Europe

Lagos to Mombasa: Was the AU-EU Summit a Success?

sbrown — Thu, 10 Mar 2022 16:08:21 +0000

After two years of COVID-related delays, the African Union (AU) and the European Union (EU) finally sat down to a summit in February 2022.

Expectations were high, and the goal was nothing less than the fundamental reset of the EU’s relationship with Africa to become a “true partnership of equals.” How close did we get to that lofty goal?

In this episode, Malado Kaba, managing director of Falémé Conseil and a CGD non-resident fellow, and Inge Kaul, senior fellow at the Hertie School and a CGD non-resident fellow, join Gyude to discuss how the commitments made at the summit compared to those announced at last year’s China-Africa FOCAC forum, whether the summit managed to move beyond the simplistic portrayal of Africa as a continent to be aided by the EU, and whether issues beyond aid, such as research, innovation, and trade, got the attention they deserved.

Resources:

Lagos to Mombasa: What Does the Climate Crisis Mean for Africa?

sbrown — Thu, 02 Dec 2021 16:53:04 +0000

Although sub-Saharan Africa is the lowest contributor to global emissions, it will likely be hit hardest by the impacts of climate change—from rising temperatures to extreme and destructive weather events.

In this episode, Zainab Usman, Senior Fellow and Director of the Africa Program at the Carnegie Endowment for International Peace, and Olumide Abimbola, founder and Director of the Africa Policy Research Institute, join Gyude to discuss the implications of the European Green Deal for Africa, the outcomes of COP26, and the impacts of the climate crisis on pandemic recovery.

Resources:

Navigating the Opportunities and Risks of the European Green Deal for Africa, Carnegie Endowment for International Peace
What Does the European Green Deal Mean for Africa?, Carnegie Endowment for International Peace
Der Europäische Green Deal und die Staaten Afrikas, Africa Policy Research Institute

Lagos to Mombasa: How Do We Accelerate EU-Africa Investment?

sbrown — Thu, 07 Oct 2021 15:10:48 +0000

Infrastructure investment from the private sector and donor countries can boost growth in Africa and aid in post-pandemic recovery. Unfortunately, high risks and slow returns mean that infrastructure projects often struggle to get off the ground.

So how do we create more bankable projects? Mikaela Gavas, Co-Director of CGD’s Development Cooperation in Europe Program and Senior Policy Fellow, joins Gyude to discuss the barriers to investment, the EU’s experience in overcoming them, and how a new initiative—an Accelerator Hub—could act as a one-stop shop to help local businesses and institutions in Africa develop financially viable proposals and connect them with investors.

Resources:

An Accelerator Hub for EU-Africa Investment, CGD

When Will the Fiscal Situation Allow More Aid Spending in the UK?

egrant — Tue, 20 Apr 2021 14:00:43 +0000

In the UK’s recent comprehensive foreign policy review, Prime Minister Boris Johnson has reaffirmed the government’s commitment to resume spending 0.7 percent of gross national income on official development assistance (ODA) “when the fiscal situation allows.”

This begs the question: when will the fiscal situation allow?

This blog draws on our new briefing with the Institute for Fiscal Studies (IFS) to answer that question. In particular, we identify the Chancellor’s preferred fiscal measure, look back at the fiscal circumstances in which the target was met historically, and compare these to forecasts from the independent Office of Budget Responsibility (OBR), based on the government’s latest spending plans. While the economy is expected to regain its pre-COVID-19 size in the next year, in the OBR’s estimate, the government’s finances will return to a historically more normal level in 2023.

We argue there is a reputational and value-for-money case for a prompt return to the 0.7 per cent target but, either way, the government should make clear its plans for legislation and the budget or risk abrupt changes undermining its own objectives.

The aid budget and the fiscal situation

As part of its one-year spending review in November, the Chancellor confirmed that aid spending would, in addition to a £0.7bn reduction in aid spending from a smaller economy in 2020, be reduced to 0.5 percent of national income for 2021, creating a very steep fall in the budget from over £15bn in 2019, to just over £10bn this year. In justifying this change, the government argued that maintaining aid spending at 0.7 percent is “not an appropriate prioritisation of resources" given the pandemic, but has indicated that it intends to return to 0.7 percent “when the fiscal situation allows.”

It would have been fiscally possible to maintain aid spending in the pandemic, and around half of traditional providers increased their aid spending. Debt will rise significantly, though the Office for Budget Responsibility (OBR) expect borrowing costs as a share of gross domestic product (GDP) to remain below pre-COVID-19 levels. Still, the Chancellor is committed to only borrow to invest beyond the crisis; and we consider the affordability of the aid budget in those terms.

When might fiscal circumstances allow?

The government’s preferred fiscal measure is the “current deficit,” which measures the government’s borrowing for “day-to-day” (i.e., non-investment) spending as a share of GDP. The government’s manifesto stated their “policy of keeping the current budget in balance.” This has been a long-standing fiscal target, pursued by previous chancellors of both major parties; Gordon Brown called it the “golden rule,” and it was a key element of George Osborne’s “fiscal mandate.” Although the chancellor has not formally committed to a particular fiscal target, in the 2021 budget he confirmed that “in normal times the state should not be borrowing to pay for everyday public spending.”

The UK’s current deficit has seen a dramatic spike in 2020-21 due to the impact of COVID-19—domestic spending in 2020 increased by some £250bn. But the Treasury’s independent forecaster, the OBR, and others expect the UK economy to recover quickly, returning to its pre-pandemic level in the last quarter of 2021. Alongside the government’s new plans to increase corporation tax, and all other planned changes to taxation and spending, they forecast that the current deficit will quickly fall over the coming years (see Figure 1).

In our new analysis with the IFS, we examine the aid budget and the current budget deficit.

Figure 1. UK current budget deficit (percent GDP) and the aid target

Source: OBR Public finances databank—March 2021

In 2013, the first year the 0.7 percent aid target was met (it was made law in 2015), the UK’s current deficit was over 4 percent of GDP, and over the seven-year period to 2019 when the aid target was met, the UK’s current deficit averaged 1.6 percent of GDP.

Looking forward, the OBR projects that in 2023-24 the current deficit will fall below both these levels, to 0.6 percent. It appears that the chancellor is aiming for a zero deficit in 2025-26, although this has only been achieved five times in the last 30 years. It was momentarily achieved in 2018-2019 and that followed eight continuous years of economic growth, so this level and timeframe may be ambitious. Still, it seems the chancellor hopes to recover to “normal” pre-pandemic levels before the scheduled end of this Parliament in May 2024.

The UK’s debt is expected to rise significantly, though is not out of line with its G7 peers. Debt as a share of GDP is projected to rise from an average of 81.1 per cent in the seven fiscal years to 2020, to almost 110 percent at its peak in 2023-2024. But debt levels will still be below most of the G7, including the US, France, Italy and Japan. Still, regardless of aid spending, and even with a balanced budget, the ratio is unlikely to return to pre-COVID-19 levels in the next decade.

Returning to 0.7

The government appears to have three main options for returning to the 0.7 percent target.

Option one

Using the current deficit, the clearest candidate for this would be 2023 when, even with an extra 0.2 percent of GNI spent on aid, the UK’s deficit would be around 0.8 percent of GDP, and well below the 1.6 percent seen in the previous period in which it was met. This would imply programming an additional annual expenditure of £4.8bn by that year.

