partner countries. The new concept is expected to be released in 2020.
- ODA trends
Germany is the second-largest DAC donor and plans to hold its ODA quota in 2019
According to data from the Organisation for Economic Co-operation and Development (OECD), Germany’s total ODA was US$25.0 billion in 2018 (current prices), making it the second-largest donor country, after the United States (US) (For more information, see ranking below.) This corresponds to 0.61% of Germany’s gross national income (GNI), making it seventh-largest donor in relative terms.
These numbers are based on the new methodology for measuring ODA which the OECD Development Assistance Committee (DAC) applied to ODA reporting for 2018 onward. This methodology, called ‘grant-equivalent’, is intended to better reflect “donor effort” because only the ‘grant’ portion of loans is counted as ODA. Because Germany delivers 24% of its ODA as loans (many of which are not very concessional), Germany’s official ODA in 2018 was 2.8% lower than it would have been according to the previous ‘cash-flow’ methodology. (For more information on these methodologies, see the Donor Tracker Codebook.)
To allow for comparisons overtime, the OECD still publishes ODA figures calculated based on to the ‘cash-flow’ methodology. According to these numbers, Germany’s ODA in 2018 decreased by 4% compared to 2017.
Lower levels of net ODA in 2018 are explained primarily by a decrease in spending on refugees in Germany (refugee costs fell from $6.5 billion in 2017 to US$3.9 billion in 2018, a decrease of 40%). When excluding in-country refugees costs, the German government committed to holding ODA at 0.51% of GNI in 2019 (the same share as 2018). Germany does not offset refugee costs with cutbacks in funding for global development, instead, refugee costs are considered separate and additional to budgeted funding for development. Funds for in-country refugees come mainly from Germany’s federal states. In 2018, the Federal Ministry of Finance started excluding these costs when communicating ODA/GNI projections.
The budget of the Federal Ministry for Economic Cooperation and Development (BMZ) (34% of total ODA, 2017, latest year for which data is available) has increased significantly over the past four years. It has grown by 69% since 2014 and is set to be US$12.8 billion in 2020. Germany has framed these increases as a response to challenges arising from humanitarian crises, forced displacement, and climate change. The budget for 2021 is expected to remain at the 2020 level, after which it will likely decrease, reaching US$11.0 billion by 2024 (down 14% compared to 2020). However, in the past, medium-term plans have shown similar conservative planning patterns, while actual annual budgets were higher.
Germany is one of the few European countries that does not offset costs for hosting refugees with cutbacks in funding for global development.
Unless otherwise indicated, all data in this section is based on the grant-equivalent measurement system. For more information, see our Donor Tracker Codebook.
- Policy priorities
Development cooperation focuses on displacement and migration, climate change, agriculture, and food security
The government’s coalition treaty (for 2017 to 2021) lists the following development prioritites: 1) fair trade, 2) Marshall Plan with Africa, 3) gender equality and education, 4) social and health systems, 5) poverty eradication, 6) climate change mitigation and adaptation, and 7) fighting the root causes of flight and migration. Building on those, the Federal Ministry for Economic Cooperation and Development (BMZ) highlighted its three priority areas for the current legislative term (2017 to 2021): 1) displacement and migration, 2) climate change, and 3) agriculture and food security (for more information, see box).
In October 2018, BMZ published a strategy paper entitled ‘Development Policy 2030’, which outlines the various tools it will apply to meet the challenges associated with five major global trends: population growth, climate change, globalization, scarcity of resources, and digitalization. These include increasing national and European funds for development assistance, promoting sustainable private investments, and strengthening multilateralism
Germany’s key development priorities:
- Flight and migration, through the special initiative ‘Tackling root causes of displacement, stabilizing host regions, supporting refugees’, BMZ plans to spend €505 million (US$596 million) on this issue in 2020;
- Climate change and renewable energy, with a pledge of €1.5 billion (US$1.8 billion) to the Green Climate Fund (2020 to 2023); and
- Agriculture and food security, with investments of over €1.5 billion (US$1.8 billion) per year, e.g., through BMZ’s special initiative ‘ONE WORLD - No Hunger’.
Through its G7 and G20 presidencies, in 2015 and 2017 respectively, Germany further strengthened its focus on global health, climate and sustainability, women’s empowerment, financial inclusion, and its relationship with the African continent. During the G20 presidency, health ministers held their first high-level G20 meeting with a focus on anti-microbial resistance (AMR) and pandemic preparedness. Discussions around AMR resulted in the planning and launch of a G20 AMR research and development (R&D) Collaboration Hub, based in Berlin. In February 2019, the Global Health Hub Germany was launched with the aim of serving as an independent and interdisciplinary exchange and networking platform. The German Federal Ministry of Health (BMG) is currently developing a new government-wide global health strategy.
