Less money for development aid? How will that impact the next financial framework?

Published: 07 December 2010

The financial situation in many states – especially the EU member states speaks for itself. More and more countries will have to or are cutting down their public spendings on development aid. This raises the question about how the new financial framework of EU policy could look like and what kind of instruments could be used. Several experts met today to discuss this issue on the EDDs. This difficult question can be tackled through different approaches.

Raising involvement of the private sector

“If there will be less money available, we have to take into account other possibilities to support developing countries. Where the state governance cannot help anymore, the private sector should step in”, explains Tamsyn Barton, Director General for Operations outside the European Union and Candidate Countries, European Investment Bank. In her opinion the private sector should not only be more involved but also be interested in a long-term investment to ensure that developing countries will have time to develop and will not leave to themselves after the investment.

Investment in investment

According to Prof. Paul Collier, Director of the Centre for the Study of African Economies, University of Oxford, UK, we have to believe in “investment in investment”: “We have be make sure that the investment of the EU or the private sector in developing countries is well done”, so Collier. He is sure about the fact, that if Africa develops, “there will be a lot of benefits for Euopean countries, because they will profit from booming African countries by empowering trade within African coutries and EU countries”. Development aid or investment can be result of compassion about developing countries, but according to Collier and also be and should be self-interest. “We are the biggest donor and the biggest actor of development aid. We should be focusing on Africa, it is our new neighbor”, ensures Klaus Rudischhauser, Director for General Affairs, Directorate General for Development and Relations with ACP States, European Commission.

Raising aid effectiveness

Less money available for development aid also leads to the discussion of aid effectiveness: “We have to make sure that of each Euro of development money we will get more out of it, we have to get more value out of that and make aid more effective”, claims Klaus Rudischhauser, Director for General Affairs, Directorate General for Development and Relations with ACP States, European Commission. “This can be done by investing in infrastructure of the facilities in the development countries themselves to make sure that the money can be monitored in a better way”, says Kampeta Sayinzoga, Permanent Secretary & Secretary to Treasury, Ministry of Finance and Economic Planing, Rwanda.

There is still a lot to do to face the challenge of a new financial framework of EU policy. This panel discusssion on the EDDs have at least been a first step to addressing this important issue.