Option two

An alternative scenario would be to return to 0.7 percent target only when the budget deficit has been eliminated. The OBR’s projections suggest this could be achieved in 2025-2026, although as this runs into the next Parliament , and the government has not set out detailed spending plans, this may be unlikely. Indeed, this is historically very rare and is a high bar to ask of any public expenditure. This option would amount to spending of 0.5 percent indefinitely, and would likely be no different from a permanent reduction.

Option three

Finally, the government could consider returning to 0.7 percent when the economy recovers to its pre-pandemic size, which is expected to be before the start of 2022. On paper this would imply value for money risks as the aid budget followed a very steep reduction with an equally steep expansion; but if announced promptly, in practice it would enable projects and programmes to be paused, rather than cancelled. Along with delaying payments to multilaterals, the government could realise £4 billion in savings, mainly with a delay in outcomes, and potentially alongside some real efficiencies where weaker spending is cut.

As advocates of development and the UK’s leadership role, of course we’d like to see this third option, but it does offer genuine benefits, both in terms of aid effectiveness, and politically in terms of the UK’s ambitions in the United Nations Climate Change Conference (COP) and the G7.

Whichever pathway the Government chooses, committing to a concrete schedule of returning to the target will provide the advance notice necessary to allow planning, improve aid effectiveness, and lower value-for-money risks.

Fiscally constrained Global Britain

The prime minister has made clear the aid cut is temporary. On the Chancellor’s preferred measure of the “fiscal situation,” normality is expected to return by 2023, and almost certainly within this Parliament. The UK’s leadership role in COP and the G7 would be significantly enhanced by confirming its path back to 0.7 percent, and doing so for 2022 would even offer the prospect of enhancing UK spending going forward.

The sooner the government can provide clarity and commit to a concrete schedule of returning to the 0.7 percent ODA target, the more effective the UK’s aid spending will be, and the stronger its reputation.

Patel’s “New Plan for Immigration” Is Economically Harmful and Won't Work

hschoech — Tue, 06 Apr 2021 15:45:03 +0000

Last week, the UK’s Home Office released a “New Plan for Immigration.” The plan has three major objectives: to increase the fairness and efficacy of the asylum system, to deter irregular entry of asylum seekers into the UK, and to “remove more easily” those whose asylum claims were rejected.

As others have adequately covered, there are vast moral and ethical issues with both the contents and framing of this “New Plan for Immigration,” in addition to it appearing to contravene international law. The “New Plan” has also been released at a time when both asylum applications and the salience of immigration as an issue are at record lows, prompting questions as to why this policy has been released now, and with so little new content.

Instead of rehashing these points, this blog will focus on why the policy interventions contained within this policy are both bad for the economy of the UK—especially important during the recovery from COVID-19—and why they won’t work, based on experiences in the European Union. The objectives of the “New Plan” are not inherently bad, but the policy interventions contained within it won’t meet those objectives.

The “New Plan” Will Harm the UK’s Economy

On the one hand, the “New Plan” maintains the UK’s commitment to refugee resettlement and promises to enhance the support available to them once they arrive. This is good economics: like all migrants, refugees make a positive contribution to countries that accept them, especially over the long-term. In particular, the Refugees Transitions Outcomes Fund (which appears to be an outcomes-based fund supporting new refugees find employmenyt and housing support) sounds promising and echoes suggestions we have made, and mirrors successful outcomes-based payment programmes that have been implemented elsewhere, such as Switzerland and Finland.

We also cautiously welcome the proposal to help refugees access other immigration routes (e.g. refugees who would be eligible under the points-based system), although it is imperative that the core focus of the resettlement programme remains those most in need, not attempts to select only refugees with particular skills.

On the other hand, the “New Plan” also denies government financial support to genuine refugees, just because they have arrived through irregular routes. Asylum seekers, whose claims have been confirmed by the Home Office as genuine, will have no access to public funds, will not have the automatic right to settle in the UK, and the Home Office will assess the possibility of returning them after only 30 months.

This will almost certainly cause unnecessary economic harm to the UK. By increasing uncertainty for confirmed refugees, the “New Plan” reduces their incentive to invest in education, skill-building, and integration. If the Home Office might try to remove you in a year or two, why defer earnings now to try to get your nursing or engineering qualifications recognized? This will reduce the number of skilled professionals the UK could draw on to plug labor market gaps and recover from COVID-19.

Denying refugees access to public funds is also bad for the economy. As well as potentially exacerbating stress and mental health problems (which are bad for employment), this could limit refugees’ self-employment opportunities. While refugees are particularly entrepreneurial, the only academic study cited by the “New Plan” finds that lack of capital is a key constraint to starting and expanding businesses. Cutting off access to said capital will exacerbate this and may plunge them into desperate situations such as homelessness. The cost to the UK government of a year of homelessness is estimated to be over £20,000, so even a slight increase in the chance of homelessness from cutting off funds would more than offset the fiscal savings.

The government should recognize that most asylum seekers have their claims approved and remain in the UK for some time. Even from a purely self-interested perspective, the government should be thinking about how to support these refugees and benefit from their unique offer to the UK economy. Refugees can provide a net fiscal contribution, are entrepreneurial, fill labour market gaps, and tend to be young and eager to work, and a handful of success stories would easily pay for additional assistance. When they don’t meet this potential it’s because of particular barriers they face; the government should seek to remove these barriers, for instance by allowing asylum-seekers to work (which could raise £98 million), instead of adding more.

The “New Plan” Won’t Work

In order to increase the fairness of the asylum system, the “New Plan” sets out to crush the smuggling business model by increasing both deterrence and border patrols, as well as criminal penalties for convicted smugglers. It will also treat asylum claims made by people having entered the UK illegally as inadmissible, insisting that these people could have claimed asylum in countries they had travelled through to reach the UK. However, while the Refugee Convention and its protocols do not provide an absolute right to choose a country of asylum, certain asylum seekers may have perfectly legitimate reasons to seek protection in the UK, such as family ties. Hence, in the absence of viable alternatives, some asylum seekers will not be deterred from aiming to cross the Channel.

As both the EU-Turkey and the US-Mexico borders demonstrate, increased security at borders will not be sufficient to deter border crossings. CGD research has shown that only through a combination of deterrence with opening of legal pathways for work, study, and resettlement can countries reduce irregular migration. While the “New Plan” contains references to expanded asylum and resettlement pathways, there are few details. And while the “Vulnerable Person’s Resettlement Scheme (VPRS)” came to an end earlier this year, the UK should ensure that it continues its successful resettlement program until a new scheme is put in place.

On returns and readmissions, the “New Plan” acknowledges that the current system has its weaknesses and collaboration with countries of origin needs to be improved. According to the Home Office, enforced returns are at the lowest since 2013. To increase returns, the new Immigration Plan seeks “a range of levers [...] to improve returns co-operation, including considering whether to more carefully control visa availability where a country does not co-operate with receiving their own nationals who have no right to be in the UK.”

For this to work, the countries of origin of visa applicants and asylum seekers need to overlap; in 2020, the top five countries of origin for asylum seekers in the UK were Iran, followed by Albania, Eritrea, Iraq and Sudan. Asylum acceptance rates vary significantly across nationalities, with only 36 percent of all Albanians claimants being granted asylum, compared to 54 percent for Iranians and 74 percent for Eritreans, meaning that the need to return rejected asylum seekers also varies.