Since 2014, BMZ’s increasing budget has been channeled through ‘special initiatives’, which are programs spearheaded by the development minister. In the 2017 to 2021 legislative period, three special initiatives are prioritized: ‘tackling the root causes of displacement, reintegrating refugees’, ‘stability and development in the MENA region’, and ‘ONE WORLD – No Hunger’. In addition, in 2018 another special initiative on ‘vocational training and jobs’ was launched.
The German government is engaged in a new approach to development in Africa focused on fostering private investment and good governance across the continent and is advocating for a concerted EU-Africa Policy at the EU level. In 2017, the Development Minister presented a ‘Marshall Plan with Africa’ laying out initiatives to improve economic and social development. The plan suggests that countries willing to implement reforms would benefit from increased ODA and German support for private investment. To date, Germany has ‘reform partnerships’ based on this principle with six countries: Tunisia, Ghana, Ivory Coast, Ethiopia, Morocco, and Senegal. These reform partnerships serve as Germany’s bilateral contribution to ‘Compacts with Africa’, a G20 initiative which was developed by the German Ministry of Finance and launched during Germany’s G20 presidency in 2017. ‘Compacts with Africa’ brings together African countries, bilateral partners from the G20, and international organizations to work on country-specific agendas to increase investment opportunities to private investors.
- ODA breakdown
Germany channels the majority of its ODA bilaterally
The German government has a strong preference for bilateral funding. In 2018, bilateral funding stood at 78% of total ODA (DAC average: 59%). This includes earmarked funding to multilateral organizations (13%), which is reported as bilateral ODA. Germany’s preference for bilateral funding is driven by its two large government-owned implementing agencies, GIZ and the KfW Development Bank. Germany channels only small shares of its bilateral ODA through non-governmental organizations (NGOs) (7%, DAC average: 18%) and through multilateral organizations (17%, DAC average: 23%).
Most bilateral funding is directed to hosting refugees in Germany and humanitarian assistance
In response to the influx of refugees to Germany since 2015, spending on ‘humanitarian aid’ and migration has increased significantly. In 2018, most bilateral funding was directed toward hosting refugees in Germany (17% of total bilateral aid in 2018) despite a 40% decrease in volume compared to 2017. Humanitarian aid (12%, down 6% compared to 2017) and education (11%, up 13% since 2017) received the second and third largest share of Germany’s ODA. However, more than half of Germany’s education ODA (US$1.4 billion, 56%) represents costs for students from partner countries studying in Germany.
Health (4%) and agriculture and rural development (4%) receive relatively small shares of bilateral ODA. Funding for both sectors is supported through Germany’s contributions to multilateral organizations. (For more information, see the Sectors: 'Global Health' and 'Agriculture' for Germany).
Germany channels the largest share of its bilateral ODA as grants (76% in 2018, DAC average: 91%). The remaining component of Germany’s bilateral ODA, disbursed as loans and equity investments, stood at 24% in 2018 (down from a peak of 35% in 2014).
The German government has a strong preference for bilateral funding. In 2018, bilateral funding stood at 78% of total ODA.
Bilateral ODA is expected to shift towards fragile and conflict-affected areas
A large share of Germany’s bilateral ODA is not allocated by region (31% in 2018) or income group (42% in 2018). This is partly due to the high share of costs of hosting refugees in Germany. For this reason, the following analyses exclude such funding to avoid misrepresentation of trends in key recipients of Germany’s ODA.
Germany allocates the largest share of its bilateral ODA to Asia (30% in 2018) and the Middle East and North Africa (MENA) region (25% in 2018). Funding to sub-Saharan Africa accounts for one fifth (20% in 2018). When only looking at ODA in the form of grants, the largest individual country recipients are Syria, Iraq, and Afghanistan. Given the German government’s increasing focus on fighting the root causes of migration in the Middle East, North Africa, and sub-Saharan Africa, larger portions of its ODA will likely go to these regions in the coming years.
The portion of bilateral ODA going to low-income countries (LICs) is relatively low (25% between 2016-2018). It is also below Germany’s ambition to spend between 0.15% and 0.20% of GNI as ODA on LICs, which was affirmed by the 2017 to 2021 coalition treaty.
Germany channels 76% of its bilateral ODA to middle-income countries (MICs). Indonesia, India, and China are the largest individual country recipients. Most funding to Indonesia (89%) and more than half of the funding to India (67%) is provided in the form of loans or equity investments. The majority of grants to China and India are made up of costs for students from those countries enrolled in German universities. (For more information, see the Sector: 'Education' for Germany.) The Federal Ministry for Economic Development and Cooperation (BMZ) has not made any new bilateral commitments to China since 2010 and plans to phase out bilateral funding to China completely. In February 2020, Federal Minister for Economic Cooperation and Development presented a draft of a new concept for BMZ’s collaboration with bilateral partner countries to the German Parliament’s (Bundestag) Committee on Economic Cooperation and Development (AWZ). The concept is currently being revised and discussed, before public announcement.
