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Policies principles and processes under the eu agenda for change
1. Policies, principles and processes
under the EU Agenda for Change
Geert Laporte, Deputy Director
Florian Krätke, Policy Officer
Meeting for senior ACP officials in charge of
development financing
Brussels, 15-16 April 2013
National and Regional
Programming for the
11th EDF
2. ECDPM Page 2
Introducing ECDPM
• Independent development policy ‘think and do’ tank working on
European Union’s relationship with Africa, Caribbean and Pacific
(ACP) for more than 25 years;
• Providing practical, policy-relevant analysis and support to ACP
and European stakeholders;
• Non-partisan facilitator of dialogue;
• Systematic linking with key players in the EU and the ACP
through networks and partnerships;
• Independent sounding board for ACP and EU development
policies;
• Currently funded by some 10 European States;
• Board of ECDPM drawn from ACP and Europe.
3. 1. A new EU development policy
• Agenda for Change
2. A new budgetary context
• EU budget 2014-2020
• Funding for the 11th EDF
3. Differentiation and the 11th EDF
• Legal basis for differentiation
• Different types of differentiation
• Likely consequences for the 11th EDF
4. National and regional programming
• Programming process
• Joint programming
• Priority sectors
Contents
Page 3ECDPM
5. ECDPM Page 5
The Agenda for Change explained
5
An extension of the European Consensus on Development, the ‘Agenda for
Change’ (2011) presents a strategic shift in EU development policy, with more
focused areas of intervention;
Differentiate
partnerships based on
needs, capacities, co
mmitments, performa
nce and potential
impact, including
fragile states;
Coordinated EU
action and coherence
among EU policies
(PCD).
I) Human
rights, democracy
and good
governance;
II) Inclusive and
sustainable growth
for human
development.
PRINCIPLES FOCUS
Democracy, human rights &
rule of law; Gender equality;
Public sector management;
Tax policy & administration;
Corruption; Civil society &
local authorities; Natural
resources; Development-
security nexus.
1) Social
protection, health, education
and jobs;
2) Business
environment, regional
intregration and world
markets;
3) Sustainable agriculture
and energy.
ACTION
Joint programming
together with EU
Member States;
Modalities for joint
actions (budget
support, trust
funds, delegated
cooperation);
Innovative financing
(including blending);
Common framework for
measuring &
communicating results.
MODALITIES
6. The Agenda includes initiatives to increase the
effectiveness of EU development cooperation:
• Joint programming;
• Sectoral concentration (2-3 sectors);
• Enhanced budget support;
• Using ODA to leverage other resources (blending, DRM);
• Policy Coherence for Development (PCD);
• Differentiated approach to partner countries.
Note that 20% of EU aid should support ‘social inclusion
and human development’, an 20% of the EU budget
should contribute to ‘low-carbon resilient societies’.
The Agenda for Change (contd.)
ECDPM Page 6
7. • With the Agenda for Change, the EU subscribes
to current global trends in development and a
vision ‘beyond aid’;
• ‘differentiation’ of countries (focus on the
poorest)
• leveraging non-ODA financial resources
(blending)
• Much reaffirmation of past commitments (joint
programming, PCD), some codification of past
practice;
• Will the EU be able to put in practice this
ambitious programme? How?
A new direction for EU
development cooperation?
ECDPM Page 7
9. A new EU budget – how much
for development?
ECDPM Page 9
• Member States agreed on Multi-annual Financial Framework (MFF) (EU
budget) 2014-2020 at the European Council of 8th February.
• Negotiations still ongoing in EU: European Parliament still to give
consent, new EC proposal limits increases of aid to DCI, EIDHR and IfS;
• Resources for the external action, including development, suffered the
largest cuts:
Heading MFF 2007-2013 MFF 2014-2020 % change
MFF – Total Commitment
Appropriations
€ 993.60 billion € 959.88 billion - 3.5
Heading 4 – Global Europe (includes
DCI, IfS, EIDHR etc.)
€ 55.935 billion € 58.704 billion + 5
11th European Development Fund
(outside the MFF)
€ 22.687 billion € 26.984 billion + 18.9
2011 prices
10. • EU Member States further from 0,7%
target;
• Certain instruments / programmes see
only little growth (EIDHR, IfS, PAP, DCI);
• Increased pressure to deliver on aid
effectiveness commitments reflected in
Agenda for Change.
Implications of the budget cuts
for EU aid and programming
ECDPM Page 10
11. • 11th European Development Fund kept
outside the EU budget;
• Overall approximately 1% decrease in
funding per annum;
• EU-15 decreased contributions slightly, EU-
12 increased moderately;
• Increasing talks of review and
‘budgetization’ in the run-up to the
expiration of the Cotonou Agreement
between ACP and EU in 2020.
