Germany

At a glance

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Funding trends

  • Germany spent US$28.4 billion on total official development assistance (ODA) in 2020 (current prices), making it the second-largest Organisation for Economic Cooperation and Development (OECD) Development Assistance Committee (DAC) donor in absolute terms. This corresponds to 0.73% of its gross national income (GNI) allocated to ODA, including US$2.6 billion in-country refugee-hosting costs. Germany was the fifth-largest donor in relative terms in 2020 (up from sixth place in 2019) making this the first year since 2016 that Germany has reached the 0.7% GNI-to-ODA target. Excluding these costs, Germany spent 0.66% of its GNI on ODA.
  • Total ODA increased by 14% between 2019 and 2020 (in real terms), due primarily to the mobilization of additional ODA resources to fight the COVID-19 pandemic. The OECD DAC estimates total COVID-19 related ODA from Germany at US$1.4 billion in 2020.
  • Considering the volume of Germany’s response to the international COVID-19 crisis, ODA is expected to remain at a similarly high level in 2021. Following a pledge of €1.5 billion (US$1.8 billion) in additional funding to the Access to COVID-19 Tools Accelerator (ACT-A, made at the G7 meeting at the end of February of 2021), Germany’s total contribution to ACT-A stands at US$2.5 billion (as of May 2021), making it the second-largest donor to the global initiative. Most of the funding provided will be considered ODA-eligible.

Strategic priorities

  • 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) region.   
  • According to the German Federal Ministry for Economic Cooperation and Development’s (BMZ’s) newly published development cooperation strategy ‘BMZ 2030’, Germany will significantly reduce its number of bilateral partner countries in the future from around 85 to 60.
  • Germany's federal elections held on September 26, 2021, marked and end of Chancellor Angela Merkel's era after 16 years in office. The Social Democrats (SPD) led by chancellor candidate Olaf Scholz emerged from the election with the largest number of seats in the German parliament. The SPD is currently in coalition talks with the third-place Greens and fourth-place Free Democratic Party (FDP) in an effort to form a new governing coalition. The new government will determine the political orientation of Germany’s development policy for the next four years.

Outlook

  • After 16 years in office, German Chancellor Angela Merkel will step down from office. Until a new coalition is formed, the outgoing government will remain in office as a 'caretaker government' led by Merkel. Merkel, as acting Chancellor, will continue to represent Germany on the international stage, including the G20 summit in Rome at the end of October and the 2021 United Nations Climate Change Conference (COP26) in Glasgow in November. Similarly, German Development Minister Gerd Müller, who has held his post since 2013, will withdraw from federal politics and leave office as soon as the new government is in place. 
  • In October of 2020, the German Cabinet adopted a new cross-ministerial global health strategy for 2020-2030, which defines Germany’s strategic priorities in global health for the next 10 years including health systems strengthening, pandemic prevention, and driving forward research on global health. The strategy also emphasizes strengthening the multilateral global health architecture.
  • In response to the COVID-19 pandemic, the German government has expanded its focus on global health and pandemic preparedness. To this end, the BMZ has established a new ‘Global Health: Pandemic prevention, one health’ sub-department and published a ‘One Health Strategy’, officially anchoring the climate-health-environment nexus in German development policy for the first time.
  • In 2022, Germany will assume the G7 Presidency. Pandemic preparedness and prevention, as well as health systems strengthening, are planned to be among Germany’s key priorities, but the new federal government will ultimately determine the final G7 agenda.

Policy Priorities

Development cooperation focuses on displacement and migration, global health, climate change, agriculture, and food security

The government’s coalition treaty (2017-2021) lists the following development priorities: 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 these, the German Federal Ministry for Economic Cooperation and Development (BMZ) highlighted its three priority areas for the current legislative term (2017-2021): 1) Displacement and migration, 2) Climate change, and 3) Agriculture and food security (see box: ‘Germany’s key development priorities’).


