Devex Newswire: France's aid cuts stir controversy

France's recent aid cuts and declining ODA disbursement mark a shift from past commitments, sparking criticism from civil society and raising concerns over the future of its foreign largesse.

Also in today’s edition: We look at remittances as a development financing vehicle, and focus on South African health care for migrants.

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Macron aid outcry

In the world of development, France has long been a steadfast foreign aid friend. But recent events have raised more than a few eyebrows and left civil society dismayed to say the least, write Devex Senior Reporters Vince Chadwick and Adva Saldinger.

The first blow came in February when economy minister Bruno Le Maire announced a €742 million cut — some 13% — to France's official development assistance for this year. The decision, attributed to a revised growth forecast, hit other areas of spending too. Nongovernmental organizations raised their hackles, calling the decision a regressive step backward from President Emmanuel Macron's previous promises to champion ODA.

Just as the dust settled on that news, another blow landed in April. When OECD released its report on 2023 ODA, it saw that France disbursed 11% less than a year earlier.

Murmurs of discontent abound. “What’s happening in France regarding ODA feels like the masks come off,” one advocate tells Devex. “The international community is finally able to see that behind the French government’s proactive approach and all the communications efforts, there is a lot of blah-blah-blah.”

Instead of upholding principles of global largesse, Macron is crunching domestic political numbers and trying to woo far-right voters, critics say. “Instead of defending why France has a duty to support the most vulnerable populations, the government chose to prioritize domestic interests,” the advocate says.

France, of course, hits back, saying overall aid spending has increased since Macron took office. 

But despite this, the reality remains that cuts are likely to continue. Rémy Rioux, head of the French Development Agency, told Devex in Washington, D.C., last month that the aid budget could be trimmed again as the French government tries to rein in its budget deficit.

Read: Is Macron still an aid champion? (Pro)

+ Join Devex and a panel of experts on May 15 for a discussion on why European donors are cutting their aid budgets and what aid groups can expect from EU donors in the foreseeable future. Register now.

Private sector to the rescue?

Preaching to the choir is a feature of nearly every development convening. That’s what makes the annual Milken Institute Global Conference different: Many participants at this leading finance gathering in Beverly Hills, California, don’t know much about the development space, and even among those who do, there’s not universal agreement about what ought to be done to improve it.

In private conversations in the past two days, leaders across the business and investment community have shared their skepticism of official aid agencies and all things “impact,” Devex President and Editor-in-Chief Raj Kumar tells me. Instead, as might be expected, there’s a lot of focus on the role of corporations and private investment.

There’s an overwhelming sense that there are private sector solutions to major global challenges such as renewable energy and regenerative agriculture, but also a feeling that these solutions remain too small, siloed, and stuck in the vortex of traditional approaches. There’s also fear that political headwinds are growing — DEI and ESG are now only whispered about in hushed tones, for example.

On that note, no conversation here is safe from the inevitable pivot to the U.S. presidential election and what the result — or an ugly contested result — might portend for all these high-minded efforts to address climate, inequality, and democratic backsliding around the world.

One key topic discussed in these halls — given its impact on those very elections and many others — is migration. Raj will be moderating a session on this very topic today at 11:30 a.m. Pacific Standard Time. The conversation features, among others, Carlos Vecchio — the co-founder of Venezuela’s leading opposition political party — who will speak about the 8 million Venezuelan refugees and what their story tells us about the future.

+ Spotted at Milken: Ertharin Cousin, Janti Soeripto, Sherrie Westin, Matthew Bishop, Neil Buddy Shah, Jenny Yip, John Schellhase, Salah Goss, Erin Harkness, Kristalina Georgieva, Jin Liqun, and Ilan Goldfajn.

Remittances double down

Traditional avenues such as ODA and foreign direct investment have long dominated the development finance spotlight. But there’s an external financial powerhouse for low- and middle-income countries that’s often overlooked: remittances.

