France aid reforms and how they affected 2018 funding commitments

After a steady five-year decline, France’s official development assistance finally rose in 2017, to $11.4 billion or 0.43% of its gross national income. This restored French ODA to 2012 levels. The country’s development spending is now slated to increase by €6 billion ($6.8 billion) over the course of President Emmanuel Macron’s mandate. France’s development cooperation has long suffered from a lack of political commitment and strategic direction but has been undergoing a revival since the election of Macron in 2017, as part of a plan to make development cooperation a centerpiece of French foreign policy. In August 2018, Macron backed a bill to reset its development priorities. Plans included strengthening grant assistance, particularly to health and education; raising €5 billion in climate finance by 2020; refocusing aid on fragile and least-developed countries, especially in the Sahel; and creating a new development council chaired by the president. For 2019 alone, Macron has set aside an extra €1 billion for ODA, aiming to spend 0.55% of GNI on ODA by 2022. The new funds include €500 million for education, youth, gender equality, health, and nutrition; €200 million for climate and biodiversity; €200 million for crisis and fragile situations; and €100 million for decentralized cooperation and governance. But because France’s ODA allocations stem from more than 2 dozen budget programs and extra-budgetary funds, they can be extremely challenging to monitor and assess. To shed some light on the country’s recent development spending, Devex decided to dig into the open data portal of the French Development Agency, AFD. We compiled and analyzed project-level data published by AFD and the Ministry of Europe and Foreign Affairs, or MEAE — two entities that manage most of France’s bilateral assistance. Official start dates are not assigned to funded projects, so we looked at the date of each project’s first disbursement. Our analysis indicates that France committed a total of €1.6 billion in bilateral ODA through AFD and MEAE in 2018, 98% of which was channeled through AFD. While this is a decrease from 2017 — when bilateral commitments amounted to approximately €2.4 billion — Macron’s push to increase France’s ODA budget is likely to result in higher allocations from both AFD and MEAE in the near future. This analysis does not cover PROPARCO, AFD’s private sector financing arm. Geographic allocations While the continent received the largest share of allocations from both AFD (63%) and MEAE (86%) commitments, AFD has a relatively strong focus on Asia too. In 2018, the agency dedicated 20% of its commitments to Asia, as opposed to just 4% from MEAE. A closer look at the country-level distribution of AFD and MEAE allocations reveals that an estimated 41% (€646 million) went to France’s priority countries in 2018. However, 4 of 19 priority countries did not receive any funding pledges: Djibouti, the Gambia, Liberia, and Mauritania. Despite being a key geographic focus for French aid, the Sahel region did not fare particularly well, with only 5 of 10 Sahelian countries ranking among the top 20 aid recipients in 2018. While 47% (€722 million) of AFD and MEAE commitments in 2018 went to lower-income countries, middle-income economies still received the bulk of ODA — with Sri Lanka, Côte d’Ivoire, Bolivia, Philippines, Cameroon, Tunisia, China, and Morocco featuring among the 10 largest recipients in 2018. Among a total of 53 recipient countries, these eight emerging markets absorbed over 40% of AFD and MEAE commitments that year. Meanwhile, Senegal and Tanzania were the only least-developed economies to rank in the top 10. Sectoral allocations Strategic priorities of French development policy are defined every two years by the Interministerial Committee for International Cooperation and Development, or CICID, a high-level coordination body chaired by the prime minister. In February 2018, the committee listed five overarching priorities for French aid: International stability; climate resilience and renewable energy; education; gender equality; and health. These priorities do not show up clearly in the 2018 allocations but are likely to be more visible from 2019 onwards. In 2018, infrastructure and urban development accounted for the highest share of commitments (28%), with a particular emphasis on renewable energy, road infrastructure, and social service infrastructure. Water and sanitation, and agriculture and food security, also received high allocations, at 23% and 22% respectively. Accounting for only 2% and 4% of aid commitments respectively, education and health received very limited support. This is, however, expected to change following Macron’s plan to bump up contributions to global education, youth, gender equality, health, and nutrition by half a billion euros in 2019, and to maintain high levels of support throughout his mandate. The Elysée also seems eager to demonstrate leadership on a range of key conferences and pledges. France co-chaired the Global Partnership for Education financing conference in February 2018, where it pledged €300 million for education. It will also host the sixth replenishment of the Global Fund to Fight AIDS, Tuberculosis, and Malaria in Lyon in October. On the whole, funding from AFD and MEAE seems more complementary than aligned. Agriculture and food security accounted for the largest share of MEAE commitments in 2018, but only the third largest from AFD. Similarly, health, HIV/AIDS and education were major giving priorities for MEAE, but only received limited support from AFD. Funding flows Tied to its continued emphasis on middle-income economies, France still relies heavily on loans, which made up 68% of its aid commitments in 2018. The AFD business model, which favors loans over grants, encourages the agency to invest in middle-income countries and profitable sectors. France’s loan portfolio is also significantly more concentrated than its grants: While bilateral grant commitments were dispersed across almost 50 countries, loan commitments focused on 13 countries in 2018, primarily Senegal, Sri Lanka, Côte d’Ivoire, Bolivia, and the Philippines. As part of its ongoing reform efforts, France plans to strengthen the grant component of its development assistance, as well as sharpen its focus. In July 2018, the government announced that it will quadruple grant assistance to €1.3 billion in 2019 to focus on the 19 priority countries. Funding channels France channels roughly two-thirds of its aid through governments of recipient countries. With the notable exception of Humanity & Inclusion (formerly known as Handicap International), the 20 largest recipients of French aid commitments in 2018 were all governmental entities. This is confirmed by many close observers. “In France, the amount of aid that goes through civil society is very weak, and the NGO dimension of our cooperation is very weak. We have a tendency to invest in a public agency and to concentrate all the efforts there,” Philippe Jahshan, president of the French NGO platform Coordination Sud, previously told Devex. Devex Analytics is a team of analysts, data scientists, and engineers delivering actionable solutions on development issues through structured datasets, official reports, press releases, and community-sourced information. Do you have questions about our methodology or analysis? Reach out to our experts at analysts@devex.com.