Germany’s key development priorities:

  • Flight and migration, through the special initiative ‘Tackling root causes of displacement, stabilizing host regions, supporting refugees’, BMZ allocated €475 million (US$532 million) for this issue in 2021.
  • Climate change and renewable energy, with a pledge of €1.5 billion (US$1.7 billion) to the Green Climate Fund (2020 to 2023).
  • Agriculture and food security, e.g., through BMZ’s special initiative ‘ONE WORLD - No Hunger’ with €525 million (US$588 million) in 2021.
  • Pandemic Preparedness and One Health is becoming a strengthened focus in response to the COVID-19 pandemic.

In May of 2020, the BMZ published a new strategy document ‘Reformkonzept BMZ 2030’ (BMZ 2030), which aimed to fundamentally reform German development policy to make it more strategic, impactful, and efficient. According to BMZ 2030, the agency plans to concentrate its efforts on five key areas, considered the “DNA of the BMZ” and which should transcend legislative periods. Development cooperation in these areas is meant to take place both bilaterally and multilaterally. These focus areas will also set the thematic focus for the BMZ’s future collaboration with partner countries and will replace existing priority areas of bilateral cooperation.


Key focus areas and respective action areas (BMZ 2030)

  • Peace and societal cohesion

    • Good governance
    • Peace and crisis prevention
    • Flight and migration
  • ONE WORLD - No Hunger

    • Food security
    • Rural development
    • Agriculture
  • Vocational training, jobs

    • Vocational training
    • Privat sector, finance system development
    • Trade and economic infrastructure
  • Climate, Energy

    • Climate protection, climate adaptation
    • Renewable energy, energy efficiency
    • Sustainable urban development
  • Environmental protection and natural resources

    • Biodiversity
    • Forest protection
    • Water

In addition to these core areas, the BMZ plans to work on 10 ‘initiative themes’, which will receive special attention for selected periods (2-4 years). They include global health, pandemic preparedness, One Health, family planning, and digitalization.

Through its G7 and G20 presidencies, in 2015 and 2017 respectively, Germany 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 the G20 AMR Research and Development (R&D) Collaboration Hub, based in Berlin. In February of 2019, the Global Health Hub Germany was launched to serve as an independent and interdisciplinary exchange and networking platform.

In 2022, Germany will assume the G7 Presidency. Pandemic preparedness and prevention, health systems strengthening, research and development for infectious diseases and AMR are planned to be among Germany’s key priorities, but the new federal government elected in September of 2021 will decide on the final G7 agenda.

In October of 2020, the German Federal Cabinet adopted a new cross-ministerial global health strategy for 2020-2030, titled ’Responsibility – Innovation – Partnership: Shaping global health together’ to serve as the basis for Germany’s engagement in global health and to ensure Germany’s contribution to the Sustainable Development Goal 3 (SDG 3: “Ensure healthy lives and promote wellbeing for all at all ages”). (See Sector: ‘Global health’ for more details.)

In response to the COVID-19 Pandemic, the BMZ plans to strengthen its focus on pandemic preparedness. To this end, the ministry has established a new sub-division titled ‘Global Health: pandemic prevention, One health’. In November of 2020, the BMZ published its first ‘One Health Strategy’, officially anchoring the climate-health-environment nexus in German development cooperation (See Sector: ‘Global health’ for more details.)

Since 2014, the BMZ’s increasing budget has been channeled through ‘special initiatives’, or programs spearheaded by the development minister. In the legislative period 2017-2021, 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 2018 another special initiative on ‘vocational training and jobs’ was launched.

The German government is engaged in a new approach to development across the African continent focused on fostering private investment and good governance 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 seven countries: Ethiopia, Ghana, the Ivory Coast, Morocco, Senegal, Togo, and Tunisia. These reform partnerships serve as Germany’s bilateral contribution to ‘Compacts with Africa’, a G20 initiative that was developed by the German Ministry of Finance and launched during Germany’s G20 presidency in 2017.

