Members' Research Service By / December 13, 2017

How the EU budget is spent: Development Cooperation Instrument

The Development Cooperation Instrument (DCI) is the main financial instrument in the EU budget for funding aid to developing countries.

© djvstock / Fotolia

Written by Matthew Parry,

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© djvstock / Fotolia

The Development Cooperation Instrument (DCI) is the main financial instrument in the EU budget for funding aid to developing countries. The DCI’s primary objective is to alleviate poverty, but it also contributes to other international priorities of the EU such as the UN’s post-2015 Development Agenda; sustainable economic, social and environmental development; and the promotion of democracy, the rule of law, good governance and respect for human rights. The DCI’s financial envelope within the EU’s 2014-2020 Multiannual Financial Framework (MFF) is €19 661.64 million in commitments (about 1.81 % of the 2014-2020 MFF).

The DCI is not the EU’s largest development funding instrument – that is the European Development Fund, with a 2014-2020 budget of €30.5 billion – but the DCI is the biggest in the EU budget (the EDF is managed by the Commission but is intergovernmental in nature, standing outside the EU budget). Moreover, the EDF is aimed mainly at the African, Caribbean and Pacific Group of States (ACP) and the overseas countries and territories (OCTs) of the EU, while the DCI funds assistance to other developing countries.

The DCI’s 2014-2020 financial envelope is subdivided between three different types of programme: geographical programmes, which have been allocated €11.8 billion over the MFF’s seven years (60 % of the total envelope); thematic programmes, for which €7 billion (36 %) has been budgeted; and a pan-African programme, which has a budget of €845 million (4 %).

DCI budget for 2014-20 by programme typeGeographical programmes are aimed at supporting bilateral and regional cooperation in areas such as human rights, democracy, good governance, inclusive and sustainable growth for human development, migration and asylum, conflict prevention, and disaster risk reduction. They support cooperation with 47 countries in the following regions: Latin America (with an indicative geographical programme allocation of €2 500 million for 2014-2020); South Asia (€3 813 million); North and South-East Asia (€2 870 million); Central Asia (€1 072 million); the Middle East (€545 million); and ‘other countries’ (€251 million). At least 15 % of the geographical programme funds must be spent on human rights, democracy and good governance; while at least 45 % must go to ‘inclusive and sustainable growth for human development’.

Thematic programmes complement the geographical programmes. Within this pillar of the DCI, there are two categories: Global Public Goods and Challenges (GPGC), for which the indicative 2014-2020 allocation is €5 101 million; and Civil Society Organisations and Local Authorities (CSO-LA), for which the indicative allocation is €1 907 million. Between January 2017 and January 2021, GPGC is financing a project aimed at strengthening the ability of non-state actors in Liberia, Côte d’Ivoire and Ghana to carry out forest law enforcement, improve governance and trade, and reduce deforestation and degradation (DCI contribution: €3 million).

The Pan-African programme supports the strategic partnership between Africa and the EU. This programme complements other financing instruments that are used in Africa, such as the EDF and the European Neighbourhood Instrument (ENI). For 2016, the Commission identified two objectives under the programme: first, increase the availability of high-level professional manpower in Africa, by supporting the intra-African mobility of students and staff and improving the quality of higher education; second, support the transformation of the African livestock sector with a view to environmentally sustainable, climate-resilient socio-economic development, and equitable growth. The 2017 action document includes an initiative to improve broadband access in Africa, co-financed by the International Telecommunications Union (ITU) (DCI contribution: €7.5 million).

The DCI is one of six EU budgetary instruments for financing external action that are governed by Regulation (EU) No 236/2014 laying down common rules and procedures for the implementation of the Union’s instruments for financing external action. The other five are: the European Instrument for Democracy and Human Rights (EIDHR); the European Neighbourhood Instrument (ENI); the Instrument contributing to Stability and Peace (IcSP); the Partnership Instrument (PI); and the Instrument for Pre-accession Assistance (IPA II).

The EU foreign policy instruments- financial envelopes for the 2014-2020 MFFA June 2017 mid-MFF evaluation of the DCI requested by the Commission noted that the DCI was achieving genuine results, and argued that the DCI allows the EU to add value through its unique expertise in regional economic and political integration. However, the evaluation also recommended that the Commission work to align the instrument more closely with recipient countries’ priorities and to reduce fragmentation of thematic programmes, and warned against compartmentalisation between the DCI and the other EFIs that undermined complementarity.

A December 2015 review by the European Court of Auditors (ECA) of the risks involved in the EU taking a results-oriented approach to development and cooperation acknowledged that the Commission had correctly identified most of the nine key risk areas cited in the review: consistency of terminology; clarity of results chain; complexity arising from cross-cutting issues; harmonisation of instruments between development partners; reporting and evaluation; data consolidation; data quality; and focus on budgetary out-turn; and changes in the context of EU actions. However, the review recommended that the Commission improve guidelines for deciding terminology, objectives and indicators; clearly link actions and results; improve reporting; ensure data availability and quality; and routinely assess the risks of implementation before committing financial resources.

Read the complete briefing on ‘Development Cooperation Instrument‘ on the Think Tank pages of the European Parliament.


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