In this ECDPM video, Klaus Rudischhauser, Deputy Director-General for Policy and Thematic Coordination at the European Commission, talks about where and how EU development assistance should be targeted.
He says money should be given to those countries most in need, and that other forms of development initiatives – such as domestic resource mobilisation – should be used in upper-middle income countries. Development assistance is “seed money to drive processes, to promote reform and to assist the country in implementing those reforms.”
He says that the Commission will “produce a policy document – before the summer – showing the relative contribution and importance of the various sources of financing”, filmed on the fringes of ECDPM’s Board and eminent persons meeting around the future of EU-Africa relations.
It’s clear that development money, official development assistance in the old sense of the word would become less and less important therefore it is clear that over the next few years there will be a discussion about where does the money come from for these development issues.
If I can just give you a short example, there will still be development money, but there are remittances, there is foreign direct investment, there is trade, there is domestic resource mobilization. All this together contributes to the overall financing of development and sustainability. In order to put in all these different contributors into perspective we will produce a policy document – before the summer – that will show the relative contribution and relative importance of the various sources of financing which we will need to look at.
It basically means putting development assistance, which will still be a very important part, into perspective by putting it into the wider framework of other sources of financing.
It’s not so much a question of less money being available, because obviously you never have as much money as you want. You will want to concentrate your money on those countries that are most in need.
We can help these countries in reducing their poverty by helping them to develop social protection schemes, making growth more inclusive. That is something where we can provide good advice, where we can cooperate and use, in a very effective way, the money that we are still quite willing to set aside for these countries.
We have been engaged for a very long time in policy for development and in cooperation with developing countries. The fact is very simple but also very positive: many of our partner countries have developed. They are now upper-middle income countries and therefore we have to think about the way to work with them. If you are an upper-middle income country your own revenue and budget is starting to become the main source of whatever is happening in the country and society, and development assistance is becoming a very small share.
That means you have to re-think how you use your development money in such a country. It can no longer be money that actually replaces government action. It can only be seed money to drive processes, to promote reform and support, assist the country in implementing those reforms. It can no longer be money that is destined for poverty reduction simply because the volumes are not there and the country has the resources to do this.