Funding for the 11th EDF
ECDPM Page 11
12. • Internal Agreement agreed in principle, Implementing
Regulation and Financial Regulation still under
negotiation in EDF Committee;
• Some concern over timing of ratifications of the 11th
EDF (as usual);
• Large MSs (FR, UK, DE) still have over 50% of voting
rights in EDF Committee;
• EDF preserved at the status quo, thought there are
doubts in EU Member States’ on the future of the EDF;
• New EU Member States’ increased contribution does
not mean they are more committed to the ACP.
Next steps and considerations
ECDPM Page 12
14. 1. Differentiated eligibility to
development assistance.
2. Differentiated levels of
development assistance;
3. Differentiated mix of policies and
instruments;
All types have a legal basis in the CPA.
Types of differentiation
ECDPM Page 14
15. • Differentiated treatment has historically
been part of EU development cooperation
(Lomé onwards);
• European Consensus on Development
(2005) identifies differentiation as a
‘necessity’:
• Use of cooperation modalities and levels vary
according to circumstances in partner
countries/regions;
• Criteria: needs and performance;
• LDCs and fragile states are
prioritised, ‘appropriate attention’ given to
MICs.
History and legal basis
ECDPM Page 15
16. ‘Differentiation’ is fundamental principle of ACP –
EU cooperation:
“co- operation arrangements and priorities shall vary
according to a partner’s level of development, its
needs, its performance and its long term
development strategy. Particular emphasis shall be
placed on the regional dimension. Special treatment
shall be given to the least developed countries. The
vulnerability of landlocked and island countries shall
be taken into account. Particular emphasis shall be
placed on regional integration, including at
continental level” (CPA, Article 2)
History and legal basis (contd.)
ECDPM Page 16
17. • Based on:
need, performance, capacity, commitment &
potential EU impact;
• Differentiation applied in two stages of aid
allocation:
(1)eligibility to grant-based bilateral aid (new);
(2)aid allocation at programming stage.
• Criteria for first stage:
• UMICs according to the OECD-DAC;
• More than a 1% share of global GDP;
• Other indicators (next slide).
This type of differentiation will not be
applied to the 11th EDF.
Differentiated eligibility to
development assistance
ECDPM Page 17
18. • Likely indicators used for 11th EDF:
• GNI p/c;
• Population;
• Human Asset Index (HAI);
• Economic Vulnerability Index (EVI);
• Worldwide Governance Indicators (WGI).
• Other indicators suggested:
• Environmental Performance Index (EPI);
• Human Development Index (HDI);
• Absorption capacity.
• Provisions for state fragility.
Differentiated levels of
development assistance (contd.)
ECDPM Page 18
19. Envisions a transition of certain countries to different aid
and non-aid modalities through thematic envelopes (DCI)
and particular instruments (EIDHR, PI):
• Loans (esp. blending of loans and grants);
• Technical cooperation;
• Support for trilateral cooperation.
Differentiated mix of policies
and instruments
ECDPM Page 19
20. • Criteria for differentiation have not changed
much from the 10th EDF – important factor is
the weighing;
• LICs and LMICs already the focus of the EDF
(over 90% of allocations, increasing trend);
• Explicitly stated differentiation policy
indicates that UMICs will likely receive lower
aid allocations;
Key question: how will differentiation
affect programming, and what is the
‘destination’ of differentiation?
Likely consequences for the 11th
EDF
ECDPM Page 20
22. • Programming principles closely linked to Agenda for
Change;
• Sector definition / choice:
• Alignment to partner country/region definitions;
• Drivers: 1) ownership of sector priorities and policies, 2)
expected results and impact, 3) EU priorities and comparative
advantage;
• Implementation modalities should not drive;
• Specific allocation may be made to strengthen CSOs and LAs.
• Sector concentration:
• SIDS only one sector (critical mass);
• Possibility of additional interventions in fragile states.
Programming instructions for Delegations possibly
adjusted at a later stage in light of MFF outcome.
Guiding principles and
instructions for programming
ECDPM Page 22
23. First phase completed: Delegations have
submitted analysis and proposals for overall
lines of EU response (or draft joint-
programming document) to EEAS/DEVCO late
September 2012;
EEAS/DEVCO have not yet responded with
instructions to all Delegations to start the
second phase of programming;
Some Delegations started drafting MIP/NIP
already.
Outline of the programming
process
ECDPM Page 23
24. • Simplified process, yet still delayed;
• Though process not the same as in the past, old
habits continue:
• Little transparency in designing and programming aid
allocations per country;
• prescriptive approach to programming leading to
tensions with partner countries.
• Strong push by EC interest for sustainable agriculture
and energy; move away from infrastructure;
• B-envelopes will be at € 0 unless need arises;
• Regional programming yet to begin though guidelines
exist.
Programming process so far
ECDPM Page 24
25. • Joint programming aims at delivering more
with less resources and enhancing cost-
effectiveness of aid through coordination
among the Commission and EU Member
States;
• The initiative is at various stages in
Ethiopia, Ghana, Laos, Rwanda, Guatemala
but potential for joint programming is being
assessed in around 40 countries;
• A list of countries where joint programming
will be undertaken in the future is expected
by June 2013.