ODA Breakdown

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Germany channels the majority of its ODA bilaterally

The German government has a strong preference for bilateral funding. In 2019, bilateral funding accounted for 79% of total official development assistance (ODA), well above the Organisation for Economic Cooperation and Development (OECD) Development Assistance Committee (DAC) average of 59%. This includes earmarked funding to multilateral organizations (14%), which is reported by the OECD as bilateral ODA. Germany’s preference for bilateral funding is driven by its two large government-owned implementing agencies, Germany’s development agency (GIZ) and the KfW Development Bank. Germany channels only small shares of its bilateral ODA through NGOs (8%, DAC average: 20%) and multilateral organizations (18%, DAC average: 22%).

The largest share of bilateral funding is spent on hosting refugees in Germany and humanitarian assistance

In response to the influx of asylum seekers to Germany since 2015, spending on humanitarian assistance and migration has increased significantly. Even after a 19% decrease in volume from 2018, the cost of hosting refugees in Germany still accounted for the largest share of Germany’s bilateral funding in 2019 (14% of total bilateral assistance in 2019). Education (13%, +15% since 2018) and humanitarian assistance (10%, -15% since 2018) received the second- and third-largest shares of Germany’s bilateral ODA. However, more than half of Germany’s bilateral education ODA (US$1.6 billion, 56%) represents costs for students from partner countries studying in Germany.

Agriculture and rural development (4%), environmental protection (4%), and health (4%) receive relatively small shares of bilateral ODA (despite the fact that funding for both the environmental and the health sectors has increased by 50% each since 2015 and funding for the agriculture sector has increased by 18%), but these sectors are supported through Germany’s contributions to multilateral organizations. (For more information, see sectors: ‘Global Health’, ‘Agriculture’, and ‘Climate’).

Germany channels the largest share of its bilateral ODA as grants (79% in 2019, DAC average: 92%) with the remaining 21% disbursed as loans and equity investments (down from a peak of 34% in 2015).

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 (32% in 2019) or income group (44%). This is partly due to Germany’s high share of in-country refugees. The following analyses exclude these costs to avoid misrepresentation of trends in key recipients of Germany’s ODA.

Germany allocates the largest shares of its bilateral ODA to the Middle East and North Africa (MENA) region (26%) and Asia (24%). Funding to ‘sub-Saharan Africa’ (Eastern, Western, Central, and Southern Africa, according to the African Union’s designations) has steadily increased over the last years, from 18% of Germany’s bilateral ODA in 2015 to 23% in 2019. As the German government increases its focus on fighting the root causes of migration in the MENA region, and ‘sub-Saharan Africa’, larger portions of 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 at 25% in 2019 compared to the DAC average of 34%. This expenditure is also below Germany’s target to spend between 0.15% and 0.20% of gross national income (GNI) as ODA on LICs as set in the 2017-2021 coalition treaty. In 2019, just 0.06% of GNI was spent on ODA to LICs.

Germany channels 75% of its bilateral ODA to middle-income countries (MICs). India, China, and Syria are the largest individual country recipients. Most funding to India (70%) and more than half of the funding to China (55%) 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. (See sector: ‘Education’.) The top recipients of German grant funding are Syria, Iraq, and Afghanistan. All funding to these countries comes in the form of grants.

In May of 2020, Development Minister Gerd Müller presented a new strategy for German development cooperation significantly reducing the number of Germany’s bilateral partner countries. The so-called ‘BMZ 2030’ strategy represents the most significant reform in 12 years. Currently, Germany cooperates with around 85 countries, providing direct bilateral funding through the German development agency, GIZ, and the KfW Development Bank. Germany will significantly reduce its number of bilateral partner countries to 60, focusing on countries that are willing to implement targeted reforms regarding good governance, human rights protection, and fighting corruption. Partners whose bilateral cooperation with the BMZ is terminated will receive increased funding through multilateral and civil society channels. Amongst the strategy’s key focus areas are agriculture, food security, and climate protection.

Only 21% 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. Although this cap has since been lifted, core funding to multilaterals remains low at only 21% of total ODA (DAC average: 41%). In 2019, the largest recipients of Germany’s core funding to multilaterals were the institutions of the European Union (58%), UN agencies (13%), the World Bank (12%), other multilateral institutions, including the Global Fund to Fight AIDS, Tuberculosis and Malaria; Gavi, the Vaccine Alliance (10%); 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 2019 (14% of ODA). Growth has largely been driven by funding for 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.