Figure 1. Top five countries of origin of asylum seekers and different visa holders

Asylum Applications		Work visa (granted)		Study visa (granted)		Family visa (granted)		Visitor visa (granted)
2019	2020	2019	2020	2019	2020	2019	2020	2019	2020
Iran	Iran	India	India	China	China	Pakistan	Pakistan	China	India
Albania	Albania	Philippines	Philippines	India	India	India	India	India	China
Iraq	Eritrea	Australia	Ukraine	United States	Nigeria	United States	Bangladesh	Russia	Russia
Eritrea	Iraq	United States	United States	Saudi Arabia	Hong Kong	Bangladesh	United States	Saudi Arabia	Nigeria
Sudan	Sudan	China	Australia	Hong Kong	United States	Nepal	South Africa	South Africa	Turkey

Sources:
Asylum applications: How many people do we grant asylum or protection to? - GOV.UK (www.gov.uk)
Granted visa 2019: List of tables - GOV.UK (www.gov.uk)
Granted visa 2020: Managed migration datasets - GOV.UK (www.gov.uk)

As Figure 1 demonstrates, not a single of the top five countries of origin for asylum seekers is also a top country for visa holders, making the threat of withholding visas for uncooperative countries a non-starter. Hence, this measure would not achieve much to increase returns. Instead, if applied to countries where many visa applicants come from, the measure would harm the UK labor market, its tourism and hospitality industry, and hinder family reunifications.

If the UK is serious about wanting to increase returns, it is worth looking across the channel and learning from the European Union experience. Before COVID-19, the European Union only managed to voluntarily or forcibly return roughly one third of failed asylum seekers, with many countries refusing to take their nationals back. The lack of an effective returns system is one of the main reasons behind the European Union’s “New Pact on Migration and Asylum,” which is currently under negotiation.

While the European Commission has identified various challenges with the returns system such as a lack of harmonization at European Union level, inefficiencies, etc., the insufficient cooperation of third countries is one of the main reasons for the low returns numbers, as we’ve previously pointed out. And while the European Union has also threatened to restrict countries’ access to visas, there are two major differences; with 26 countries participating, European Union’s joint visas (Schengen visas) have a much wider reach-increasing the leverage of the European Union.

In addition, the European Union wants to use sticks and carrots, convincing countries of origin to collaborate better on returns by offering more investment and other incentives such as expanding pathways for legal migrants to meet skill needs in European countries. Such incentives are completely absent from the UK’s “New Plan”.

How to make the plan more beneficial

Currently, the “New Plan” is out for public consultation; responses are due within the next six weeks. While the details may subtly shift as a result of this consultation, it appears likely that the Government’s overall objectives will remain the same.

Of course, we share the Government’s goal to reduce the harm caused by human smuggling and trafficking. Many asylum seekers have died attempting to cross the Channel, and smugglers have profited from their desperation. But the interventions included within the “New Plan” won’t reduce irregular arrivals, nor curb smuggling networks, for the reasons we have outlined above.

Instead, the UK should focus on ensuring that asylum seekers and refugees economically contribute to the UK economy, by expanding the number of refugees allowed to come to the UK, providing them recourse to public funds, and allowing asylum seekers to work while their claim is pending. In addition, the Government needs to devise a way to facilitate return, perhaps by enhancing legal migration routes alongside return agreements.

Redesigning Global Europe: The EU’s Neighbourhood, Development, and International Cooperation Instrument

egrant — Tue, 30 Mar 2021 16:17:59 +0000

Following three years of protracted wrangling over the European Commission’s proposed new rules and financial instrument for development (and our blogs charting its evolution), on 18 March, EU member states and the European Parliament’s Foreign Affairs and Development Committees finally approved the new Neighbourhood, Development, and International Cooperation Instrument (NDICI)—Global Europe. The instrument, worth €79.5 billion over the period 2021-2027, marks a profound transformation of EU development policy and spending.

The significance of this new instrument can’t be overstated. The EU institutions are not only the third largest donor after the US and Germany, but also the second largest grant aid pool in volume terms, after the World Bank.

Below, we explore some of the key shifts that the new instrument will bring with it, and we set out some of the challenges we foresee in its implementation. There is no doubt that the redesign has rationalised and simplified what was a very complex and intertwined web of EU development finance instruments. Nevertheless, the new rules and targets run the risk of distorting the focus on the quality of assistance and blurring the lines of accountability.

Rationalising and consolidating EU development spending

The EU’s development finance architecture has evolved over time, partly as a result of the constraints imposed by the rigidity of the EU’s Multiannual Financial Framework (MFF). Pre-2021, EU external spending was extremely complex and fragmented. No fewer than 10 overlapping and incoherent financial instruments (excluding special funds) were designed for international development and humanitarian spending, with limited ability to address unforeseen events and emerging priorities. Under the new framework, in an effort to rationalise EU development spending, seven of the ten instruments were merged into a single instrument—the NDICI—including the off-budget European Development Fund (EDF) which finances cooperation with African, Caribbean, and Pacific (ACP) countries and the European Neighbourhood Instrument with countries on the periphery of the EU. The NDICI places at its core, cooperation with the EU’s two priority regions—sub-Saharan Africa and the Neighbourhood (the EU’s eastern and southern neighbours).

Figure 1. Consolidation of multiple EU development finance instruments into the NDICI

Source: Elaboration from the authors based on the proposal for a regulation of the European Parliament and of the Council establishing the Neighbourhood, Development and International Cooperation Instrument

The NDICI also puts forward a new investment framework for external action that consolidates the plethora of financial tools (the regional blending facilities, the Guarantee Fund for External Actions, the guarantee for the European Investment Bank (EIB), and the European Fund for Sustainable Development guarantee) into a single worldwide blending facility and a single guarantee mechanism (External Action Guarantee), which together form the European Fund for Sustainable Development Plus (EFSD+).

Figure 2 shows the multiple investment instruments pre-2021 and Figure 3 shows how they have been consolidated in the new framework. The EFSD+ may guarantee operations up to €53.4 billion—that’s almost 70 percent of the entire instrument—with each operation funded from the instrument’s geographic programme envelope. It is open to all eligible EU and non-EU counterpart institutions, with a view to creating a level playing field for bilateral and multilateral development finance institutions (DFIs), thereby breaking the “monopoly” of the EIB over EU guarantees.

However, unlike the bilateral DFIs that benefit from their respective national state guarantees, the EIB depends on the EU for sovereign guarantees. And thus, the NDICI sets aside three EIB-dedicated windows worth €26.7 billion. In terms of governance, the European Commission, together with the member states and the EIB, will all sit on the EFSD+ Strategic Board.

Figure 2. The EU development finance architecture under the 2014-2020 MFF

Source: Authors’ own elaboration

Figure 3. The EU development finance architecture under the 2021-2027 MFF

Source: Authors’ own elaboration

Maintaining scale and scope

The new development-related commitments for 2021-2027 are something of a glass half-full

The new development-related commitments for 2021-2027 are something of a glass half-full (see our analysis of the outcome of the EU budget negotiations). As shown in Figure 4, the size of the EU’s external action has very slightly increased in constant prices, and its share of the EU’s overall budget (9.16 percent) has also somewhat improved, compared to the 2014-2020 period (8.7 percent). This in itself is a significant accomplishment, especially considering that the latter included the contributions of the UK, which the remaining 27 member states are thus fully covering from 2021. At the same time, the outcome disappoints, including for the European Commission, who had called for a significantly larger EU global development footprint.

Figure 4. EU budget for external action, 2014-2020 and 2021-2027 compared

Source: European Commission

Note: EUR 1 billion from EDF reflows not included in the MFF 2021-2027.