Initial experiences with joint
programming
ECDPM Page 25
26. Initial experiences with joint
programming (contd.)
ECDPM Page 26
• Aid fragmentation is the main rationale
supporting EU joint programming;
• Other drivers, both technical and political, push
donors to undertake joint programming – but
Member States have different approaches;
• Partner country’s role generally limited (except
in Rwanda) yet different reactions of partner
governments;
• Scope for other donors’ involvement provided
they adhere to rules and fundamental principles
(alignment of programming cycles).
27. • The Agenda for Change reflects an EU aid development
policy that proposes to do more/better with less and
contains strong ‘beyond aid’ elements;
• Differentiation principle likely to lead to reduced aid
allocations to UMICs – no clarity on the ‘destination’ of
graduation;
• Programming process delayed, prescriptive or
intransparent in certain places;
• Prepare for a new post-2015 development
framework, with more emphasis on domestic resource
mobilisation and other financial flows for development;
• Reflect on EU-ACP relations in anticipation of a new
post-2020 framework.
Key conclusions
ECDPM Page 27
29. ECDPM Page 29
EUR million – 2011 prices. Data from EUCO37/13
Annual commitment appropriations for
EU development cooperation 2014-2020
Commitment
appropriations
2014 2015 2016 2017 2018 2019 2020 Total
Heading 4 - Global Europe 7.854 8.083 8.281 8.375 8.553 8.764 8.794 58.704
Emergency Aid Reserve 0.28 0.28 0.28 0.28 0.28 0.28 0.28 1.96
11th EDF (outside the MFF) 2.952 3.868 3.911 3.963 4.024 4.094 4.174 26.984
Total 11.086 12.231 12.472 12.618 12.857 13.138 13.248 87.648
30. Comparison of the EDFs
ECDPM Page 30
EUR millions – current prices, adapted from Gavas, 2013
Years
covered
Total
amount
Average
amount of
funding per
year
No. of
ACP
countries
No. of
EU
countrie
s
EDF 1 1959-1964 569 -- -- --
EDF 2 1964-1970 730 121.67 18 6
EDF 3 1970-1975 887 177.40 18 6
EDF 4 1975-1980 3,053 610.60 46 9
EDF 5 1980-1985 4,207 841.40 58 9
EDF 6 1985-1990 7,882 1,576.40 65 10
EDF 7 1990-1995 11,583 2,316.60 68 12
EDF 8 1995-2000 13,151 2,630.20 70 15
EDF 9 2000-2007 14,300 2,042.86 77 15
EDF 10 2008-2013 22,687 4,537.40 77 25
EDF 11 2014-2020 26,984 4,497.33 79 27
31. 1. EC 11th EDF Impact Assessment (Dec ‘11)
“11th EDF should allow for a more differentiated approach”
argues for sharpened geographical focus & alternative forms of
cooperation with more advanced partners
2. EC proposal for Internal Agreement 11th EDF (Dec ‘11)
No explicit reference to differentiation
3. Implementing regulation & Financial Regulation (2012-2013)
Not formulated yet – remains to be seen
4. Joint programming ACP – EU (2013)
• EU gives ACP indication of indicative amounts per country &
region
• EU & ACP jointly agree on forms of cooperation (policy
mix, use of blending mechanisms,…)
11th EDF decision-making
process
ECDPM Page 31
32. 1. ‘Differentiated mix of policies and instruments
CPA goes ‘beyond aid’ (e.g. trade & political
dimensions)
CPA refers to innovative financing mechanisms since
2010 revision
2. Differentiated level of development assistance
levels between countries & regions have always
differed
‘Needs’ and ‘performance’ criteria only
(CPA, Annex IV), while Agenda for Change also
promotes ‘capacity’ and performance’ criteria
But: capacity & impact criteria proposed for DCI
post-2013 quite similar to performance indicators
10th EDF (e.g. economic growth, FDI)
Legal basis for different types of
differentiation
ECDPM Page 32
33. 3. ‘Differentiated eligibility of development
assistance
Views of applicability of approach to halt bilateral
grant assistance to Upper-Middle Income Countries
differs
But: theoretically EC could allocate one euro A-
envelope
Legal basis for different types of
differentiation, contd.
ECDPM Page 33
34. • Needs – allocation indicators:
Population size
GDP per capita
Demographic dynamics (youth dependency)
AIDS prevalence rate
Human poverty index
Malnutrition
Vulnerability based on Economic growth fluctuations, structural
handicaps of LDCs & enclave or landlocked countries
• Performance indicators
Aid performance (absorption capacity, aid dependence)
Macroeconomic performance (recent economic growth
rates, environmental performance, external debt, reallocations at
EDF-9 mid-term review)
Investment climate (external tariff protection, FDI, gross domestic
capital formation)
Political performance (based on national programming dialogues)
Social performance (public spending on health and education divided
by spending on military, progress on MDGs 2 and 5)
10th EDF indicators for
differentiation
ECDPM Page 34