The financial lifeline, which flows from migrants to their home countries, constitutes a substantial source of income, surpassing the combined number from official aid and foreign investment, writes my colleague Alecsondra Kieren Si.

At the end of last year, the World Bank published a brief about migration and development that contains preliminary estimates for 2023, showing that remittances to the global south are likely to be worth $669 billion.

There are other sources of funding from the global north not included in the report, such as philanthropic cash and individual donations via NGOs. But since there are also significant amounts of ODA that never reach the global south, it’s likely that remittances now exceed all development funding to LMICs combined.

Over the past eight years, remittances to LMICs have outpaced global economic growth, swelling by 42.4%. Even when the COVID-19 pandemic hit, remittances were pretty resilient, dipping only slightly as global economies grappled with economic uncertainty.

Read: How remittances are worth more than all development funding combined (Pro)

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EBRD presidency nonnail-biter

The vote for president of the European Bank for Reconstruction and Development takes place next week, but it’s not quite the nail-biting cliffhanger of a certain other presidential race this year.

In fact, the bank’s current leader, former French Treasury Director-General Odile Renaud-Basso is the only candidate — but she still needs to clear some hurdles before being confirmed for a second four-year term on May 16.

Renaud-Basso needs “double -majority” backing, first from most of the EBRD’s 75 governors — one for each of its 75 members — who must also deliver a majority of voting power, determined by the widely varying number of subscribed shares each holds, my colleague Rob Merrick tells me.

At a briefing ahead of the vote, she told Rob she believes the shareholders welcome the “continuity” her renewed leadership will bring at a time of significant change at the London-based bank.

“It's a bit strange to go into a campaign as the only candidate,” Renaud-Basso admitted, while pointing out that EBRD presidents have been reelected unopposed previously, across its 33-year history.

She added: “Four years is relatively short, and I started with COVID for almost one year. So having two terms, a longer mandate, is very often seen as a good thing in order to be able to implement strategic decisions that have been taken for the bank.”

From the archives: A Q&A with EBRD President Odile Renaud-Basso

MSF clinic dilemma

When Médicins Sans Frontières stepped in to manage a community clinic in Tshwane, South Africa, it aimed to be a haven for undocumented migrants, asylum-seekers, and refugees seeking medical care — a sanctuary for those facing discrimination in accessing health services.

But what began in 2019 as a beacon of hope soon became a flashpoint within the community. Local residents, believing the clinic catered exclusively to foreign nationals, grew resentful, especially as they saw the superior quality of care. Musa Ndlovu, who oversaw the MSF clinic, witnessed tension, with residents questioning why outsiders received preferential treatment.

This dilemma exposes a broader issue for NGOs and civil society groups wanting to address gaps in South Africa's ailing health care system. Tailoring services to refugees and migrants, while necessary, deepens divisions and fuels xenophobia, writes Devex contributing reporter Andrew Green.

Complicating matters further is the arbitrary nature of determining who can access such specialized services. While refugees and migrants face discrimination, so too do South Africans migrating within their own country. This shared struggle for equitable health care underscores the complexity of the issue.

For Ndlovu and others, the lesson is clear: integration, not isolation, is key. As MSF's Tshwane center closed its doors last year, Ndlovu reflects on the lessons learned.

Read: The struggle to provide health care to refugees, migrants in South Africa

In other news

The World Bank approved a $138.5 million loan for Namibia to upgrade its grid for renewables, aligning with its ambitions as a future renewable energy hub. [Reuters]

Ghana's Supreme Court will start hearing a case over the constitutionality of its proposed anti-LGBTQ+ bill. If passed, the law could jeopardize the country's $20 billion debt restructuring and test the World Bank's stance on LGBTQ+ rights. [Bloomberg]

3 million people are now internally displaced in Myanmar, a 50% jump in the last six months as fighting between armed groups and the military intensified. [Al Jazeera]

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