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© UNHCR / C. Sattlberger I External aid: A new Policy, a new Management Structure The European Union is a major player in international co-operation and development aid. It is also the world’s largest humanitarian aid donor. Today, the European Community has political and financial responsibility for over 10% of the world’s public development aid (PDA), compared with 5% in 1985. In order to improve the quality and the impact of its contribution to development efforts worldwide, the European Commission set, on 26 April 2000, new directions for its development policy, centred on the primary objective of reducing poverty. Parallel with this, the Commission also decided to reform the way it manages third country aid, so as to improve project quality, to cut implementation time, to harmonise and simplify financial, technical and contractual management, and to increase both the impact and visibility of foreign aid.
A New Policy People sleeping beside animals in the street is not an uncommon sight in certain parts of the world. 10 ANNUAL REPORT ON THE IMPLEMENTATION OF THE EUROPEAN COMMISSION’S EXTERNAL ASSISTANCE 1. A new strategy for poverty alleviation It is an uncomfortable but inescapable fact that, at the start of the 21st century, of the world’s 6 billion people, almost half live on less than US$2 a day and 1.5 billion – a quarter – live on less than US$1 a day. The problem of poverty is proving so intractable that the number of countries classified by the UN as “least developed” has risen from 24 in 1971 to 49 in 2001. The European Community and its Member States are strongly committed to reaching the international development targets for poverty reduction set by the United Nations at the second World Summit for Social Development, held in Geneva in 2000. These targets, now referred to as the Millennium Development Goals, include reducing the proportion of people living in extreme poverty by half before 2015, with the term ‘extreme poverty’ referring to people living on less than US$1 a day. In 2000, the Commission proposed new guidelines for the EC’s development policy. (4) These were endorsed by the Council in a Joint Statement with the Commission in November 2000 (5) and commit the Commission to: Mainstreaming poverty reduction In the Amsterdam Treaty, the campaign against poverty in developing countries is stated as one of the three main objectives of the EC development cooperation policy. (6) This ties in with the other two goals of the sustainable economic and social development of the developing countries, and more particularly the most disadvantaged among them, as well as the smooth and gradual integration of the developing countries into the world economy.As a result, poverty reduction and its overall eradication in all developing countries is the overarching objective of the EC’s new development policy. The Cotonou Agreement, (7) which sets out the legal framework for trade and development co-operation between ACP countries and the EU over the next 20 years, also specifically refers to poverty reduction and eradication as the central objective of EU-ACP cooperation (Article 19). Poverty reduction corresponds to one of the five pillars on which the new agreement is based. The Commission is also active in the construction of Poverty Reduction Strategy Papers (PRSPs). The PRSP concept was launched by the World Bank to provide a framework for mainstreaming poverty reduction in government and donor policies and to ensure donors co-ordination. The central feature of the PRSPs is that country ownership of the strategy is paramount and governments have the responsibility for both the design process and the final product. PRSPs should be developed through a participatory process involving all stakeholders including the civil society and donors. The PRSPs now provide an important framework for the different aspects of the 9th European Development Fund (EDF) and by the end of 2000, the European Commission had already undertaken the assessments of the interim PRSPs of several developing countries: Benin, Kenya, Chad, Uganda, Sao Tome, Burkina Faso and Ethiopia. The PRSP concept signifies greater support for agreed public expenditure plans which are focused on poverty reduction. This in turn implies a move towards budget support. As a result, the EC is working with other donors to develop sector approaches which contribute towards poverty reduction. This Sector Wide Approach (SWAp) defines a new way of working between government and donors through a long-term partnership. With a SWAp, all financial assistance from donors supports a single sector policy and expenditure programme led by a government. Donors move a greater part of their support through the recipient country’s public sector systems. SWAp has now become the preferred approach towards supporting pro-poor policy reforms in the social service sectors in developing countries, including the health and education sectors. (4) COM (00) 212 final of 26 April 2000 "Communication from the Commission to the Council and the European Parliament. The European Community's Development Policy". (5) The European Community's Development Policy - Statement by the Council and the Commission (10 November 2000). (6) Article 177 of the Amsterdam Treaty . (7) ACP-EU Partnership Agreement, Cotonou, 23 June 2000. © Santiago Herrero Villa
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