Prioritising geographical spending

The increased focus on bilateral cooperation is a major shift in EU development cooperation. Geographic programmes now constitute the main source of development funding. Indeed, geographic programmes now account for 75 percent of the total financial envelope of the NDICI. As illustrated in Figure 5, of the €79.5 billion (in current prices), around €60 billion will be ring fenced for geographic programmes, including at least €19.3 billion for the Neighbourhood (an increase of €2 billion) and €29.1 for sub-Saharan Africa (no change). (See press release by the Council of the EU on 18th December 2020 and previous blog on the issue.)

While the focus on geographic spending programmed at country level over thematic priorities paves the way for a cooperation that is better aligned with the objectives and needs of partner countries, there is a risk that, with less funding, global challenges may be neglected.

Figure 5. NDICI—Global Europe programme allocation (2021-2027, EUR current prices)

Source: Proposal for a regulation of the European Parliament and of the Council establishing the Neighbourhood, Development and International Cooperation Instrument

Aligning with international commitments and setting spending targets

The NDICI is aligned to a number of the EU’s international commitments, including the Paris Agreement on Climate Change. It sets a spending target of 30 percent for climate objectives. It reiterates the age-old commitment to provide 0.2 percent of GNI for aid to least developed countries (LDCs) by 2030. And it sets a benchmark of 93 percent of EU development assistance to qualify as Official Development Assistance (ODA) as defined by the OECD Development Assistance Committee (DAC), demonstrating the EU’s compliance with adherence to international norms and standards.

Additional spending targets have also been set for thematic priorities. Ten percent of the financial envelope has been allocated to “actions supporting management and governance of migration and forced displacement,” and 20 percent to social inclusion and human development, including basic social services such as health, education, water, nutrition, water, sanitation and hygiene, and social protection.

Creating flexibility cushions for rapid response and changing priorities

The creation of a flexibility cushion and a rapid response pillar are the real radicals in this budget. They consist of €9.5 billion for unforeseen events, emerging challenges, and new priorities, and €3.2 billion for crisis response. That’s almost 16 percent of the entire development instrument unallocated and unprogrammed. Considering the lack of budgetary space in its response to COVID-19, and the scrambling for funds that followed thereafter, these new flexibility mechanisms are, undoubtedly, useful and long-anticipated additions to the EU’s toolbox.

Incentivising collaboration between European development actors

The NDICI gives new impetus to greater collaboration between European development actors. The rules governing the instrument specify that “joint programming” is the preferred approach for country programming. This gives the European Commission the legal backing to make the Team Europe approach—combining its own expertise and funding with that of the member states and the European development finance institutions—the norm rather than the exception. Joint programming is already actively ongoing in 79 countries, although, to date, only 22 joint strategies have been signed. However, although joint programming is emphasised as preferable, joint strategies and implementation, remain voluntary.

Challenges ahead

While there is much to herald with this more rational configuration of EU development assistance, the new instrument does bring with it some challenges.

The first challenge is in relation to the “annuality” principle of the EU budget. While the EU budget is established on an annual basis by the Budgetary Authority (the Council and the European Parliament), the off-budget EDF for cooperation with the ACP was established for a seven-year period as a multiannual rolling fund, with contributions being provided by the member states as needed. Under the annual budget process, the level of commitments and disbursements that are possible are defined both by the terms of the MFF and the budget adopted for the year. Although there is a provision in the NDICI that allows for unused commitments to be carried over into the following year, it does set a deadline of the end of the year for disbursement. There are two consequences of this:

the incorporation of the EDF into the budget may result in the disbursement rate becoming a more important factor than the quality of actions, and
the shift from a multiannual rolling fund to annual disbursement may pose a risk to the predictability of EU development assistance.

The second challenge relates to the plethora of earmarked funds and spending targets. While spending targets demonstrate prioritisation and commitment to a particular issue, the NDICI contains no fewer than five of them. Tracking these targets will be no easy feat and may encourage the use of ‘loose’ definitions for which actions qualify. Furthermore, excessive focus on achieving the targets and volume of funds may result in a tendency to overlook the quality of actions, thereby diluting their overall development impact.

Finally, the question of accountability and transparency of development spending lingers. With the NDICI, the European Commission has effectively limited the European Parliament’s control and scrutiny role, thereby limiting transparency and accountability, in two ways. Firstly, the European Commission will have free rein to decide on disbursement of the emerging challenges and priorities cushion, only having to inform the European Parliament before any funds are mobilised. Secondly, the European Parliament has been granted the status of mere “observer” on the EFSD+ strategic board, with no decision-making authority on the use of blended finance and guarantees. While micro-management by the European Parliament is to be avoided at all costs, getting the balance right between flexibility and accountability will be a challenge.

Despite the NDICI only having just been approved by the European Parliament committees, programming of the funds is in full swing. There will most likely be some statement from parliamentarians reasserting their demand for strategic oversight and guidance over development spending. The European Commission has promised it will oblige in the form of a “high-level political dialogue” with the parliament twice a year. It remains to be seen whether this will suffice.

With thanks to Anita Käppeli for her comments.

Note: On 4/6/21, this blog was corrected to reflect the possibility under the NDICI to carry unused commitments over in the following financial year.

Hitting 0.7 For 0.7’s Sake: The Perils of the Global Aid Funding Target

jturner — Wed, 03 Mar 2021 13:16:16 +0000

News that France is legislating a target to give 0.7 percent of GNI as official development assistance (ODA) inspires mixed feelings in me. I have always been ambivalent about this target for wealthy nations, and not necessarily because it’s based on an arbitrary and outdated calculation (though it is). In fact, in spite of its genesis, the number seems, if anything, on the low side: most recipients could absorb substantially more aid than they get, provided it is given well. Nor is my concern that we’re running out of good things to do in developing countries—a cursory glance at GiveWell suggests multiple development objectives that have a great deal of string left to play out (and even if ODA should do different things to private philanthropy, the case that there are many things it can do effectively and which need more funding has never been easier to make).

My concern is more akin to Goodhart’s law: when a measure becomes a target, it ceases to be a good measure (though coined in this formulation by Marilyn Strathern). When an aspiration to meet a specific level of funding drives new aid spending, rather than a political settlement and institutional structure that prizes development outcomes and allocates funding for good work to that end, we cease to give due attention to that all-important clause: “provided it is given well.”

This does not mean more aid isn’t a good thing. Nor does it mean that cuts during a global pandemic—as the UK is implementing— are not a terrible idea. Both statements are true. And arguing that introducing a target to reach 0.7 percent of GNI is a bad idea may give cover for bad actors who don’t care about development and want to avoid our obligations to the rest of the world. But introducing a target can give cover to other kinds of bad practices and bad actors, with long-term negative consequences for development. It’s great that France wants to give more aid, but a target is a bad way to do it.

In this blog, I set out three channels through which the adoption of the 0.7 percent target can have negative consequences, illustrating them with the example of the UK experience, and how France can be more generous while avoiding these pitfalls. Spoiler: a target isn’t the answer.

Three possible perverse effects of adopting 0.7

The key insight of Goodhart’s law is there is a difference between making progress on a measure incidentally and in targeting it for its own sake. A number of countries give more than 0.7 percent of GNI in ODA as a result of political settlement and policies that value better international development outcomes, and a resource allocation process that reflects this. As my colleagues have shown, these countries tend to give good aid—and they give a lot, because they value using aid well. When 0.7 is the result of striving for 0.7 itself rather than the consequence of valuing development highly, three distortive effects may arise.