For more granular and up-to-date development finance data on Germany, including information on where and in which sectors it is 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 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. The BMZ has been led by Development Minister Gerd Müller (CSU) since 2013.

The BMZ is organized across six Directorates-General. The regional subdivisions allocate Germany’s bilateral development assistance according to the BMZ’s strategy and priorities. Sectoral subdivisions formulate Germany’s sector strategies, interface with multilateral development institutions, and advise on bilateral programs.

The programming of bilateral funding to partner countries is guided by regional strategies, which are developed by the 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 operate under the political supervision of the 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 the 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 the BMZ and raises its 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 official development assistance (ODA) levels, the BMZ’s budget, and long-term ODA contributions.

Other ministries have a 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) recently published a new, government-wide strategy for global health and is responsible for the majority of funding of the World Health Organization (WHO), and thus also a key stakeholder for the provision of Access to COVID-19 Tools Accelerator (ACT-A) funding. The Federal Ministry of Education and Research (BMBF) provides funding to the field of global health research, including the Coalition for Epidemic Preparedness Innovations (CEPI), Product Development Partnerships, and antimicrobial resistance- (AMR-) related funding. Thus, it is currently also a key stakeholder for the provision of ACT-A funding in the field of research and development for COVID-19.

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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 that makes final budget decisions and is thus a key stakeholder when it comes to modifying funding allocations.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 that 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 the BMZ and the Foreign Office). About 120 development and humanitarian assistance related CSOs coordinate their activities through the Association of German Development CSOs, VENRO. The Forum Umwelt und Entwicklung, which coordinates advocacy work for sustainable development and humanitarian assistance, is also considered an important stakeholder.

Budget Structure

BMZ manages the largest share of Germany’s ODA

Germany’s official development assistance (ODA) is sourced from the budgets of different ministries. The largest share of ODA comes from the Federal Ministry for Economic Cooperation and Development (BMZ, 41% in 2018, the latest year for which total ODA data is available from the Ministry). The share of ODA provided by the BMZ is expected to increase again as in-country refugee costs provided by Germany’s federal states further decrease (in 2014, the BMZ’s share of total ODA was 51%). Another 10% of ODA funding is raised by Germany’s development bank, KfW, on the capital market. The Federal Foreign Office (AA), which manages most of the funding for humanitarian assistance and UN peace missions, accounts for 13% of ODA overall.

In December of 2020, the German Parliament adopted the 2021 federal budget worth €498.6 billion (US$558.1 billion), almost on par with post-COVID 2020 budget levels. Due to the BMZ’s allocation of two supplemental COVID-19 response packages in 2020 and 2021, each worth €1.6 billion (US$1.7 billion), the 2020 and 2021 federal budgets are substantially higher than budget levels in pre-COVID times (e.g., 2019: €356.4 billion or US$398.9 billion). While originally set at €10.9 billion (US$12.2 billion) in the medium-term budget planning, the BMZ’s budget currently sits at €12.4 billion (US$13.9 billion) for 2021, on par with 2020 BMZ post-COVID budget levels.

According to the budget caps set by the Federal Ministry of Finance (BMF), the BMZ’s 2022 budget is set at €10.8 billion (US$12.1 billion; -13% compared to 2021). However, an additional envelope worth €1.5 billion (US$1.7 billion) sitting in budget section 60’s COVID-19 related budget line is earmarked for “development purposes”. In a press release, Development Minister Gerd Müller stated that this additional funding will come on top of the BMZ’s original 2022 budget, thus increasing the total budget to €12.3 billion (US$13.8 billion), similar to the 2021 budget levels.

In 2023, 2024, and 2025, the BMZ’s budget levels will fall, according to the mid-term financial planning, with the budget set at €9.3 billion (US$10.4 billion) in 2023 and to €9.2 billion (US$10.3 billion) in 2024 and 2025, respectively, bringing the budget below 2018 levels. However, projections from the midterm financial planning have been conservative for years, and ultimately budgets have tended to increase rather than decrease or decrease less dramatically than predicted.

