EUI

Summary

ODA Spending

How is EU ODA changing?

According to OECD data, the EUI's total ODA increased 20% between 2021 and 2022 due to significant support for Ukraine, making the institutions the third-largest DAC donor in absolute terms in 2022.

In February 2024, the European Council concluded the midterm review of the MFF with a decision to reallocate EUR2 billion ( US$2.1 billion) within the NDICI-Global Europe fund to finance migration-related initiatives and other activities supporting refugees and host communities. This resulted in a pro rata reduction of 7.5% across all NDICI-Global Europe allocations.

The EU and Member States are collectively committed to providing 0.7% of their GNI as ODA by 2030. According to CONCORD Europe's AidWatch 2024 report, EU Member States' ODA/GNI ratio represented just 0.51% in 2023, marking a decline from 2022 when it reached 0.56%.

The key operating features of the EU's next seven-year budget will be flexibility, speed, and a policy-first approach, ensuring the budget advances the EU’s strategic priorities, which are increasingly shaped by domestic interests such as competitiveness, access to raw materials, migration, and security. These priorities, combined with continued support for Ukraine and the cost of repaying the EU’s borrowings on external markets, are likely to drive EU ODA down after 2027, when the current MFF ends.

In 2021, the EU launched the Global Gateway, a European strategy to boost public and private investment in infrastructure, green energy, education, health, and research for sustainable development. It aims to mobilize up to EUR300 billion (US$316 billion) in investments until 2027, bringing together resources of the EU, Member States, European financial institutions and national development finance institutions. Global Gateway marked a shift in the EU's approach to development, moving away from the traditional development to mutually beneficial partnerships which also boost the EU’s strategic autonomy. In December 2024, the new Commissioner for International Partnerships, Jozef Síkela, started his work as part of the new European Commission. Síkela will prioritize the scaling up of the Global Gateway, particularly focusing on the increase of private sector mobilization as a means to fill funding need gaps.

Where is EU ODA allocated?

The EUI channel nearly all ODA bilaterally or as earmarked funding through multilaterals.

Bilateral Spending

'General budget support' jumped dramatically as the main share of the EU's bilateral spending in 2022, more than tripling in absolute terms from the previous year. While absolute volumes for priorities such as 'humanitarian assistance' and 'government and civil society' remained relatively stable from 2021-22, they shrank considerably in relative terms as the EUI prioritized support for Ukraine.

The EUI have committed to spending 0.15-0.2% of GNI on ODA to LICs and states affected by fragility and conflict in the short term, and 0.2% of GNI on ODA to these countries by 2030. However, the EUI’s ODA to LICs has been trending downward since 2017. In 2023, ODA from EUI to Ukraine increased to US$18.9 billion, from US$10.6 billion in 2022. As Ukraine is an LMIC, this further decreased the share of funding to LICs.

The EUI channels most of its bilateral ODA to Europe. The MENA region, as well as Sub-Saharan Africa also received significant parts of EUI’s bilateral ODA in 2021. This is in line with the NDICI – Global Europe’s geographic programs, which foresee allocations of EUR19.3 billion ( US$22.8 billion) for 2021-2027 for neighboring countries of the EU and the remainder to be allocated, among other regions, to SSA.

The EUI provide a majority of their ODA in the form of grants. The EUI prefer project-type interventions and allocate far above the DAC average to these interventions.

A portion of EUI ODA is channeled as loans, mostly from the EIB. The majority of EUI’s loans are provided within Europe and Northern Africa.

The EIB is also a key actor for managing funds through the EFSD+. The EFSD+ is a financial instrument under the NDICI, which aims to mobilize financial resources from the private sector for economic development projects in partner countries. EFSD+ supports investments to achieve sustainable development goals and inclusive development, including poverty eradication, reduction of inequalities and support for vulnerable groups. The EFSD+ has nearly EUR15 billion ( US$17.8 billion) dedicated to it from NDICI’s geographic envelopes of the current MFF.

