2. Germany’s policy vision and framework
This chapter assesses the extent to which clear political directives, policies and strategies shape Germany’s development co-operation and reflect its international commitments, including the 2030 Agenda for Sustainable Development.
The chapter begins with a look at the policy framework guiding development co-operation, assessing whether Germany has a clear policy vision that aligns with the 2030 Agenda and reflects its own strengths. It examines whether Germany’s policy guidance sets out a clear and comprehensive approach, including to poverty and fragility. The final section focuses on the decision-making basis, i.e. whether Germany’s policy provides sufficient guidance for decisions about where and how to allocate its official development assistance.
The Federal Ministry for Economic Cooperation and Development (BMZ) 2018 policy for development co-operation is centred on the 2030 Agenda and the Paris Agreement on climate change and encompasses all the ministry’s development co-operation activities. BMZ’s Marshall Plan with Africa, reform partnerships with six African countries, and new investment fund show how it has refocused its development co-operation towards the African continent. Development co-operation sits firmly within Germany’s political and strategic priorities and is backed by strong political leadership and a dedicated development ministry and resources, but there is no overall vision binding German development actors, beyond BMZ.
The BMZ 2030 strategy operationalises its Development Policy 2030, allowing for a long-term focus on global public goods and German expertise, as well as shorter-term political initiatives that are coherent with the 2030 Agenda. This includes reducing the number of partner countries from 85 to 60 and concentrating thematic priorities in five core areas. The strategy includes six cross-cutting quality criteria. Once fully implemented, the BMZ 2030 reform process could offer a modern, less fragmented and more streamlined narrative that speaks to German development co-operation’s comparative advantage. Germany is enhancing the application of its quality criteria and should continue to strengthen its focus on poverty, inequality, gender equality and women’s empowerment.
Bilateral financial and technical co-operation flows directly from the thematic and political priorities of BMZ, with dedicated budget lines for four special initiatives. The “global partners” category in the BMZ 2030 strategy formalises Germany’s engagement in the protection of global public goods with eight emerging economies. Germany is clear in its multilateral strategy that its main goal is to reaffirm the multilateral order and make them more effective, anchoring political priorities where relevant.
A broad range of stakeholders are involved in development co-operation, and Germany could continue to build on this strength to engage more in inclusive partnerships and multi-stakeholder consultations.
Germany’s development co-operation is centred on the 2030 Agenda and the Paris Agreement
In 2018, BMZ’s Development Policy 2030 built upon the 2014 Charter for the Future, recalibrating development policy in line with the 2030 Agenda and the Paris Agreement on climate change. The primary aims of Germany’s development co-operation remain to overcome hunger and poverty; implement the 2030 Agenda and achieve the 17 Sustainable Development Goals (SDGs); and address climate change in line with the Paris Agreement (BMZ, 2018[1]). Development Policy 2030 exists alongside Germany’s Sustainable Development Strategy, which was updated in March 2021 and cites people, planet, prosperity, peace and partnership as the guiding principles of German development co-operation (Federal Government, 2018[2]). The 2018 policy further envisages integrated and holistic country portfolios that provide strategic direction (as proposed in the 2015 peer review), are negotiated with partner countries, and explain why German development co-operation is committed in the long term to specific priority areas and fields of action.
Development co-operation sits firmly within Germany’s political and strategic priorities and is backed by strong leadership and a dedicated development ministry and resources. While the German Sustainable Development Strategy includes development co-operation and is steered by a Committee for Sustainable Development represented by state secretaries, there is no overall vision or structure bringing together all German development actors as exists for example with Germany’s policy towards Africa, which has strong political leadership (Chapter 4). The 2018 government coalition agreement calls for an increase in the volume and effectiveness of official development assistance (ODA) investments, including the four special initiatives defined in the BMZ (2018[1]) 2030 policy: ONE WORLD – No Hunger; tackling the root causes of displacement and re-integration of refugees; stability and development in the Middle East and North Africa (MENA) region; and training and job creation. While Development Policy 2030 recognises the broad range of German government entities, non-state actors and international partners engaged in development co-operation, it is still a BMZ document. As such, it is difficult to translate the policy into action by and co-ordination with other ministries (Chapter 4).
Since 2017, Germany has refocused its development co-operation towards Africa. Germany’s high-level political commitment to Africa, and its aim to boost economic development and job creation there, recognise that a fast-growing population of 1.2 billion, half of whom are under the age of 25, presents both opportunities and challenges. Germany’s objectives are articulated in the BMZ’s Marshall Plan with Africa and the reform partnerships with six African countries – both reflected in the BMZ’s development policy 2030, and in its new investment fund (Box 2.1).
