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Business insight: Italy

New year, new course for Italian foreign aid?

By Elena L. Pasquini23 January 2013

The Italian and the European Union flags. Photo by: Ewan Topping / CC BY

After years of painful cuts, Italy’s foreign aid program may be turning a corner in 2013. Under its new cooperation chief, the country is planning modest aid increases and a series of reforms, suggest documents seen exclusively by Devex.

The Foreign Affairs Ministry’s Directorate General for Development Cooperation finalized its 2013–2015 spending blueprint just before Christmas, but documents have not yet been made public.

Devex was able to get a sneak peek, though, and saw a renewed commitment to foreign assistance as part of a coordinated, cross-government effort that involves a variety of foreign engagement tools including trade, debt cancellations, private sector engagement and innovative finance.

Question marks remain, of course, in particular because parliamentary elections at the end of February could upend spending priorities.

Leading the task of restoring Italy’s role as a major donor will be Giampaolo Cantini, who succeeded Elisabetta Belloni as director-general of development cooperation earlier this month.

DGCS wants to spend a total of roughly €273 million this year ($363.7 million), including €18.3 million toward existing multiannual commitments, as well as €163 million next year and €159 million in 2015. Some 90 percent will be channeled into aid projects, the rest will go toward operating costs; 57 percent will be devoted to bilateral projects, 43 percent to multilateral interventions.

Years of cuts have forced the directorate-general to improve its efficiency, a government official told Devex. In its new three-year plan, Italy is now sharpening its focus on a select group of sectors and countries where it sees competitive advantages. Aside from a few cross-cutting issues such as women’s empowerment and human rights, those sectors include health, education, institution building as well as nutrition and food security, particularly assisting small-holder farmers, through research and training, to recover from conflict and become self-sustainable.

One thing that may change this year is the way in which DGCS works with its implementing partners. The agency is finalizing plans to simplify the submission of grant proposals, the government official told Devex. It is also exploring ways to better engage NGOs in multidonor projects.

DGCS’s internal structure may change as well. The interinstitutional or stakeholder dialogue platform is going to be organized in levels — political and operational — and through thematic working groups. Local technical units in the developing world will be reorganized. Those in Egypt, Kenya, Lebanon, Mozambique and Tunisia will be enhanced, a UTL may open up in Burkina Faso.

The DG is also exploring the potential launch of a public competition for about 30 technical experts.

Funding priorities

Roughly €49.5 million will go as assessed contributions and €42.3 million as voluntary contributions to multilateral institutions such as the U.N. Relief and Works Agency for Palestine Refugees in the Near East, Food and Agriculture Organization and International Fund for Agricultural Development; contributions to the U.N. Development Program, UNICEF and U.N. Department of Economic and Social Affairs will be resumed.

Funding under the “missions decree” for international crises has yet to be determined; Afghanistan, Iraq and Syria will be among the priorities, the government official told Devex.

By 2015, the Italian government wants to finalize debt conversion programs with Egypt, Morocco, Djibouti and Myanmar, totaling €122 million; resources would be devoted to education, health, water and environmental initiatives. Italy will continue negotiating debt cancellations, as well, through the Ministry of Economy and Finance. In the past three years, Italy signed agreements with Vietnam, Algeria, Jordan, Philippines and Ecuador; negotiations with Syria were suspended.

Funding for decentralized cooperation is shrinking; the Italian government disbursed €50 million annually, on average, over the past few years.

The Ministry of Economy and Finance manages most contributions to international institutions. Roughly €889 million are expected to be channeled into the EU budget and €457 million into the European Development Fund, while €250 million may go toward multilateral banks and funds.

In the five years leading up to 2015, the GAVI Alliance will have received a total of €506 million from the Italian government, including €27.5 million for the International Finance Facility and €38 million that will go toward advance market commitments this year.

Country priorities

In 2013, 48 percent of DGCS’s foreign aid spending will go toward sub-Saharan Africa, 29 percent to the Balkans, Mediterranean countries and the Middle East, 13 percent to Asia and 10 percent to Latin America and the Caribbean.

Priorities include:

  • Senegal: social protection, private sector development, rural development.
  • Niger: food security, disaster preparedness, capacity and institutional building, decentralization.
  • Burkina Faso and Guinea: pilot interventions focused on small and medium-sized enterprises, financial inclusion, microfinance, health, capacity and institution building.
  • Burkina Faso: a multistakeholder consultation will help define priorities.
  • Mali: emergency response.
  • Sudan and South Sudan: health, education, food security, urban development, humanitarian demining.
  • Kenya: hydric sector.
  • Ethiopia: negotiations continue on a new triannual program focused on agriculture, education, health.
  • Mozambique: rural development, health, education.
  • Balkans: exit strategy with the exception of Albania.
  • Egypt and Tunisia: mainly microcredit initiatives and vocational training.
  • Libya: health, emergency, capacity building.
  • Palestinian territories: SMEs, institution building, justice, electoral process, human rights.
  • Iraq: cultural heritage and hydric resources, a line of credit of €100 million will be activated for agriculture and irrigation.
  • Afghanistan: governance, rural development, health, infrastructure, transport.
  • Vietnam: health, environment, SMEs.
  • Myanmar: new cooperation channel, mainly focused on food security and education.
  • Bolivia and Ecuador: health, institutional reform, environment.
  • El Salvador: young generations, citizen security.
  • Cuba: food security.

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About the author

Ele
Elena L. Pasquini

Elena Pasquini covers the development work of the European Union as well as various U.N. food and agricultural agencies for Devex News. Based in Rome, she also reports on Italy's aid reforms and attends the European Development Days and other events across Europe. She has interviewed top international development officials, including European Commissioner for Development Andris Piebalgs. Elena has contributed to Italian and international magazines, newspapers and news portals since 1995.


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