The EFSD+ is one of the financing tools of Global Gateway and aims to mobilize up to EUR135 billion ( US$142 billion) of public and private financing to help partner countries achieve the SDGs.

On February 28, 2023, the European Commission and the EIB signed a EUR4 billion ( US$4.2 billion) agreement on lending to businesses in ACP countries until 2027 under the EU’s Global Gateway investment initiative. The guarantee agreement will mobilize EUR3.5 billion ( US$3.7 billion) in lending and a EUR500 million ( US$526 million) contribution to the ACP Trust Fund established and managed by the EIB, which will enable higher-impact operations. Investments will support jobs, especially for women and youth, as well as green and digital transitions.

This agreement builds on the EUR26.7 billion ( US$31.6 billion) guarantee agreement the European Commission and the EIB signed in May 2022 for investments in partner countries in the EU Neighborhood. These agreements are done under the framework of the EFSD+.

On October 25 and 26, 2023, the EUI hosted its inaugural Global Gateway Forum, which resulted in over US$3 billion in pledges for global health, clean energy, and education initiatives for partners including Egypt, Ghana, Kenya, Nigeria, Rwanda, Senegal, South Africa, and Tanzania, among others. While the forum resulted in a large volume of pledges, many were re-announcements and not new additional resources.

Multilateral Spending and Commitments

Only a very small share of the EUI’s ODA is channeled in the form of core contributions to multilateral organizations.

The European Commission's leadership is supportive of strengthening multilateral institutions. In September 2022, the European Commission pledged EUR715 million ( US$710 million) to the Global Fund, which marked a 30% increase from the European Commission's previous pledge.

The European Commission pledged EUR300 million ( US$316 million) to Gavi for Gavi’s 2021-2025 strategic period. Following Gavi’s launch of its Investment Opportunity for 2026-2030, EC President Ursula von der Leyen announced a pledge of EUR260 million ( US$274 million) for 2026-2027 and that more will be coming from the next MFF post-2027 for the remainder of the strategic period. In late 2024, the EU and the Gates Foundation announced they will co-host Gavi’s 6.0 replenishment in early 2025.

The EUI’s recent commitments to multilateral organizations are summarized below.

Politics & Priorities

What is the current state of EU politics?

EU parliamentary elections were held in June 2024. Results showed that the political center of gravity continues to shift to the right. The center-right EPP have won the elections, and the far right, namely the ID and ECR, significantly increased their support base. Renew (liberals) and the Greens have incurred major losses. However, the result was not a landslide for the far-right, as some predicted. The current coalition is made of the S&D, Renew, and the EPP:abbrEPP, with support of the Greens.

EC President Ursula von der Leyen secured her renomination as Commission President in July 2024. Von der Leyen's external relations team will be made of a Commissioner for Enlargement Marta Kos, a Commissioner for International Partnerships Jozef Síkela, a new Commissioner for the Mediterranean Dubravka Šuica, and Commissioner on Preparedness and Crisis Management (in charge of humanitarian aid) Hadja Lahbib, under the leadership of the High Representative for Foreign and Security Policy and Vice-President of the European Commission Kaja Kallas. Von der Leyen also appointed the EU’s first Defense Commissioner, Andrius Kubilius, overseeing an area expected to eat up substantial funding in the next MFF. The Budget Commissioner, Piotr Serafin, will report directly to the EC President.

The key focus of the Commissioner for International Partnerships, Jozef Síkela, will be to scale up the Global Gateway. In 2025, he will organize, together with EEAS High Representative, the next EU-Africa Summit. He re-committed to spending 13% of EU ODA on education under the current MFF. The adoption of the fourth Gender Action Plan has also been confirmed.

Von der Leyen’s political guidelines for the 2024-2029 European Commission included:

• A global Europe: Leveraging EU power and partnerships. This will be achieved by treating enlargement as a geopolitical imperative and having a more strategic approach to the EU’s neighborhood. Furthermore, the EU will develop a new economic foreign policy which will be fit for today's realities and focused on economic security, trade, and investment in partnerships. The EU will also play a leading role in reforming the international system; and
• Delivering together and preparing the Union for the future. This includes by proposing a new long-term budget which aligns with priorities and is more impactful, flexible and simpler, and is based on policy instead of programs. Furthermore, the Commission will revamp its external action financing to make it more impactful, targeted for partners, and more aligned with EU’s strategic interests.