BMZ’s Marshall Plan with Africa and reform partnerships
Germany initiated the Compact with Africa initiative1 during its G20 presidency in 2017 to promote private investment in Africa. Twelve countries have since joined the initiative: Benin, Burkina Faso, Côte d’Ivoire, Egypt, Ethiopia, Ghana, Guinea, Morocco, Rwanda, Senegal, Togo and Tunisia.
In 2018, BMZ launched its Marshall Plan with Africa,2 a paradigm shift marked by a policy priority on job creation and by the means of reform partnerships. Today, reform partnerships3 with six African countries (Côte d’Ivoire, Ethiopia, Ghana, Morocco, Senegal and Tunisia) aim to focus on joint sustainable economic co-operation, moving away from the concept of donor and recipient countries.
In 2019, the Federal Government, under the leadership of the Foreign Office developed Africa policy guidelines to ensure coherence among the different German federal ministry initiatives (Federal Government, 2019[3]). Pro! Africa is one such initiative of BMWi to promote foreign trade and investment for Africa.
A new development investment fund with a focus on Compact with Africa countries, to be provided with up to EUR 1 billion by end of 2021, comprises:
AfricaConnect4 – Resources to improve financing opportunities for German and European small and medium-sized enterprises (SMEs) and promote employment and sustainable economic growth
AfricaGrow5 – Funding as equity and risk capital, to finance African SMEs and start-ups to promote innovation, employment and sustainable economic development
An African business network6 – Support to German enterprises with information and advice on African markets in several stages.
The refocusing on Africa has led to a considerable and welcome increase in ODA to the continent (Chapter 3). In Tunisia, for example, the reform partnership has brought an influx of German development co-operation. The focus had been more on economic reform. Complementary efforts through the Special Initiative on Training and Job Creation and AfricaConnect have helped set up a business facility desk at the German Tunisian Chamber of Industry and Commerce to facilitate German and European investments in Tunisia’s automotive and aviation industries. Germany also helps build capacity of Tunisian SMEs and has invested equity via TunInvest Croissance.
Working with other partners is essential. In Tunisia, aligning behind a joint reform programme helped consolidate the numerous other reform initiatives underway and achieve some level of harmonisation. As the European-African partnership also evolves, it will be important to see how German and European initiatives might complement or reinforce one another. The new development investment fund is an example of how co-ordination with other development finance institutions and multilateral development banks can reinforce existing initiatives. In line with the African Union’s Agenda 2063 and in support of the African Continental Free Trade Area, Germany might more systematically involve its broad range of partners and instruments to gradually move away from a donor mindset to one that is more about dialogue, sharing knowledge and co-creating.
← 1. For details, see https://www.compactwithafrica.org/content/compactwithafrica/home.html.
← 2. For details, see https://www.bmz.de/en/countries_regions/marshall_plan_with_africa/index.html.
← 3. For details, see https://www.bmz.de/en/countries_regions/marshall_plan_with_africa/contents/chapter_02/01/index.html.
← 4. For details, see https://www.deginvest.de/Unsere-L%C3%B6sungen/AfricaConnect/index-2.html.
← 5. For details, see https://africagrow.allianzgi.com/.
← 6. For details, see the Africa Business Guide website at https://www.africa-business-guide.de/abg-de/.
The BMZ 2030 reform strategy provides a long-term focus on global public goods and German expertise, allowing for new political initiatives that are consistent with the 2030 Agenda
The BMZ 2030 reform strategy, or BMZ 2030, operationalises the ministry’s Development Policy 2030. The focus of the reform strategy, which began in 2019 and is still ongoing, is to move away from an emphasis on ODA spending and towards enabling Germany to make a difference in a globalised world, including through some of the recent special initiatives and BMZ’s strong advocacy at national and European Union (EU) level to achieve fair and sustainable globalisation. An example is the so-called “supply chain law” (Chapter 1). The reform strategy responds to identified challenges such as lack of focus and prioritisation, and overly bureaucratic procedures.
BMZ 2030 reduces the number of priority partner countries by 29%, from 85 to 60. The strategy sets out criteria for the selection of partner countries using these categories: 42 bilateral partners (of which six are reform and seven are EU transformation partners); 8 global partners (to work on issues defining a common global future and protecting global goods); and 10 nexus and peace partners (to tackle the structural causes of conflict and displacement and provide support in peacebuilding). The strategy also explains Germany’s plans to phase out of bilateral co-operation in partner countries and in certain sectors. As it considers how to exit responsibly from partner countries, Germany could draw on the exit experiences of other OECD Development Assistance Committee (DAC) members1 and its own experience phasing out of traditional bilateral development co-operation, such as from the People’s Republic of China (hereafter, China). Today, BMZ co-operates with China through a strategic partnership focusing on the protection of global public goods. Through the federal ministries of Economic Affairs and Energy (BMWi) and Environment, Nature Conservation and Nuclear Safety (BMU), Germany tested out new projects on climate policy and economic exchanges, forming a strong Sino-German foundation for intergovernmental co-operation on cybersecurity, mobility, emissions trading and energy transition that persists to this day (Giehler, 2020, p. 65[4]).
