The next EU budget offers an opportunity to play a leading role in the fight against global poverty. Most rich countries have cut development assistance, global health included, and more cuts seem likely. The EU’s next long-term budget, the Multiannual Financial Framework (MFF) for 2028 to 2034, is one of the few places where development cooperation could hold its own, and one of the few that could fill part of the gap the cuts have left. Whether it does, depends on a negotiation that is far from settled.
EU Member States are negotiating that budget now, and the line that funds the EU’s work as a development partner is taking a larger cut than the budget as a whole. The Irish presidency has to find a compromise that Member States can accept at home and defend abroad. Into that negotiation comes a new study by ODI Global, commissioned by rani, which puts twenty years of data to a simple question: what does Europe get back when it invests in development in Africa?
Key findings
- Where Europe invests in development in Africa, Europe sells more to those countries. Across twenty years of data covering EU member states and African partners, higher development assistance goes together with higher European exports. Development is the cause, benefits to the EU is the consequence. The pattern holds for aid given directly by member states, for aid channelled through the EU, and for the two combined.
- The headline figure is for aid through the EU. At average levels of aid and trade, each euro of EU institutions’ development assistance is associated with roughly €6.80 in additional European exports, around €5 in goods and around €1.80 in services. This means that development resources aimed at development objectives already benefit EU Member States as a spillover effect. Efforts to change the focus of the EU’s external cooperation entirely to the EU’s self interest are misguided and wrong-headed as these investments already give returns.
The study looks at all development cooperation, so the association runs through spending on health, education, and governance as much as through trade projects. This is to be expected if development builds the conditions trade needs: functioning institutions, healthy and educated workers, purchasing power, roads, and ports.
This growth is concentrated in finance, telecoms, ICT, intellectual property, and business services, the knowledge-intensive sectors where Europe competes globally.
The study contributes to a growing body of literature that shows that development cooperation exists to reduce poverty and build partnership, and when it works, Europe’s own economy benefits as a consequence.
Read the Summary Brief
Read the Working Technical Paper