Donor Profile: EUI

Last updated: December 8, 2022

Summary



ODA Spending


The EUI spent a total of US$19.0 billion in 2021, making them the third-largest OECD DAC donor in absolute terms.


EUI’s ODA decreased by 8% between 2020 and 2021, due to repayments of private sector loans and the frontloading of payments in 2020, in response to the COVID-19 pandemic. From 2021 - 2027 for the rest of the EU long-term budget framework, the EUI’s ODA is likely to remain stable.


More broadly, the EU and its member states aim to increase their ODA further as they are collectively committed to providing 0.7% of their GNI as ODA by 2030. In 2020, they only reached 0.49%.



ODA Breakdown


The EUI show a strong preference for bilateral funding. In 2020, the EUI provided 99% of their ODA (US$19.5 billion) as bilateral funds to partner countries.


Although the EUI do not provide much core funding to multilaterals, in 2020, 18% of EUI ODA (US$4.4 billion) was disbursed as earmarked funding through multilaterals.



Bilateral

Projects related to government and civil society received the largest share of bilateral EUI funding (14%). This includes funding for public sector policy and administrative management, decentralization, and anti-corruption.


13% of the EUI’s bilateral funds in 2020 were spent on budget support (a 34% increase from funding levels in 2019). According to the EC, promotes country ownership and aligns EU funding with national development strategies.



The EUI have committed to spending 0.15-0.2% of GNI on ODA in low-income countries in the short term and 0.2% of GNI on ODA to these countries by 2030; however, EU funding for low-income countries has not increased much since 2016.


The EUI provide a majority of their ODA in the form of grants (71%, or US$17.9 billion in 2020). The EUI prefer project-type interventions, which accounted for 65% of bilateral ODA (US$15.5 billion) in 2020, much higher than the 40% DAC average.


A portion of EUI’s ODA is channeled as loans from the EIB. The majority of EIB investments (90%) are made within Europe, however, roughly 10% of EIB loans are channeled to countries outside European partner countries.


The EIB is also a key actor for managing funds through the EFSD under the EIP. This was initially endorsed by the EU with an initial contribution of €4.5 billion (US$5.1 billion) meant to generate additional public and private investments worth €44.0 billion (US$50.1 billion) in the EU neighbourhood and Africa through investment windows that address socio-economic causes of migration. The EFSD+, which will replace the current ESFD, will have nearly €15.0 billion (US$17.0 billion) dedicated to it from NDICI’s geographic envelopes.



In 2020, funding from the INTPA budget was mostly channeled toward countries in Asia (34%), followed by countries in SSA (24%), and Latin America (19%). Six of the top 10 recipients of INTPA funding were lower-middle income countries.


Funding from the DG Near budget was focused mainly on Europe (78%), in line with its mission of implementing assistance actions in Europe's eastern and southern neighborhood. Funding was mostly directed at lower-and upper-middle-income countries in these regions.


Funding from the EDF budget was aimed at OACPS and the overseas countries and territories of the EU. In 2020, the majority of EDF funding (72%) was allocated to countries in SSA. Six of the top 10 recipients of EDF funding in 2020 were low-income countries.



Note: From January 2021 onwards, under the 2021-2027 MFF the NDICI will merge several of the previous external financing instruments under the EU budget.


Multilateral

Only a small share of the EUI’s ODA was channeled in the form of core contributions to multilateral organizations (1%, or US$251 million in 2020). This included US$105 million to UN agencies, US$131 million to Gavi, and US$15 million to the Global Fund as of 2020.


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




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 abbr: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.



Politics & Priorities


Political Context


In May 2019, elections for the EP were held and in July 2019, Ursula von der Leyen was elected as the first female EC President. Von der Leyen’s political guidelines for the 2019-2024 EC prioritize:

  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.

Main Actors




Development Priorities


The EU’s development strategy is outlined in the European Consensus on Development from 2017. The Consensus aims to improve the effectiveness of EU development policy through performance-based budget support and underlines the EU’s intention to combine traditional development assistance with other resources, including private sector investments and domestic resource mobilization. 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 EUI aim to undertake an “integrated approach” to external action, which is meant to be holistic and partnerships driven.