In July 2024, Barry Andrews, from the liberal Renew Europe group, was elected as chair of the European Parliament Committee on Development. In his inaugural speech, Andrews highlighted the importance of addressing global inequalities and ensuring that development initiatives are inclusive and sustainable.

In addition to the Commission, the EU Council Presidency rotates among Member States every six months, with each country setting short-term policy agendas for the bloc, as part of a longer-term program for a trio of presidencies. The presidencies for 2025 are Poland and Denmark.

Negotiations on the next MFF, the EU’s seven-year budget, along with sectoral instruments such as the next iteration of the NDICI, will begin in 2025. With Ukraine, defense, and competitiveness as key priorities, alongside the burden of EU loan repayments and a Council comprising leaders spanning the political spectrum from the left to the far right, the negotiations are expected to be challenging. There is also a significant risk that EU ODA may be reduced in the 2028–2034 period compared to 2021–2027. The EC proposal is expected at the end of summer 2025.

Who is responsible for allocating EU ODA?

What are the EU's developmental priorities?

The EU’s development strategy is outlined in the European Consensus on Development from 2017. The Consensus serves as the EU's translation of the SDGs into its development policy and provides a common framework for the EU and its Member States.

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:

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

While the Consensus remains the overarching framework for development cooperation, other priorities and policies are increasingly influencing it, including migration, geopolitical rivalry, and security. This shift is exemplified by the Global Gateway, which aims to establish a more assertive and ambitious, interest-driven EU approach to international cooperation. It seeks to address the interests of partner countries while incorporating economic diplomacy, sustainability criteria, and security considerations into European external investments, aligning with European interests and the EU’s open strategic autonomy agenda.

A further innovation in the EU's direction on international partnerships is the Team Europe approach. Initially a response to the challenges posed by the COVID-19 pandemic, it has now evolved to a fundamental component of all development initiatives and entails a coordinated effort among the EC, EU Member States and their implementing agencies, public development banks, the EIB, and the EBRD.

This approach emphasizes synergy and resource pooling, leveraging the diverse expertise and resources of its constituent members to deliver more effective and impactful interventions. In a further communications and branding effort, over 150 TEIs aim to promote ambitious and easily recognizable European flagship initiatives with a maximum transformative impact in partner countries. Almost 30% of the TEIs include a climate component and almost 60% have a geographical focus in sub-Saharan Africa, the region with the most initiatives.

By issue

In response to intensifying global challenges (including climate change and migration) and recognition of changing economic and geopolitical interests on the global front, in May 2018, the European Commission proposed a new long-term budget for 2021-2027. Within the European Commission’s long-term budget for 2021-2027, NDICI - Global Europe streamlines the previous external financial instruments from the 2014-2020 programming period to deliver more efficiently on priority sectors and global challenges. NDICI - Global Europe's priority areas include:

• Human development;
• Social inclusion;
• Gender equality;
• Climate change;
• Environmental protection; and
• Migration-related actions.

In December 2021, in response to China’s Belt and Road Initiative, the EU launched its Global Gateway Initiative to mobilize EUR300 billion ( US$354.8 billion) in investments in clean energy, digital and transport infrastructure, health, education, and research systems across the globe. The Global Gateway is meant to be a trusted brand promoting democratic values, good governance, and transparency. Funding for Global Gateway will come in part from the EU budget, including the EFSD+; EUR145 billion ( US$171.6 billion) of the funding would come from planned investments by EU Member States and development finance institutions.

In June 2021, the Council of the EU adopted conclusions on enhancing the European financial architecture for development that called on the European financial architecture, especially the EIB and the EBRD, to strengthen cooperation with European development finance institutions by following a 'Team Europe' approach and combining resources for better results.