Buy a hammer and everyone shows up with nails. All arms of government are short of money in most countries. Creating a protected budget attracts other arms of government appropriating some portion of the uplift to 0.7 for things that ODA shouldn’t do, even if they fit under the rules —a number of which I proposed axing in the context of the UK aid cuts here. These bad actors won’t capture the full uplift, so moving to 0.7 still does some net good—while it lasts.
Intra-marginal spending doesn’t change. The target itself does nothing to change the quality of the ODA that was already done before it is adopted—which may be good or bad news, depending on how well it was used before the uplift.
A shift in the political economy of aid allocation. This is the key problem, and an extension of Effect 1. When the budget is protected and other arms of government capture part of it for security, migration, or prosperity objectives for which aid is poorly suited and which have few real development payoffs, this creates a fundamentally new political economy of aid within the government. Should the budget fall again—as in the UK—this new political economy means we don’t simply go back to where we started, because these new players have greater clout. The cuts will be disproportionately focused on the best development spending.

These effects mean that in the short run, more good is done in total by adopting the target, even if the average quality of the new spending is worse than what came before. It is the third effect above that is so poisonous to development prospects in the long term. If generous aid spending isn’t a political equilibrium without legislative protection, it’s unlikely to be one with it. Scaling up and scaling down aid will therefore be asymmetric.

The UK experience as a cautionary tale

I had a front row seat to the UK’s adoption of the 0.7 percent target. My very first job in what was then DFID was in the team that provided advice on proposed legislation to enshrine the target in law (the target was already being discussed in Parliament as early as 2010). The government position then was that it would introduce legislation when Parliamentary time allowed, given the other bills vying for attention. In the meantime, with a secretary of state, prime minister, and chancellor who all believed in development spending, the UK was ramping up its aid spending over time in any case. Only one serious attempt was made to put the legislation before Parliament—very low down the list of government bills that day so it was clear it was unlikely to pass, as indeed was the case. (In the end it wasn’t even debated.) Nevertheless, after final estimates came through, the UK had in any case given 0.7 percent of GNI as ODA in 2013.

The very next year Michael Moore, a Liberal Democrat MP, introduced a Private Member’s Bill (PMB) to enshrine the 0.7 percent target in law—and this time the government supported the bill, signaling early on that it would likely find Parliamentary time (as PMBs have a separate chunk of Parliamentary time allocated to them) and would pass into law (because the coalition government had a majority). The law became official in 2015. Though it gave aid protection during a period of austerity, the aid budget immediately became a target for departments that had never previously shown any inclination to international development work. The trajectory of UK aid since that point is a warning.

Figure 1 . ODA as a share of GNI and UK aid spending by department

Source: Statistics on International Development 2019, author’s analysis

Each mechanism by which Goodhart’s law can undermine the 0.7 target has been realized. When the law had little chance of passage (2010-13), there was virtually no change in the proportion of ODA being secured by non-development-focused arms of government. In 2014, once the PMB was introduced and sponsored by the government, we see a jump in the ODA administered by non-development parts of the UK government, gathering pace after the legislation passed in 2015. The grab of ODA by the Department for Business, Energy and Industrial Strategy; the Home Office; the Foreign and Commonwealth Office; and others was not a product of the change in the political landscape in mid-2016 after the Brexit vote, but had already largely been accomplished by then.

Meanwhile, it is clear that the intra-marginal effect of 0.7 was limited: the bulk of DFID’s work was much better in development terms than its sister departments, as made clear by independent evaluation, and very little previously existing work was halted. Effect 2, that 0.7 does nothing in and of itself to change what came before it, was a positive, since the legacy portfolio was strong.

The final, and most poisonous effect of the cuts was the shift in the political economy of aid in the UK. Figure 1 clearly demonstrates that other government departments began using aid much more. But what the numbers don’t show is the way the terms of this engagement changed. There was a common sense in DFID that initiatives in other departments like the Prosperity Fund were poorly managed and less good for development. Nevertheless, they were considered a “necessary evil” of having a protected budget. Indeed, DFID staff were seconded to other government departments to help them manage their aid better. This reflected the imbalance in both effectiveness and power across government. As if to hammer this point home, in November 2015—much to the surprise of most of DFID—a new aid strategy was published, relegating poverty reduction to one of four targets of UK aid, rather than its overarching focus. Again, this did not a reflect a rightward shift in the government. The Cabinet was materially similar to the pre-0.7 Cabinet, and the EU referendum was in the future. What changed were the returns to encroaching on development, given that the protected budget near-guaranteed the pot that could be fought over. When the cuts came this year, the development teams fought extremely hard to protect their spending. But there is little doubt that what remains will be weaker than what came before, and less focused on doing good development work.

What about France?

France should learn from the UK experience. Even though the new legislation commits only to “strive” towards 0.7, we can expect that with an upward pressure on development budgets, there will be pressure from arms of government without a protected budget to make use of it. The first and third negative effects of treating 0.7 as a target itself, rather than the outcome of resource allocation processes that value development appropriately, are a danger. The direction of the second effect is less clear, and this suggests the bones of an alternative approach that can improve the generosity and quality of ODA without the negative effects.

French aid, as it stands, is poorly targeted. It does not focus on either poor people or poor countries. The second “effect” of 0.7 legislation, that it does little in and of itself, to improve the existing ODA given is a negative in the French context.

Figure 2. French ODA is not well targeted at poor people or poor countries

Source: OECD CRS data 2006-2019

To their great credit, French lawmakers recognize this, and have used the law to legislate a better use of ODA across the portfolio: more focused on poorer and more fragile countries, and assessed for quality by an independent body. They may be able to partially occupy the space abdicated by the UK in international development, especially with elevated needs post-Covid. Coupled with the new Development Innovation Fund chaired by Esther Duflo there is much to cheer in France’s trajectory. These changes suggest an alternative approach to doing development better than legislating for how much you spend.

A better way

A better approach has three arms.

Legislate for outcomes, not inputs. One of the reasons DFID was an effective organization was that it was bound by legislation that made poverty reduction the legal mandate of its work. Regardless of what it spent, it would need to be justified on poverty reduction grounds. The great weakness of the legislation was that this requirement wasn’t biting enough, and didn’t establish a burden of proof or define poverty reduction. Making development objectives an immutable part of the organizational mission focuses the organization and helps recruit mission-oriented people.
Commit to robust scrutiny. DFID was also one of the most externally scrutinized arms of the UK Government, with a Parliamentary Committee (the IDC), the Independent Commission on Aid Impact, and the National Audit Office all taking aim at it. Alongside this, it made robust commitments to transparency of spending and procurement. There are few skeletons in the closet because there are few closets.
Get the internal processes right. DFID’s effectiveness was built on the pillars of technical expertise—a strong cadre of economists, political scientists, anthropologists and more—and intense contestability. DFID prioritized its own ability to generate, commission and interpret research. Technical experts were constantly making the case for spending on alternative objectives based on evidence and assessing the case made by others. But this wasn’t a free-for-all: a system of evidence-based spending cases (business cases), annual reviews, and internal quality assurance kept them honest.

This approach does not guarantee that good development work takes up an increasing portion of what the government does. But neither does a 0.7 percent target, especially if it has perverse effects when abandoned. More money can mean more welfare gains, but only if it’s spent well. The effort and political capital it takes to scale up spending may be better used to make existing aid better: targeting it at countries and people who need it more, using it to achieve things that other means cannot do more efficiently, resisting the urge to try and make it do things it simply cannot achieve or to use it as an (inefficient) means of self-enrichment. When these are the battles that should be fought, shifting the terms of the debate to the overall budget is not an effective strategy for improving global welfare.