By issue

Within the EC’s long-term budget for 2021-2027, NDICI - Global Europe streamlines the previous external financial instruments to deliver more efficiently on priority sectors and global challenges. NDICI - Global Europe's priority areas include:

  1. Human development,
  2. Social inclusion,
  3. Gender equality,
  4. Climate change,
  5. Environmental protection, and
  6. Migration-related actions.

With the onset of the COVID-19 crisis, the EU and its Member States acting together as ‘Team Europe’ began increasingly prioritizing global health. The EU has been particularly involved in supporting efforts to guarantee equitable access to safe and effective vaccines around the world.


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Then, in December 2021, in response to China’s Belt and Road Initiative, the EU launched its Global Gateway strategy to mobilize €300 billion (US$341.9 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+, as well as from €145 billion (US$165.2 billion) in planned investments from EU Member States and development finance institutions.


READ MORE

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By region

Through its 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 December 2020, the chief negotiators from the EU and OACPS initialed a deal on a new 20-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 provisional agreement, pending formal signature, also considers the SDGs and the Paris Agreement.

READ MORE

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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.

Political Outlook

The next European elections will be held in 2024.


Budget


Budget breakdown

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 covers 2021-2027 and totals €1.80 trillion (US$2.05 trillion). This includes a €1.07 trillion (US$1.22 trillion) EU budget and a €750.0 billion (US$854.7 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 is allocated €98.4 billion (US$112.2 billion), including €85.2 billion (US$97.1 billion) for external action and, within that, €70.8 billion (US$80.7 billion) for NDICI - Global Europe.


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. In addition to the MFF, it will receive some funding from EDF reflows, with an indicative allocation of €1.0 billion (US$1.1 billion). It breaks down into the following pillars:

  1. Geographic: €53.8 billion (US$61.3 billion), 93% of which funding must be ODA -eligible. Geographic funding here represents a higher proportion than in the previous MFF. This funding includes €17.2 billion (US$19.6 billion) for the EU ‘Neighbourhood’ and €26.0 billion (US$29.6 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: €5.7 billion (US$6.5 billion) for global challenges, human rights and democracy, civil society organizations, and stability and peace.
  3. Rapid Response: €2.8 billion (US$3.2 billion); and
  4. Flexibility cushion: 8.5 billion (US$9.7 billion) for emerging challenges and priorities.

The EFSD (now EFSD+) budget has also increased from €1.5 billion (US$1.7 billion) to nearly €15.0 billion (US$17.1 billion).


Other external funding instruments covered by Heading 6 include:


  • Humanitarian Aid instrument: €10.3 billion (US$11.7 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: €2.4 billion (US$2.7 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: €12.6 billion (US$14.4 billion) for 2021-2027 for 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: €444 million (US$506 million) for 2021-2027 for external action toward 25 islands that are not sovereign countries, but depend on four EU Member States: Denmark, France, the UK, 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.


Budget Process

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

  • EC presents draft budget: Usually, by the end of May, the EC presents its annual draft budget to the European Council and the EP. 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 EP prepare positions on draft budget: Once the EC 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 EP by mid-September; however, the EP committees begin holding internal discussions on the draft budget between July and September. This includes DEVE, which delivers its opinion along with proposed budgetary amendments on funding to NDICI - Global Europe’s geographic and thematic programs, and BUDG. This period represents a key opportunity for engaging with MEPs in the relevant committees around budget allocations to the NDICI - Global Europe.
  • EP votes on amendments to Council’s position: Once EP has received the Council’s position it has 42 days to approve or amend it. BUDG prepares the EP’s position based on the previous inputs from the thematic committees. Usually, in late October, EP votes in plenary on the Council’s position, including the proposed amendments.
  • Conciliation procedure between EP and Council: EP 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 EP is convened to reach an agreement. The Conciliation Committee has 21 days to find a compromise, after which EP and Council must adopt the agreed budget.

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 state indicative amounts allocated to each sector based on the seven-year budget allocations in the MFF.


Additionally, every year, DG INTPA and EU delegations 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.


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Sheba George

sgeorge@seekdevelopment.org

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