The European Union, like many other donors, is currently exploring the best ways to fight against poverty around the world. Faced with differentiation between developing countries, some of which have become aid donors themselves while others suffer from increasing fragility, the EU must ensure the greatest impact and best value for money for its aid. As always, important policy changes spark off a fierce debate. In particular I would like to respond to a recent article from the Guardian’s Poverty Matters blog, which criticized “cuts” to MICs and urged donors to “get more sophisticated in their thinking”. I am sure that the readers will be pleased to learn that this is exactly what we are applying to EU development aid.

It’d be too easy to argue that all that poverty boils down to is a lack of money. Poverty’s underlying causes are often far more complex and wide ranging the authorities’ inability to provide basic services, poor governance or a lack of access to markets, for instance. Clearly, then, a “one-size-fits-all” approach cannot work and we have to find best solutions to address the needs of different countries. It goes without saying that we cannot work with India in the same way as we do with Liberia. The EU has, after lively public debate, and based on assessment of country needs, its capacities and its performance, proposed that providing traditional aid based on bilateral programmes is no longer the best way forward for those countries that are most advanced. We have not arrived at this conclusion randomly; we have done so after thorough consideration of the facts. This means that we will change our traditional aid approach with many MICs. But this will by no means result in our pulling out and abandoning the poor living in those countries. Instead, we will address poverty issues in a more sophisticated way.

Fighting poverty by tackling global issues

It is no secret that global challenges such as HIV, climate change, inequalities or a lack of growth still hamper development of many middle income countries and are a major obstacle to alleviating poverty. Therefore in our Agenda for Change, we suggest to develop a cooperation based on new partnerships with them. We also proposed to create a new Partnership Instrument for 2014-2020, to support activities which could benefit to both the EU and our partners, with over €1 billion. 

That is not all. Additionally, instead of bilateral aid, we proposed to develop a relationship through our thematic programmes which systematically takes account of needs and resources in these countries. We are seeking to invest €6.3 billion from the next EU budget in a “global public goods” programme which will tackle the greatest global challenges flexibly. It will focus on climate change, environment, sustainable energy, food security and migration, as well as on human development, including healthcare, education and gender equality.

The EU will also increase its support to civil society organisations (CSOs), in recognition of the fact that they, together with local authorities are best placed to understand people’s needs and respond with effective help. Not to mention, that they are a cornerstone of a free and democratic society.

Our flexibility will come in part from allowing these programmes to go beyond the local to tackle regional issues as well where necessary. The food crisis in the Horn of Africa and access to electricity in sub-Saharan Africa are regional problems requiring regional solutions. Thanks to this smart and comprehensive approach, we aim to achieve greater results.

Leveraging resources

There are other ways in which we can get more from our aid. Take India, for instance. In 2011, India’s GDP amounted to some $4.5 trillion, so even if the Commission had invested every cent of the €10 billion of aid at its disposal that year, its effects would have been very limited. That said, where appropriate, we can deploy financial mechanisms such as blending of loans and grants to multiply our resources. Through such blending mechanisms, we can support the projects that the private sector would normally be reluctant to finance alone– the difference being that with our grant a bank would be willing to issue a loan. I believe that this offers a valuable way to address the lack of infrastructure such as electricity grids, which are indispensible for development but often too expensive for the donors to fund. I recently inaugurated the site of the future solar power station in Burkina Faso, financed through a mix of EU donors pooling grants and loans. This will be the largest solar power station in Africa which will provide access to clean electricity to the country and the region.

In a nutshell, we plan to change the substance and quality of our support in order to achieve high-impact aid delivering great results for people. So we won’t simply withdraw from certain countries; in fact we will be seeking to tailor our action to meet the real needs.

Focus on the nest of poverty – Least Developed Countries (LDCs)

I was told that I got my numbers wrong when I said that we would focus more on the LDCs, where most of the world’s poor live. Gapminder and OECD data nonetheless suggest that there are around 800 million people, i.e. more than half of the global poor, living in extreme poverty in the LDCs.

It is important that we take the right decisions when it comes to LDCs and fragile states. It is here where our aid can have the most impact. Some of these countries are the most difficult places on the planet to live in and improving security, public management, basic infrastructure and sanitation more often than none means starting from scratch. These are the countries where the risk of operating is also higher; but then we are not in development aid for the fame, but to make a difference. The EU will take this risk because it is our duty and we will eventually break the vicious circles of instability, insecurity and violence.

The fight against poverty goes on. It may come to take different forms in different parts of the world. Yet it will remain very much a global fight.

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