Only 22% of Germany’s ODA is channeled multilaterally; however, earmarked funding to multilaterals has increased
Until 2013, the German Parliament had capped multilateral spending at one-third of total German ODA. Even though this cap no longer exists, core funding to multilaterals remains low at only 22% of total ODA (DAC average: 41%). In 2018, the largest recipients of Germany’s core funding to multilaterals were the institutions of the European Union (53%), the World Bank (17%), other multilateral institutions including the Global Fund to Fight Aids, Tuberculosis and Malaria (Global Fund), Gavi, the Vaccine Alliance (14%), United Nations (UN) agencies (9%), and regional development banks (7%).
Earmarked funding to multilaterals, which is funding channeled through multilateral development organizations for use in a specific sector or country (reported as bilateral ODA), has increased significantly in recent years from US$1.2 billion in 2015 (6% of ODA) to US$3.8 billion in 2018 (13% of ODA). Growth has largely been driven by funding to humanitarian assistance and crisis response.
Unless otherwise indicated, all data in this section is based on the cash-flow basis measurement system. For more information, see our Donor Tracker Codebook.
- Main actors
The Development Ministry steers strategy; two development agencies execute
Germany is governed by a renewed ‘Grand Coalition’ made up of Chancellor Angela Merkel’s center-right Christian Democratic Union (CDU), its Bavarian sister party, the Christian Social Union (CSU), and the center-left Social Democrats (SPD). Under the overall guidance of the Chancellery, which is responsible for determining policy guidelines, the Federal Ministry for Economic Cooperation and Development (BMZ) sets development priorities. BMZ has been led by Development Minister Gerd Müller (CSU) since 2013.
BMZ is organized across six directorates-general. The regional subdivisions allocate Germany’s bilateral development assistance according to BMZ’s strategy and priorities. Sectoral subdivisions formulate Germany’s sector strategies, interface with multilateral development institutions, and advise on bilateral programs.
Programming of bilateral funding to partner countries is guided by regional strategies, which are developed by BMZ’s regional divisions. Country strategies — developed for all priority countries — reflect the regional strategies and are created by country desk officers in cooperation with embassies, Germany’s state-owned development agency (GIZ), and its state-owned development bank (KfW). Bilateral cooperation with countries that are not classified as priority partners is based solely on the applicable regional strategy.
Germany’s two major state-owned development agencies, GIZ and KfW, play key roles in Germany’s policy development, priority setting, and implementation.
Germany’s two major state-owned development agencies, GIZ and KfW operate under the political supervision of BMZ. Both play key roles in policy development, priority setting, and implementation.
- GIZ plans and executes Germany’s technical cooperation with partner countries. GIZ also provides consulting services to BMZ’s sectoral divisions through its ‘sector initiatives’ (‘Sektorvorhaben’).
- KfW Development Bank leads on Germany’s bilateral financial cooperation with partner countries. It receives funding from BMZ and raises own funds on capital markets using KfW’s own resources.
The Federal Ministry of Finance (BMF), led by Minister Olaf Scholz (SPD), develops caps for the federal budget and individual ministerial budgets. This makes it an important stakeholder when it comes to overall ODA levels, BMZ’s budget, and long-term ODA contributions.
Other ministries have significant influence on the strategic direction and funding allocation in some development sectors. For example, the Federal Foreign Office (AA) leads on humanitarian assistance and crisis prevention. The Federal Ministry of Health (BMG) is developing a new, government-wide strategy for global health and is responsible for the majority of funding of the World Health Organization (WHO).
GERMANY'S DEVELOPMENT COOPERATION SYSTEM
Parliament: The role of the German Parliament (Bundestag) is to scrutinize development policymaking, resource allocation, and implementation, mainly through its Committee on Economic Cooperation and Development (AWZ). The AWZ may also suggest changes to funding allocations in the government’s draft budget. However, it is the Budget Committee which makes final budget decisions and is thus a key stakeholder when it comes to modifying funding allocations.
Civil Society: Civil society interacts in several ways with government and Parliament including via petitions and conferences. Civil society organizations (CSOs) are frequently invited to parliamentary hearings and government consultations. Many CSOs implement their own in-country programs and are funded by the German government (mainly by BMZ and the Foreign Office). About 120 development and humanitarian assistance-related civil society organizations coordinate their activities through the Association of German Development CSOs VENRO. Another important association is the Forum Umwelt und Entwicklung, which coordinates advocacy work for sustainable development and humanitarian assistance.