In June 2024, the Council of the EU adopted conclusions stressing the urgency for the EU and its Member States to achieve individual targets as well as the EU’s collective commitments to providing 0.70% of GNI as ODA, and 0.20% as ODA to LDCs by 2030. It also underlined ODA’s key role in achieving Agenda 2030 and its ability to leverage other public and private sources of financing.

Council conclusions in June 2024 on the Mid-Term Evaluation of the NDICI - Global Europe external financing instrument found the instrument to be overall fit for purpose and delivering against its objectives. In addition, the Council noted that NDICI - Global Europe brings clarity, effectiveness, and transparency of the EU's support to and cooperation with its partner countries.

Read more about the EUI's spending on Education

By region

Through NDICI - Global Europe, the EU aims to support regions and partner countries that are most in need.

One of the EU’s top priorities is strengthening its partnership with countries in Africa. In April 2021, the chief negotiators from the EU and OACPS initiated a deal on a new 20-year treaty to govern EU - OACPS relations. The deal focuses on six key areas of cooperation:

• Human rights, democracy, and governance;
• Peace and security;
• Human and social development;
• Environmental sustainability and climate change;
• Sustainable growth; and
• Migration and mobility.

The treaty, signed in November 2023, also takes into account the SDGs and the Paris Agreement.

The EU’s partnership with Africa is a key priority for the Commission, as the EU is eager to develop a strategic, long-term vision for the EU-Africa relations due to its strategic proximity. At the 6th EU-:abbrAU Summit in Brussels in February 2022, EU and AU adopted a Joint Vision for 2030 which outlined key areas of partnership - economic growth, peace, security, and migration. With deepening global competition, the EU also sees Africa as a key partner in securing the supply of raw materials and clean energy. Via the Africa-Europe Investment Package, the EU has committed to mobilize EUR150 billion ( US$158 billion) in grants and investment from its budget. The investment package will support the ambition for 2030 and AU Agenda 2063, and is composed of an Investment, a Health and an Education Package. It is meant to help build more diversified, inclusive, sustainable, and resilient economies.

Read more about the EUI's spending on Climate Change in LICs and LMICs

Similarly, the EU remains an important development partner to countries in Latin America. In July 2023, the EU renewed its partnership with Latin America at the EU-:abbr[CELAC](Community of Latin American and Caribbean States) Summit in July 2023. The EU’s priorities in the region are rolling out Global Gateway investment strategy to accelerate a fair green and digital transition and tackle inequalities, while promoting peace and security, democracy, rule of law, human rights and humanitarian assistance. The EU aims to invest in physical infrastructure such as digital, climate, energy and transport, while also investing in education, research, and health.

Under the EU’s Global Gateway strategy, the EUI committed to contributing EUR800 million ( US$842 million) to 16 Caribbean partner countries until 2027.

During the third EU-CELAC Conference from July 17-18, 2023, the EU announced EUR45 billion ( US$50 billion) of funding under the Global Gateway for 135 programs in the LAC regions.

What is the future of EU politics?

Budget

Note: All values that refer to the 2021-2027 MFF in EUR are presented in 2018 prices, the year when the MFF was set up. Exceptions are explicitly stated.

What are the sources of the EU's ODA budget?

The EU’s long-term budget MFF sets political priorities and provides a framework for financial programming for a period of five to seven years. The current MFF has been adopted in December 2020. It covers 2021-2027 and totals EUR1.82 trillion ( US$2.15 trillion). This includes a EUR1.07 trillion ( US$1.23 trillion) EU budget and a EUR750 billion ( US$885.5 billion) instrument, Next Generation EU, set up to support the EU’s post-pandemic economic recovery.

The MFF is divided 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’, which receives an allocation of EUR98.4 billion ( US$116.2 billion), including EUR85.2 billion ( US$100.7 billion) for external action. Within that, EUR70.8 billion ( US$83.6 billion) is dedicated to NDICI - Global Europe. NDICI - Global Europe has maintained development funding at a similar level to the past MFF, despite the UK’s departure from the EU in 2020.