The BMZ 2030 reform process is in the early stages of concentrating German development co-operation from 11 thematic priority areas to 5 core areas and integrating 6 cross-cutting quality criteria. Initiative areas (currently ten) allow for a time-bound focus on specific development issues. Thematic strategy papers for each of the five core areas will build on existing allocations and set out political and development objectives and a choice of instruments. BMZ is currently working to update strategy and guidance documents. Country strategies will in turn draw on thematic strategy papers. At country level, activities are already folding into fewer sectoral “blocks” in view of BMZ 2030. The new integrated planning and allocation system will prioritise a thematic approach to which regional and country strategies will be closely linked. It will be important for Germany to manage the tension between the new system and the needs-driven approach it puts forward in its 2018 development policy, which values country ownership (Chapter 4). As it develops its new country strategies with fewer focus areas on this basis, Germany has an opportunity to rationalise German development co-operation in partner countries and determine the objectives to which it aims to contribute, while remaining flexible and responsive to the needs of its partners (Chapter 6).
Guidance on cross-cutting issues is made available, but Germany should assess the impact of programmes on the wide range of quality criteria
At the heart of Germany’s 2018 development policy is a three-dimensional approach to sustainable development: balancing economic, environmental and social policies and priorities; managing the trade-offs; and linking climate change adaptation and mitigation investments with poverty reduction. The policy recognises a wide range of areas and cross-cutting issues and focuses on aspects that a future-oriented development policy needs to address. These include demographic trends, resource scarcity, climate change, digital technology and interdependence, and displacement and migration. To address some of these challenges, BMZ’s development co-operation aims to help prevent crises, manage conflict and build peace. The BMZ 2030 policy explicitly refers to the short, medium and long-term investments Germany makes in fragile contexts (Chapter 7A). The policy includes ten focus areas that are now superseded by the five core areas in the BMZ 2030 reform strategy.
Germany does not clearly set out how these different themes and cross-cutting issues form an overarching, comprehensive approach. The linkages between these will have to be made quite clear in the business plans and standard indicators that are being developed for each core area under BMZ 2030.2 This will be particularly important for the six cross-cutting quality criteria (Figure 2.1). Broadly speaking, BMZ sets out the overarching development co-operation policy through strategy documents that are binding for its implementing partners such as Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and KfW Development Bank (KfW).
Source: Authors’ illustration.
Germany has the political clout, financial resources and technical expertise to lead globally in the core (and cross-cutting) area of climate change and the environment. As an example of how different papers complement each other, BMZ and BMU outlined their co-operation with developing countries and emerging economies on the protection of biodiversity in a joint paper, emphasising their commitment in support of the Convention on Biological Diversity (BMZ/BMU, 2018[5]). To illustrate just one part of this co-operation, GIZ has seven different global biodiversity projects commissioned both by BMZ and BMU, and KfW recently expanded its green credit lines to Africa via the Eco-Business Fund,3 which it founded in 2014 to encourage sustainable economic development and the protection of biodiversity (KfW/BMZ, 2019[6]).
Quality criteria feature across Germany’s portfolio, but cross-cutting themes will need to be applied systematically across all interventions and their intended impact carefully monitored. Good governance, anti-corruption and integrity are central to Germany’s reform partnerships (Box 3.1). Digitalisation is a growing field (Chapter 4), and BMZ’s new strategy on transitional development assistance emphasises resilience and sets out a clear path to achieving impact (Chapter 7A). The next section reflects on two additional quality criteria.
Germany should continue to invest at all levels in gender equality and poverty reduction and inequality
The approach to gender equality and women’s empowerment has been three-pronged: dedicated support, mainstreaming and dialogue. BMZ has an ambitious gender action plan that outlines objectives and measures to be taken in specific sectors and across sectors (BMZ, 2016[7]). A 2017 corporate GIZ evaluation of gender equality recommended incorporating findings into project design, conducting better reporting on intended and unintended effects on gender equality, and introducing gender equality into the policy for locally hired personnel (GIZ, 2017[8]). The 2019 GIZ gender strategy takes many of these recommendations into consideration (GIZ, 2019[9]). Germany places the strongest emphasis on its support to gender equality and women in the economic empowerment space: KfW, for example, has started to apply a gender lens to investing and Germany is the largest donor of the Women Entrepreneurs Finance Initiative, known as We-Fi.4 As of 2019, however, the volume of ODA focused on gender equality remains below the DAC average (Chapter 3). To fulfil its ambition, Germany should continue to invest in broad commitment to the agenda, demonstrable impact on development outcomes, and staff capacity.