0.7 is a convenient campaigning topic. But Daniel Kahneman famously observed that when faced with a difficult question, we often substitute it for an easy question—and do not notice the substitution. The difficult question is “how do we do development well, and at scale?” The easy question is “how much money in the budget can we secure?”

The difference matters. We should ask the difficult question.

The Dutch 2021 Elections: Whither Development Assistance?

jturner — Mon, 25 Jan 2021 17:19:12 +0000

On 17^th March, the Dutch will make their way to the polls to elect a new government. Although only in charge of a caretaker government following a scandal over child care benefits, Dutch Prime Minister Mark Rutte remains largely popular at home for his management of the pandemic through an “intelligent lockdown” and seems to be heading towards a fourth term.

Looking at the political parties’ manifestos and in a scenario where Rutte’s party, the People’s Party for Freedom and Democracy (VDD), becomes more dominant in the coalition as projected, the results could have significant consequences for Dutch development policy. The amount and purpose of Dutch aid in the years to come are at stake. In a world facing the steepest decline in human development in more than three decades, this blog draws attention to the threats that the election campaign proposals pose to the Netherlands’ credibility as a leading international donor.

High ambitions but limited capacity

Between 1975 and 2012, the Netherlands achieved and maintained its commitment to give 0.7 percent of its gross national income (GNI) in official development assistance (ODA). But it has seen an almost continuous decline in this ratio since Prime Minister Rutte came into office in 2010 (see figure 1). In response to the pandemic, however, the ODA/GNI ratio is expected to increase again, from 0.59 percent in 2019 to 0.61 percent in 2020 and 2021. Nevertheless, frontloading the increase could come at the cost of a heavily reduced budget between 2022 and 2024.

Figure 1. Dutch ODA as a percentage of GNI (2008-2019)

Source: OECD

Despite declining funding, the Netherlands remains among the 10 largest OECD Development Assistance Committee (DAC) donors, and it manages to focus its development policies on issues where the country has strong comparative advantages. In 2018, following the latest coalition agreement, it refocussed its aid on four themes: (i) sexual and reproductive health and rights, (ii) water management, (iii) agriculture, and (iv) security and the rule of law. This change in thematic priorities also came with new geographic priorities in Europe’s vicinity: the West African Sahel; the Horn of Africa; and the Middle East and North Africa.

Beyond ODA, the Netherlands also ambitions to champion the provision of global public goods. Last year’s edition of CGD’s Commitment to Development Index demonstrated the Netherlands’ relatively coherent approach to policies that impact development. But while the country performed well in linking development ambitions with trade and security issues, there is room for the Netherlands to improve in technology transfer and diffusion as well as in its openness towards migrants from low-income countries.

A precarious balance of power which could tilt to the right

The current coalition, in power since 2017, is composed of four parties: the centre right VVD, the centre right Christian Democratic Appeal (CDA), the social-liberal Democrats 66 (D66), and the centre-left Christian Union party (CU). This alliance at the centre of the political spectrum succeeded in safeguarding the Dutch commitment to development and controlling the damage to the ODA budget under the leadership of the Minister for Foreign Trade and Development Cooperation, Sigrid Kaag from D66.

However, two important features could throw the balance of power off-kilter in the aftermath of the elections in March. Firstly, there has been a change in discourse from the VVD, which is now determined to focus more on national issues in response to the pressure from the extreme-right Party for Freedom. The VVD’s proposals on asylum and migration policy are particularly telling. The party’s manifesto does not rule out suspending the right to apply for asylum and closing the Dutch borders in the face of a new migration crisis. Secondly, projected to move from 33 to 38 seats in the Dutch House of Representatives, the VVD will most likely reinforce its dominant position in the coalition, far ahead of the CDA, polling at 18 seats. These two disruptors could put pressure on the volume, conditionality, and objective of Dutch development aid.

Three major threats for Dutch development policy

There are three identifiable risks for Dutch development policy. The first relates to the amount allocated to development cooperation by the Dutch government. In its manifesto the VVD advocates for severing the link between ODA and GNI, thereby “halting any increase in Dutch ODA when the economy grows.” The VVD is also calling for private individuals rather than the Dutch state to finance nongovernmental organisations (NGOs) in development. In this scenario, NGOs dependent on Dutch financing, which represented 26 percent of the total bilateral aid (€ 830 million) in 2019, could be the first to suffer cuts from this decision.

The second risk relates to the potential reinforcement of the conditions attached to aid. Both the VVD and the CDA clearly view cooperation on migration as an imperative for development cooperation. Thus, countries refusing to engage in migration partnerships would see their assistance dramatically reduced or even entirely withdrawn. The VVD goes even further in wanting to channel “more money through the EU at the expense of the Dutch UN contribution to make concrete political demands to partner countries.” Using aid as a means of exercising political pressure in this way could potentially irreparably damage the relationship between the Netherlands and its partner countries.

The third risk relates to the repurposing of aid. The VVD advocates for disbursing development assistance for strategic interests, such as improving market access or curbing migration flows, moving away from the DAC definition of “promoting the economic development and welfare of developing countries.” The VVD has even threatened to write its own definition of aid if the DAC does not expand its ODA eligibility criteria to include additional spending on military missions and migration management. The VVD and the CDA intend to use development assistance to tackle the “root causes of migration” in spite of the evidence demonstrating that migration rises as the poorest get richer. These risks weigh heavily on the ability for the Netherlands to remain an influential donor and a strong multilateral player.

Manifesto and public opinion going separate ways

There are, however, progressive forces than can act as a counterweight in the debates. In the political sphere, D66 and the social-environmental party, Groen-Links, advocate for reinstating the 0.7 percent ODA to GNI ratio and for intensifying efforts on climate adaptation in developing countries. In the civil society sphere, Partos, the association of 100 Dutch development organisations, as well as the Advisory Council on International Affairs call for the Netherlands to substantially increase its international commitment to deal with COVID-19 and defend the principle that poverty eradication should remain the primary objective of Dutch ODA. In fact, the Dutch public are much more aligned with these ideas. In 2020, only 34 percent were in favour of reducing the amount allocated to development cooperation, compared with 57 percent 10 years ago. Of all the people interviewed, only the supporters of the extreme-right party, the PVV, were largely in favour of aid cuts.

It remains to be seen whether the Netherlands’ future leaders will go against the aspirations of Dutch citizens or preserve Dutch leadership in development policy. Nevertheless, the manifestos of the right-wing parties send worrying signals. While development is not a decisive factor in Dutch politics, the current direction of travel of Dutch development policy would certainly downgrade the Netherlands’ international role and commitment to global solidarity.

EU Development Policy in 2021: Greater than the Sum of Its Parts?

jturner — Tue, 12 Jan 2021 10:26:45 +0000

2020 was a challenging year for Jutta Urpilainen, the European Commissioner for International Partnerships. From the design of a new strategy for Africa to the negotiations of the Post-Cotonou agreement with African, Caribbean, and Pacific countries, all against the backdrop of a global pandemic, her first year in office has represented both a test for European Union (EU) international solidarity and an obstacle to progress on development priorities.

In this blog, we look back at the EU’s international development performance and assess the extent to which it has lived up to the EU’s pledge to be a reliable international partner. We also look forward and set out our thoughts on where the EU development portfolio needs to go in 2021. While there have been some successes and worthwhile initiatives launched by the European Commission, not least in its attempt to effectively coordinate European actors to mitigate the impact of COVID-19, there is still a long, winding road ahead towards the EU’s stated ambition of being an impactful geopolitical heavyweight. And the Commission’s lack of transparency is hindering its progress. In 2020, virtual Commission press conferences following meetings of foreign and development ministers became the exception rather than the norm.