In February 2024, EU leaders decided to redeploy EUR2 billion ( US$2.1 billion) in ODA to fund migration-related priorities. This led to an effective cut of 7.49% of all NDICI - Global Europe budgets over 2025-2027.

NDICI – Global Europe: The 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 supports countries that are most in need to overcome 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 SDGs and the Paris Agreement. In addition to the MFF, it will receive some funding from EDF reflows, with an indicative allocation of EUR1 billion ( US$1.2 billion). It breaks down into the following pillars:

1. Geographic: EUR53.8 billion ( US$63.5 billion), 93% of which funding must be ODA-eligible. Geographic funding here represents a higher proportion than in the previous MFF. This funding includes EUR17.2 billion ( US$20.3 billion) for the EU ‘Neighbourhood’ and EUR26 billion ( US$30.7 billion) for SSA. These funds are allocated through the ‘programming process’, whereby EU delegations in low- and middle-income countries decide multi-year indicative plans together with country authorities.
2. Thematic: EUR5.7 billion ( US$6.7 billion) for global challenges, human rights and democracy, civil society organizations, and stability and peace.
3. Rapid Response: EUR2.8 billion ( US$3.3 billion); and
4. Flexibility cushion: EUR8.5 billion ( US$10 billion) for emerging challenges and priorities.

Other external funding instruments covered by Heading 6 include:

• Humanitarian Aid instrument: EUR10.3 billion ( US$12.2 billion) for 2021-2027 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.
• CFSP: EUR2.4 billion ( US$2.8 billion) for 2021-2027 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: EUR12.6 billion ( US$14.9 billion) for 2021-2027 as financial and technical support for reform in partner countries. The funding is restricted to EU accession candidates and focuses on capacity-building.
• OCTs, including Greenland: EUR444 million ( US$524 million) for 2021-2027 for External Action toward 25 islands that are not sovereign countries, but associated with four EU Member States: Denmark, France, the UK, and the Netherlands. Since 2021, due to UK withdrawal from the EU, only 13 OCTs linked to Denmark, France, or the Netherlands are counted.

Under the current MFF, the EFSD+ will be able to support guarantee operations of up to EUR53.5 billion ( US$63.2 billion) for the period 2021-2027.

In June 2023, the Commission proposed the creation of the Ukraine Facility to centralize and increase support to Ukraine. The total budget agreed for the facility is EUR50 billion (US$54 billion), of which EUR33 billion ( US$34.8 billion) are concessional loans. This will lead to an overall increase of ODA - despite the cuts to the NDICI as part of the MFF midterm review.

For 2025, the budget foresees EUR16.3 billion (US$ 17.6 billion) for Heading 6 - Neighbourhood and the World. Despite attempts to increase the budget for some global challenges programs from the European Parliament, the final deal only includes increases for humanitarian assistance compared to the European Commission proposal. The final amounts reflect the cuts that EU leaders have agreed to as part of the midterm revision of the MFF and will reduce geographical and thematic envelopes by 7.48%.

What are the steps and timelines for the EU's ODA budget approval?

The annual draft budget includes geographic and thematic programs within NDICI - Global Europe*.

• Note: From January 2021 onwards, the NDICI - Global Europe will merge several of the previous external financing instruments under the EU budget, including the DCI and the off-budget EDF. The process described above applied also to DCI, but not to EDF, which was funded directly by the EU’s Member States.

EU delegations develop seven-year strategies with partner countries or regions regarding how the NDICI - Global Europe budget will be programmed. These MIPs within NDICI - Global Europe are developed in collaboration with EU partner countries 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 determine indicative amounts allocated to each sector based on the seven-year budget allocations in the MFF.

Additionally, every year, DG INTPA and EU delegations, part of the EEAS structure, jointly prepare AAPs that program the funding and goals for each country and region. AAPs are usually adopted by EC leadership during the summer following an agreement over the budget.