- Budget structure
BMZ manages largest share of Germany’s ODA
Germany’s ODA is sourced from the budgets of fifteen ministries. The largest share of ODA comes from the Federal Ministry for Economic Cooperation and Development (BMZ) (34% in 2017, latest year for which total ODA data is available from the ministry). Its share is expected to increase again as refugee costs decrease. BMZ’s budget for 2020 stands at US$12.8 billion. This is a 6% increase from 2019 (US$12.1 billion).
On March 18, 2020, the German Cabinet passed spending caps for the 2021 federal budget (Eckwertebeschluss), as well as the medium-term financial plan (until 2024), as presented by the Ministry of Finance (BMF). BMZ’s budget is set to remain at 2020 levels through 2021, after which it will be cut, reaching US$11.0 billion by 2024 (a decrease of 14% compared to 2020). Since the Eckwertebeschluss marks only the first step in Germany’s budgetary process (see ‘Budget process’) and the costs incurred by the ongoing COVID-19 outbreak have not yet been quantified, the budget caps are still volatile and are subject to change.
BMZ’s budget (see table) is composed of different budget envelopes, including:
- ‘Bilateral development cooperation’, which contains budget lines for major regions and is further broken down by annual allocations to specific country programs.
- The ‘European development cooperation, United Nations (UN), and other international organizations’ envelope includes budget lines for multilateral organizations related to climate change and biodiversity, most of the global health multilaterals, as well as for various UN programs.
- The ‘Multilateral development banks’ envelope includes contributions to the World Bank Group, as well as the African Development Bank and Asian Development Bank.
The largest share of ODA comes from the BMZ. Its share is expected to increase again as refugee costs decrease.
Other ministries responsible for managing ODA include, the Federal Foreign Office (AA), which handles most of the funding for humanitarian assistance and for UN peace keeping missions. In 2017, it accounted for 14% of ODA overall. Another 9% of Germany’s ODA was raised by Germany’s development bank (KfW) on capital markets.
Overview: 2020 BMZ Budget
Bilateral Spending 4,666 5,507 Financial cooperation 2,193
Technical cooperation 1,574 1,858 Crisis response 800 944 Other contributions 99 117 Multilateral Spending 2,529 2,985 European Development Fund 967 1,141 Multilateral organizations related to climate change and biodiversity 714 843 The Global Fund to Fight AIDS, Tuberculosis and Malaria 350 413 UN organizations 413 487 World Food Programme 28 33 The Global Agriculture and Food Security Program 35 41 International Fund for Agricultural Development 22 26 Development Banks 1,026 1,211 World Bank Group 689 813 African Development Bank 273 322 Asian Development Bank 50 59 Cooperation w/ CSOs, private sector & others 1,309 1,545 Other commitments (incl. special initiatives) 1,160 1,369 International efforts to fight climate change 80 94 ONE WORLD – No Hunger 375 443 Tackling roots causes of displacement 505 596 Stability and Development in the MENA region 100 118 Vocational training and jobs 100 118 Administrative and personnel expenses 173 204 Total spending 10,884 12,845
- Budget process
Major ODA increases or changes are confirmed early in the year; Parliament debates the budget between September and November
- Cabinet agrees on caps for federal and ministerial budgets: In February/March each year, the Federal Ministry of Finance develops caps for the federal budget and individual ministerial budgets. At this point, decisions on increases in ODA and the overall funding allocation are taken. The Finance Minister plays a central role and the Development Ministry provides input. Major funding decisions are budgeted at this time of the year.
- Negotiations happen within ministries: Ministries develop their budgets in April and submit them to the Ministry of Finance. Allocations to individual international organizations, are determined during this period. In parallel, between April and September, the Federal Ministry for Economic Cooperation and Development (BMZ) plans its bilateral spending (For more information, see Germany’s ‘ODA breakdown’) and multilateral funding envelopes.
- Draft budget is negotiated, and medium-term financial planning takes place: In June, the Cabinet negotiates the budget and publishes the government’s budget draft before the summer break. Key players at this stage are the Chancellery, the Finance Ministry, and the Development Ministry.
- Parliament debates and proposes amendments to the budget: First reading in Parliament takes place in September. Parliament usually debates the budget until November.
- Amendments are reviewed and recommendations are made to committees: The Development Committee (AWZ) makes recommendations on budget amendments in September/October. In October, BMZ’s budget is debated by the Development Committee and Budget Committee.
- Amendments and decisions on each ministerial budget are made, and parliamentary voting takes place: The Budget Committee makes its final decisions in November. Members of the Budget Committee (especially those of the government coalition parties) are central during this phase.
- Final budget draft is voted upon: The final budget draft is voted on my members of parliament in plenary and signed by the President.
Between April and September, BMZ plans its bilateral spending and multilateral funding envelopes.