The emergence of “Team Europe”: A veil of cooperation or real consolidation?

In 2020 we saw the emergence of “Team Europe,” a variable-geometry collective of EU institutions, European member states, and European development finance institutions. At the onset of the crisis, Team Europe was quick off the mark to commit a whopping €38.5 billion to help the most vulnerable countries deal with the immediate health effect of the pandemic as well as its social and economic consequences. Yet behind this monumental figure, two important caveats are worth mentioning. Firstly, as COVID-19 hit in the last year of the EU’s budget cycle, the bulk of the finance consisted of existing resources that were reallocated, inevitably resulting in a loss of funding for non-COVID-related programmes. Furthermore, a sluggish disbursement rate meant that only half the committed amount had been spent up to October. Secondly, with no common framework to coordinate responses, (or mechanism for how it actually operates in partner countries), Team Europe has been, and continues to be, somewhat of a black box. It is impossible to determine whether Team Europe has swung the pendulum towards a consolidated model of like-minded actors pulling in the same direction and being steered by the European Commission or whether it is merely a convenient branding exercise to enhance international visibility with little substance behind the veil.

Even in areas where there was broad agreement within the EU, such as on gender and women’s empowerment, the Commission’s quest for greater consolidation amongst the member states was in vain. In November, EU High Representative Borrell and Commissioner Urpilainen jointly presented the EU’s new Action Plan on Gender Equality and Women’s Empowerment in External Relations 2020–2025 (GAP III). The plan put forward an ambitious target of 85 percent of all new actions throughout external relations to contribute to gender equality and women’s empowerment by 2025. Yet, Bulgaria, Hungary, and Poland refused to sign up to the plan, throwing yet another spanner in the works towards consolidation.

However, the emerging development agenda suggests that the case for consolidation in European development cooperation may be strengthening, at least among like-minded member states. Spain has already expressed its willingness to eventually fully integrate its development activities at the EU level. In 2021, the EU urgently needs to work out how its institutions, including through joint action between them and Team Europe, can demonstrate that they have sufficient purpose, capacity, agility, and speed of action for consolidation to become attractive across the board. Leveraging a wider range of institutions like the European Investment Bank and the European Bank for Reconstruction and Development, and variable-geometry partnerships of its common institutions and clusters of member states, plus like-minded associates including the UK, Team Europe can be, and needs to be, much more than the sum of its parts.

A telling example of the form Team Europe could take in practice was the launch of the Digital for Development (D4D) Hub. Several member states joined forces with the European Commission to increase investment in the digital sector in partner countries building on their respective comparative advantages. It remains to be seen whether and how this approach will be replicated in 2021.

From “international cooperation” to “international partnerships”: A PR exercise or a profound shift in the EU’s approach?

The European Commission proudly announced that Jutta Urpilainen was to become the first European Commissioner for International Partnerships, a post previously known as European Commissioner for International Cooperation and Development. At the heart of this name change was the ambition to move to a more balanced and sustainable approach in dealing with partner countries. A first opportunity to live up to this commitment was the bloc’s strategy with Africa presented in March. It focused on building five partnerships around (i) green transition and energy access, (ii) digital transformation, (iii) growth and jobs, (iv) peace and governance, and (v) migration and mobility. However, hopes for a profound reset of the relationship between the two continents faded over the ensuing months. The postponement of the EU-African Union summit planned for October and the cancellation of a virtual mini-summit in December meant that momentum towards a renewed and balanced partnership between Europe and Africa was lost. And yet again, there was a striking lack of communication and transparency around the reasons for the delay and the proposals for next steps.

While closer cooperation with both African countries and the African Union is a primary goal of EU foreign and development policy, the partnership will need to be reinvigorated in 2021 with concrete steps to guarantee Africa’s ownership of any deal. COVID-19 has changed the premise behind the EU strategy with Africa, requiring a substantive revision of the content and scale of the partnership to meet the challenge. The strategy needs to take account of the disruption caused by the current synchronised recession harming Africa disproportionately. It urgently needs to address ways of mobilising additional resources to finance the recovery in Africa. Other key areas for greater attention include major long-term investment in African education systems to equip new generations of school leavers with the skills needed to navigate digital work opportunities as well as new strategies for long-term investment in youth employment.

The second important partnership for the EU has been the Post-Cotonou agreement with the African, Caribbean and Pacific states. Expiring in 2020, the agreement covers political and economic relations between the two groups of countries. A political deal was reached by all negotiating parties in December 2020. However, once again, we find ourselves in the dark as little has been revealed about the actual content of the agreement.

The new consolidated development instrument: Wherefore art thou?

2020 marked an unprecedented EU agreement on a colossal €1.82 trillion (all amount in 2018 prices) to be spent over the next seven years. Of the €98.4 billion allocated to EU external action, €71.8 billion was set aside for the EU’s primary instrument for international development, the Neighbourhood, Development and International Cooperation Instrument (NDICI), which merges and simplifies an array of instruments for external action under the previous Multiannual Financial Framework. The instrument is almost entirely geographically focused—three-quarters of the overall amount is ringfenced for geographic programmes, with less than a quarter left for thematic priorities. Although the Commission earmarks around 20 percent of its development aid for human development programmes, previously most of the spending went to activities promoting economic growth. From the geographic envelope will emerge the European Fund for Sustainable Development + (EFSD+) and the External Action Guarantee, aimed at supporting financial investments and social and economic sustainable development in partner countries. However, neither investment windows nor earmarked amounts have been specified. And no targets have been set. The risk is that without any clear priority steer from the EU, the disproportionate shift in European support away from human development towards economic and infrastructure investment may be exacerbated. Only 3.3 percent of the €3.1 billion contribution to EU blending projects and only one guarantee out of 28 has, to date, been allocated to human capital. But while a political agreement has been reached on the NDICI, at the time of writing, the details of the rules governing the instrument have yet to be disclosed although the text is expected to soon be officially adopted by the European Parliament and the Council.

In the wake of the pandemic, as the European Commission radically ramps up its use of budget support, blended finance, and guarantees, it needs to tighten the reins and set out its policy priorities and targets for its external spending and investment.

As 2021 continues to unfold and the longer-term repercussions of the pandemic and the economic crisis become ever more apparent, it is likely that Commissioner Urpilainen and her team will continue to face huge challenges which will become unmanageable if Team Europe fails to speak and act coherently. Achieving this coherence remains Europe’s core challenge in being a leading geopolitical actor and in successfully providing global public goods in a world that desperately needs them.

The EU Migration Pact: Building a True Partnership with Africa

egrant — Mon, 21 Dec 2020 16:00:04 +0000

This is the third of three blogs written by the Center for Global Development focused on the EU’s New Pact on Migration and Asylum. The first focused on why both returns and legal pathways are needed to effectively manage migration. The second focused on how to operationalize Talent Partnerships. This blog focuses on how to create a true partnership of equals with African countries of origin.

The European Union has long stated it sees Africa as a multilateral partner rather than a mere recipient of development aid. The new EU Pact on Migration and Asylum echoes this sentiment, touting a “change of paradigm” in which coordination with partner countries will be deepened, ensuring “a strong link between the EU's actions on migration and the daily challenges of each partner country.” The EU-Africa Strategy, proposed in March 2020, reflects similar language.

