New vision for EU development: a real change for the world’s poorest?

Today the European Commission launched a new ‘Agenda for Change’ for EU development policy, laying out Europe’s new vision for its relations with developing countries.

Oxfam welcomes the blueprint as it places greater emphasis on health, education and agriculture – sectors that lie at the heart of poverty eradication and ensure that the poorest people have access to food, work and basic services. However, the international development agency warns that the proposal could shut out the world’s poorest by relying too much on the private sector to deliver development results without evidence that this will result in change for the poorest people, and by cutting aid to middle income countries - where 72% of the world’s poorest live.

Natalia Alonso, Head of Oxfam International’s EU office, said:

“We applaud the EU’s decision to focus on health, education and agriculture, as these sectors have the greatest impact on improving the lives of those most in need. But the real question is whether the ‘Agenda for Change’ will lead to change for the sake of it or whether it will result in real change for the poorest and most vulnerable.

“It is shocking that no real lines have been drawn to define the limits of the private sector’s role in development. We cannot sit on our hands and assume that the benefits of the private sector will simply trickle down and reach those most in need.

“The proposal to cut aid to some middle income countries will most certainly have an impact on the poor. Take Angola or Peru as possible examples. It is deeply misguided to believe that this sort of countries can do without assistance as all together are home to most of the world’s poorest people.”

Oxfam reaction to Communication on Budget Support

The European Commission also published today a paper on budget support. Oxfam strongly welcomes the EC’s determination to continue investing in this modality by which donors provide aid directly to developing country governments to contribute to poverty reduction plans, rather than to specific projects. The development agency also welcomes its willingness to give a greater role to civil society as watchdog.

But Oxfam warns against a risk of politicization of aid, and that donors risk undermining the benefits of budget support by focusing on placing more conditions on this aid.

Natalia Alonso, Head of Oxfam International’s EU office, said:

“We welcome the Commission’s leadership in promoting budget support. EU member states must now get behind it and place it at the heart of Europe’s approach to poor countries ahead of the High Level Summit on Aid Effectiveness in Busan next month”.  

“Providing aid directly to developing country governments offers one of the best chances to meet developing countries' needs, rather than the political and economic strategies of donors. That’s why we are surprised that the Commission suggests attaching more political conditions to recipient countries. Budget support must remain a poverty-reduction tool – not a political one.”

Oxfam is disappointed that a recent statement by Development Commissioner Andris Piebalgs saying 50% of EC aid should be channelled as budget support was not taken on board in the Communication. This target was also supported by his predecessor Louis Michel.

Notes to Editors

1. On Middle Income Countries (MIC)

China and India together account for about half of the world’s poor. However, the story isn't just that India and China have been upgraded to Middle Income Countries (MIC) status. Even if China and India are withdrawn, the proportion of the world's poor in MICs has still tripled – this is a range of other countries like Nigeria, Pakistan, Indonesia but also some surprising ones such as Sudan, Angola and Cameroon.
More data in The Guardian blog – “Why give aid to middle-income countries?”
http://www.guardian.co.uk/global-development/poverty-matters/2011/feb/23/aid-to-middle-income-countries

2. On Budget Support

Oxfam says that budget support is one of the best means of ensuring that development focuses on developing countries' needs, rather than on the political and economic strategies of donors. It can improve the effectiveness of aid – fostering greater co-ordination among donors, and the associated administrative costs are typically far lower than for project aid. Examples:  
•    EU budget support in Rwanda has helped the government to increase vital costs in health -supporting recruitment, training and salary costs of doctors and nurse, the number of deaths recorded from Malaria has fallen from 51% in 2000 to 26% in 2007. http://ec.europa.eu/europeaid/infopoint/publications/europeaid/documents/budgetsupport08_en.pdf
•    In 2008, government spending on education increased by nearly one-third in eight of the countries that received some of the largest amounts of general budget support from the European Commission.

More: Background information on the EU's "Agenda for Change"