EU aid-for-trade for poorest countries falls short of targets, auditors warn

The European Union is failing to live up to its pledge to direct more trade-related aid to the world’s poorest countries, according to a new report from the European Court of Auditors, or ECA. The report warned that the bloc is far off track to meet its 2030 target of 25% and recommends readjusting its commitment to something more reachable. The special report, released Tuesday, found that the share of EU and member state aid-for-trade funding going to the least developed countries, or LDCs, has not only stagnated but declined — dropping to just 12% in 2022, well below the 25% commitment set for 2030. With climate and debt vulnerabilities mounting, the findings raise fresh questions over whether the EU can translate political pledges into meaningful trade gains for LDCs. “The EU trade strategy was updated in 2017 to focus on least developed country needs,” Bettina Jakobsen, a member of the European Court of Auditors, told Devex. “But it was actually not translated into an operational action plan. So it’s very unlikely that the EU will meet its 25% funding target by 2030. It’s our recommendation to the commission that it should reassess whether the target is still appropriate.” EU Aid for Trade strategy is a subset of European development assistance that specifically targets trade-related needs in partner countries. Rather than focusing broadly on poverty reduction, humanitarian relief, or social sectors such as health and education — as much of EU aid does — aid-for-trade is designed to help countries build the infrastructure, institutions, and productive capacity they need to participate in regional and global markets. “The ECA is right to remind the Commission of the need to pay greater attention to LDCs,” San Bilal, executive director of the think tank, the European Centre for Development Policy Management, or ECDPM, told Devex. EU aid, meanwhile, has remained heavily concentrated in other developing countries, with Turkey, Egypt, Ukraine, Morocco, Serbia, and India together receiving nearly three times more than all LDCs combined from 2017 to 2022 — in line with a general trend in which more aid-for-trade focuses on slightly wealthier countries rather than the countries that need the most assistance. “It’s not that the EU has not prioritized development assistance,” said Jakobsen. “The money is still there, the grants, the loans, etc. But instead of going to the least developed countries, it’s going to other developing countries.” Part of the reason for this is a lack of regional cooperation and institutional frameworks, the Court of Auditors said. “[Developing countries] might be put in a situation whereby they cannot really benefit from the aid-for-trade strategy,” said Jakobsen. “Which means they will sort of be left stranded on the platform while other more mature and advanced developing countries can take advantage of development assistance.” A ‘Europe First’ world The EU’s development assistance is largely outlined in its Global Gateway strategy, which was first launched in 2021 as a broader initiative aimed at mobilizing investment in digital, energy, and transport infrastructure. Global Gateway advocates blending grants with loans to crowd in private finance. In August, the EU published a draft of its next seven-year budget, including an update to the Global Gateway. Though the budget is not finalized, it showed an expected trend toward prioritizing EU corporations and EU interests in trade. Auditors warned that because LDCs often struggle to access loans or attract private investors, they risk being sidelined in a Global Gateway model that leans heavily on private-sector financing. “While the Global Gateway is well placed to promote the EU aid for trade agenda, there is a substantial risk that the focus will increasingly be on larger geostrategic projects in emerging economies, at the expense of smaller ones in more challenging and poorer contexts based mainly on development objectives,” said Bilal. Strengthening the alignment between the two could help ensure that the poorest countries are not left behind as the EU shifts its development model toward investment-driven partnerships. The auditors acknowledged that EU-funded projects in countries such as Angola, Cambodia, Malawi, and Rwanda were largely in line with national needs and had delivered planned outputs. But they warned of risks to long-term sustainability, citing fragile institutions, weak business environments, and high staff turnover in ministries that could undermine results. They also flagged shortcomings in monitoring and reporting: progress reports rely on commitments rather than payments, suffer from long delays, and provide little clarity on how regional programs actually benefit individual LDCs. Crucially, they found “very limited measurement” of the impact EU support is having on trade. In its formal reply, the European Commission accepted the auditors’ recommendations but made no firm new commitments. Officials said they would analyze why the 25% target has not been met and consider whether it remains appropriate, with the possibility of developing a dedicated action plan for LDCs by the end of 2026. They also pledged to clarify how the Global Gateway initiative supports aid-for-trade goals, and further promised to strengthen coordination between national and regional EU delegations and to make reporting timelier and more meaningful. Still, Brussels stressed that it cannot preempt decisions on post-2027 programming, meaning future allocations will depend on broader political priorities. The commission did not respond to a request for comment from Devex.