The BMZ’s budget (see table) is composed of different budget envelopes, including:

  • The ‘Bilateral development cooperation’ envelope includes budget lines for major regions and is 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.

Overview: 2021 BMZ Budget 
 


€, millions


US$, millions

Bilateral Spending 5,975 6,688
Financial cooperation  3,010 3,369
Technical cooperation 1,898 2,125
Crisis response 937 1,049
Other contributions 130 146
Multilateral Spending 2,702 3,025
European Development Fund 823 921
Multilateral organizations related to climate change and biodiversity 741 829
The Global Fund to Fight AIDS, Tuberculosis and Malaria 350 392
UN organizations 654 732
World Food Programme 50 56
Promotion of international agricultural research 35 39
International Fund for Agricultural Development 48 54
Development Banks 793 888
World Bank Group 543 608
African Development Bank 215 241
Asian Development Bank 35 39
Inter-American Development Bank 5 6
Cooperation w/ CSOs, private sector & others 1,444 1,616
Other commitments (incl. special initiatives) 1,326 1,484
International efforts to fight climate change 80 90
ONE WORLD – No Hunger 525 588
Tackling roots causes of displacement 475 532
Stability and Development in the MENA region 63 71
Vocational training and jobs 180 201
Administration expenses 3 3
Research, evaluation, and qualification in development cooperation  53 59
Administrative and personnel expenses 1 1
Expenses Ministry  132 148
Total spending 12,426 13,909

Budget Process

Major ODA increases or changes are confirmed early in the year; Parliament usually debates the budget between September and November, however, the budgetary decision-making process in 2021 will be delayed by the federal elections in September

Germany_budgetprocess

The fiscal year (FY) runs from January to December. The chart depicts the normal budget decision-making process, however, the budgetary decision-making process in 2021 will be delayed by the federal elections in September of that year and will proceed as follows:

  • February/March 2021: Cabinet agrees on caps for federal and ministerial budgets: In February/March, the Federal Ministry of Finance develops caps for the federal budget and individual ministerial budgets. At this point, decisions on increases in official development assistance (ODA) and the overall funding allocation are taken. The Finance Minister is a key stakeholder during this period while the Development Ministry provides input. Major funding decisions are budgeted at this time of year.
  • April-June 2021: Negotiations within ministries: Ministries develop their budgets in April and submit them to the Ministry of Finance. Allocations to individual international organizations, for example, are determined during this period. In parallel, between April and June, the Federal Ministry for Economic Cooperation and Development (BMZ) plans its bilateral spending (see ‘Key Question 3: How does Germany spend its ODA’) and multilateral funding envelopes. 
  • June 2021: Draft budget and medium-term financial planning: In June, the Cabinet negotiates the budget and publishes the government’s budget draft before the summer break. Key players in this period are the Chancellery, the Finance Ministry, and the Development Ministry.
  • September 2021: Federal elections: Usually, the first reading in parliament takes place in September. Subsequently, Parliament usually debates the draft budget from September to November. However, in 2021 this process will be delayed by the federal election in September. Depending on when the governing coalition is formed, budget discussions among the newly elected cabinet on the 2022 budget could be held off until the beginning of 2022.
  • December 2021: Budget review by new government: The newly elected government, likely formed by December 2021, will review, and potentially adjust the draft budget for 2022 and submit it to parliament.
  • January-March 2022: Parliamentary debates, amends, and votes on budget: Due to the federal election in September 2021, the parliament will likely start debating the budget in the first quarter of 2022. During this phase, the Development Committee (AWZ) will make recommendations on budget amendments. Subsequently, the BMZ’s budget will be debated by the Development Committee and Budget Committee. Afterward, the Budget Committee will take final decisions, which makes members of the Budget Committee (especially those of the government coalition parties) central stakeholders during this phase Then, the final budget draft is voted on in plenary and signed by the President. This phase usually takes place between September and December the year before.