A new factsheet on where and how EU aid is spent, adapted from work by our UK member Bond.
1. What is ‘EU aid’?
Aid is money that is classed as Official Development Assistance (ODA) – public grants or loans to developing countries to promote economic development and welfare. The European Union has a complex system of spending ODA – individual member states have their own ODA programmes but so does the European Union as a whole.
‘EU aid’ usually refers to ODA that is spent by the EU institutions, including the European Commission’s EuropeAid department. This includes a number of programmes, such as the Development Cooperation Instrument (for Asian and Latin American countries) and the European Development Fund (for African, Caribbean and Pacific countries).
EuropeAid also administers a number of other programmes, including funds to support the EU‟s neighbours and to help countries prepare for EU membership, where not every financial transfer qualifies as ODA
2. What has EU aid achieved?
In the last ten years EU aid:
- gave more than 31 million people access to safe drinking water for the first time
- stopped 24 million from going hungry
- gave more than 9 million children a primary education
- equipped 2.1 million rural people with modern energy services
- helped protect more than 1.5 million hectares of forest
- vaccinated more than 5 million children against measles
- supported 58 election observation missions
3. How much does the EU spend on aid?
The European Commission spent €11.3 billion on aid in 2011, making it the largest multilateral donor in the world.
4. Why should Member States’ aid go through the EU?
With an annual budget of around €11.3 billion the European Commission is the largest multilateral donor in the world
and a crucial actor in developing countries. There are several good reasons why Member States should give a proportion of its aid to the EU to spend:
- EU aid is better than the individual aid programmes of most of the EU 27 member states. One large donor has the potential to deliver large-scale aid more efficiently than 27 smaller donors. So encouraging other EU countries to give more of their aid to EuropeAid to spend is a sensible strategy for getting better value for money and better results.
- Spending aid money through the EU helps reduce waste. Recipient countries often complain about having to report to a large number of donors who often do not coordinate with each other. Having a single donor avoids duplication and reduces reporting burdens. A recent study showed that improved coordination could result in annual savings of €5 billion.
- Member States can gain on-the-ground presence and influence from the EU’s work in a number of developing countries where they themselves may not have a presence. EuropeAid provides aid to poor countries that lack Member States funding. Eritrea is the fifth poorest country in the world but not a large recipient of bilateral aid from the UK, France or Germany. EU aid in Eritrea supports agriculture so that communities can cope with droughts and avoid famine, and constructs roads so that people can get their goods to market, building businesses and helping lifting themselves out of poverty.
- EU aid is not perfect – government spending or private investment never is. But the best way to improve EU aid is to engage with the European Commission and other EU Member States. Reducing it would mean either lower quality aid spent by individual EU Member States or less aid overall.
5. Who decides what EU aid is spent on?
EU Member States have a strong say in determining how EU aid is spent. The main EU aid programme for Africa is the European Development Fund (EDF) and it works like this:
- All EU Member States participate in the EDF committee and each project is approved by a vote. At least 13 Member States (out of 27) must vote in favour for a project to be approved.
- The weight of each vote is partly determined by how much money the member state contributes to the EDF.
- Between January and June 2012 there were four committee meetings and 36 votes.
- Before starting a new project, European Commission’s on-the-ground delegations consult Member States.
6. What is EU aid spent on?
The EU provides aid to about 130 countries.
The main recipients of EU aid in 2011 were:
- Sub-Saharan Africa (29% of EU aid)
- Europe (20%)
- Asia (18%)
- Latin America (6%)
- North Africa (6%)
The biggest areas of spending in 2011 were:
- Social infrastructure: education, health, water, government and civil society (38% of spend)
- Humanitarian aid: emergency response, reconstruction, relief and rehabilitation, disaster prevention and preparedness (14%)
- Economic infrastructure and services: transport, communications, energy (13%)
- Production: agriculture, forestry and fishing, industry, mining and construction, trade and tourism (10%)
- Budget support, food aid, food security (10%)
By country type (2010 data):
- Least Developed Countries (45% of spend)
- Other Low-Income countries (8%)
- Lower Middle-Income countries (33%)
- Upper Middle-Income countries (14%)
72% of the world’s poor people now live in middle-income countries so a decision to give aid only to the ‘poorest countries’ would mean ignoring the plight of 960 million men, women and children. A more sophisticated approach that considers the circumstances of each individual country is needed. A plan to ensure that middle-income countries are eventually able to meet the needs of their own citizens without external aid is essential.
7. Has anyone been looking at the quality of EU aid before now?
Yes. CONCORD and its members have been working on EU aid quality for decades. We’ve been continously calling for aid to be more transparent and get to the people that need it most.
8. How good is EU aid?
The OECD’s peer review of EU aid in 2012 found that the EU was a “formidable player in global development” that had taken “positive steps to make the programme more effective and increase its impact” since its previous peer review in 2007. However, it still needed “to make more progress in a number of areas”.
The European Commission is the fifth (out of 72) most transparent donor in the world. It is ranked above every EU member state except the UK and the Netherlands.
9. Do Iceland and Turkey receive EU aid?
Iceland does not but Turkey does.
As a candidate for future EU membership Iceland receives some money to help it prepare to meet EU rules and standards. But this is not ODA since Iceland is not classified by the Organisation for Economic Cooperation and Development (OECD) as a developing country. And Iceland also contributes to the EU budget – about as much as it receives.
However, Turkey is officially classified as a developing country by the OECD so the money it receives from the EU is classified as ODA. But again, much of the money is designed to prepare the country for eventual EU membership rather than to combat poverty.
EU Member States decide the rules of financial assistance; EU institutions just implement this policy.
Adapted from Bond’s ‘EU Aid: The Facts’