Yet despite this rhetoric, the current state of migration cooperation between Africa and Europe is far from this ideal. True partnerships should focus on promoting economic opportunity in countries of origin and expanding legal pathways, both from Africa to Europe and within the continent. Currently, African governments are left responding to Europe’s short-term thinking without collaboration towards long-term mutual gain—a scenario that undermines the potential for joint initiatives that can benefit both Africa and the EU.

Shouldering the burden of short-termism

In 2015, the EU proposed a new Emergency Trust Fund for Africa (EUTF), designed to address the “root causes” of irregular migration. Thus far, the fund’s operational committees have approved a total of 4.7 billion EUR towards EUTF goals. Yet programs have been criticized for solely serving Member State interests.

For example, both African and European governments have extolled the necessity of expanding legal migration pathways between the continents at all skill levels. But the spending priorities of the EUTF have not reflected this rhetoric. Just 1.5 percent has been spent on legal migration schemes. Out of the 372,436 (Horn of Africa) and 848,816 (Sahel and Lake Chad) people impacted by the EUTF’s migration-related programming, only 19 and 288 people respectively have benefitted from these schemes.

Figure 1. Outcomes of funding for “Improving Migration Management,” by EUTF indicator

Source: EUTF Yearly Reports for the Sahel and Lake Chad and Horn of Africa regions, 2020

Instead, the majority of funding has gone to promoting returns and reintegration (Figure 1). Despite African diplomats expressing concern, returns remain the top priority of the New Pact. While returns and reintegration are central to migration management, recent moves signal that aid may become conditional on such returns cooperation. This ultimately prioritizes short-term stopgaps over long-term results.

So what would a true partnership on legal migration between Africa and Europe look like? As reflected in the negotiating mandate of the African, Caribbean and Pacific Group of States (ACP Group), such partnerships must be tailored to each individual country. The EU should fund legal migration pathways so that those who do choose to migrate have opportunities to do so willingly, safely, and orderly. This requires engaging more critically with national ministries on the continent to prioritize regular migration over irregular migration, both intra- and inter-continentally.

Labor mobility from Ethiopia

Ethiopia’s intention with labor mobility, for example, reflects improved collaboration with national ministries and greater mutual benefit for participating countries. Every year, 2 million young Ethiopians enter the labor force, a substantial pool of talent from which both Ethiopia and European countries could benefit. In 2019, the Ethiopian government launched the Overseas Employment Program, which aims to:

mobilize opportunities for unemployed Ethiopian youth amid rising demand for various skill levels;
maximize foreign currency earnings from remittances (currently ~0.5 percent of GDP);
ensure and promote skills development and transfer of technology in the Ethiopian economy; and
reduce irregular migration through targeted policies and programs.

In the short term, Ethiopia aims to place at least 150,000 Ethiopian workers abroad. To meet this goal, Ethiopia is exploring opportunities in Europe. For example, the government of Ethiopia is discussing an agreement with the Polish city of Gdańsk for skilled construction, manufacturing, IT, logistics, and maritime workers to plug skills gaps in the Polish economy. And it is working closely with a Dutch think tank, Clingendael Institute, to develop a pilot temporary mobility project for nurses and IT professionals to move to the Netherlands.

Yet by and large, Europe has not promoted such cooperation. Ethiopia is one of the major beneficiaries of the EUTF, with over 271.5 million EUR spent between 2015-2019. Economic and employment opportunities have been prioritized and resulting efforts, such as the Ethiopia Jobs Compact contract and TVET training, have generated 16,000 new jobs. However, there has been little collaboration on legal migration pathways, despite demand on both sides.

Figure 2. Projects funded by the EUTF in Ethiopia

Source: European Commission, 2020

Ethiopia’s strongest legal migration cooperation remains with countries in the Gulf Cooperation Council (GCC) region. After concern regarding irregular migration culminated in 2013, Ethiopia put a moratorium on domestic work abroad until labor and mobility standards in the GCC were properly met. In 2018, the government revived overseas employment under a new narrative, and signed various bilateral labor agreements, including an agreement with the government of the United Arab Emirates to employ at least 50,000 Ethiopian workers through a temporary labor mobility program.

Such intentional cooperation with GCC countries results from assurances that Ethiopian legal requirements are fully met. Existing labor mobility corridors are mostly for low-paid workers, yet program expansions for semi-skilled and skilled workers along with discussions on minimum wages are underway. Unfortunately, no such cooperation exists with Europe, yet.

Mobilizing regional benefits

The EU also has an opportunity to support countries in better responding to migration within Africa. According to a survey by the International Organization for Migration, 80 percent of Africans thinking about migration aren’t considering leaving the continent. As Tsion Tadesse Abebe and Aimée-Noël Mbiyozo write, “the overwhelming majority of African migration is intra-continental and the continent is working towards free movement, free trade, and regional integration.”

Africa is combining its 54 countries into a single economic bloc through the new African Continental Free Trade Agreement (AfCFTA). Using this agreement to promote migration within the continent offers a way to fill eventual skills gaps at national and regional levels. Efforts that introduce legal migration in the region—such as the Better Migration Management Programme for Ethiopians migrating to Sudan, or the Free Movement of Persons and Transhumance in the IGAD Region (comprising Djibouti, Ethiopia, Eritrea, Kenya, Somalia, Sudan, South Sudan and Uganda)—must be amplified in cooperation with the African Union. EU support for reconciliation between national employment law and free movement protocol is encouraged.

With the implementation of the AfCFTA underway, the EU should get creative. EU-Africa partnerships have ample opportunity for mutual gain, which must be better emphasized. As the EU provides support to the AfCFTA in both the negotiation and implementation stages, backing for legal migration programs to support expanded regional trade in Africa must be incorporated into the Pact negotiations, as well.

How to improve EU migration strategy moving forward

The emphasis on reducing arrivals and ensuring compliance on returns comes at the detriment of building trust in government throughout participating African countries. African priorities of facilitating legal migration, creating long-term employment, and harnessing trade for growth have been largely ignored.

Future spending of EU money on migration from Africa should not be conditional on cooperation with returns. Instead, it should improve economic development and expand legal pathways. The EU should prioritize three important actions:

Restore funding that was cut from the Multiannual Financing Framework. The 2021-2027 Multiannual Financing Framework cuts EU funding for legal migration pathways; this funding should be restored, even if approached from a different lens. For example, legal migration could then be incorporated into established packages for a greener, more digital Europe, a priority shared by many African countries.
Work with partner countries to design bilateral or multilateral legal migration pathways. Bilateral labor migration pathways, such as PALIM between Belgium and Morocco or the Digital Explorers program between Lithuania and Nigeria, have the potential to support legal migration and increase economic opportunity in participating countries. As the Mediterranean axis calls for more EU solidarity, Member States are encouraged to share information regarding program design and improved cooperation with partner countries.
Amplify EU support for regional value chains through the use of trust funds. If Member States want to strengthen African partner countries, then they must encourage interdisciplinary dialogue in Pact negotiations as it relates to the new AfCFTA. European solidarity with the African content as a collective when establishing autonomous trade preferences and regional migration schemes will go a long way.

French president Emanuel Macron recently remarked, "If we don't succeed in helping Africa develop, we, Europeans, will pay the price and will only continue to speak of Africa in terms of the migration suffered by a youth whom we failed to offer opportunities on their own continent.” EU-Africa relations, however, must go beyond themes of returns and reintegration if partnerships are to be fortified and expanded. Only by fully engaging with African policymakers and priorities will the EU be able to do so.