Poverty reduction and inequality together comprise one of six quality criteria considered in programme preparation and appraisal. Germany introduced a poverty marker in 2015 that it may update to also encompass inequality. Germany also is investing in conceptualising and reducing inequality via a global project with Namibia, South Africa and Viet Nam.5 In practice, the poverty focus has not been consistent. In some countries — for instance Rwanda, where poverty reduction is stagnating despite high growth rates — Germany is investing in human capital through technical and vocational education and training and non-farm employment. In other countries, poverty and inequality are less of an explicit focus due to other priorities like climate change or the reform agenda. Going forward, it could be useful for Germany to explore how all its instruments including technical co-operation, which made up 16% of gross bilateral ODA in 2019, are best placed to address these critical challenges and for Germany to demonstrate how all of its investments, from design to results, are contributing to SDGs 1 and 10.
Germany presents a clear rationale for how to engage at different levels
Bilateral financial and technical co-operation flow directly from the thematic and political priorities of BMZ, with dedicated budget lines for the four special initiatives. The 2018 development policy bases bilateral partnerships on the development needs of countries, relevance to implementation of the 2030 Agenda, the significance of the German contribution and division of labour with other development partners, and establishing clear financial targets. Prior to the introduction of BMZ 2030, target numbers were assigned for six priority areas.6
Germany uses intergovernmental consultations and negotiations with partner countries to put its policy into practice (Chapters 4 and 5). Going forward and as comprehensive country strategies are developed, it will be important to be clear about whether the more concentrated priorities result in improved overall country allocations, a continuation of what is already being done or the topping up of the existing country allocation, as is the case for reform countries. Recently, embassies have started to facilitate the co-ordination of activities implemented by regional and global programmes with partner governments, as seen in the intergovernmental negotiations with Rwanda (Annex C); although these are managed by regional desks, there is the risk that they are disjointed from bilateral co-operation and the special initiatives (Annex C).
Germany is clear that its goals are to reaffirm the multilateral order, advance specific policy priorities and improve the performance of multilateral organisations. It has a clear rationale for when to use European Union and multilateral partners. Germany’s decision to back the Green Climate Fund and the Asian Infrastructure Investment Bank both politically and financially is consistent with its logic of promoting a resilient environment and climate as a global public good. Similarly, it is internationally important to Germany that it upholds a European view. Germany saw its political commitment to Team Europe’s joint COVID-19 response in developing countries and the common messaging within and across EU member states as critical for their success.
The “global partners” category in the BMZ 2030 reform strategy formalises Germany’s engagement in protecting global public goods with eight emerging economies (Brazil, China, India, Indonesia, Mexico, Peru, South Africa, and Viet Nam). Germany’s pursuit of clean and sustainable energy; its work to promote social and labour standards in the textile and garment sectors across Asia (OECD, 2018[10]); and its efforts to ensure equitable access to vaccines are just a few of the ways the German government as a whole works with global partners, including through more systematic use of triangular co-operation (Chapter 5).
German development co-operation is provided by a diverse group of autonomous partners and members of civil society
Germany principally implements its government-to-government development co-operation through its own government-owned technical co-operation agency (GIZ) and development finance institution (KfW), as discussed in further detail in Chapters 3 and 4. However, one of Germany’s more unique strengths is its diverse landscape of autonomous development partners committed to contributing to achieving the 2030 Agenda in partner countries. The pandemic has thrown into relief how important it is to increase collaboration across a diverse group of stakeholders, not only to mobilise additional resources to help achieve ambitious goals but also because better co-ordination and more innovative approaches are required to meet the SDGs.
The broad range of stakeholders involved in development co-operation could achieve much more if they were to form more inclusive and multi-stakeholder partnerships. Germany values the autonomy of its political foundations, church and civil society organisations (CSOs), federal states and municipalities, research and evaluation institutes, other non-governmental organisations (NGOs), and private sector partners. These actors bring strong development co-operation expertise, complement federal funds with their own resources and are committed to implementing the 2030 Agenda. BMZ could maximise Germany’s contribution to development co-operation by facilitating a “whole of Germany” approach, drawing on the expertise of other stakeholders to add to and complement the government’s interventions. By doing so Germany’s achievements would be greater than the sum of the parts of individual stakeholders’ efforts (Chapter 5).
Germany’s support for German civil society and political foundations is based on the principles of autonomy and subsidiarity, and the view that CSOs are actors in their own right (OECD, 2020[11]). German CSOs are divided into three groups: German political foundations; small and medium-sized development CSOs, including 12 social development organisations; and two big church-based development organisations linked to the Protestant and Catholic churches. Political foundations work to strengthen parliaments, political parties and an independent judiciary and support an enabling environment and space for civil society, as seen in their important work in Rwanda with trade unions and in Tunisia (Chapter 5, Annex C).
In line with BMZ’s Development Policy 2030 and its cross-government efforts to promote sustainable value chains, BMZ and BMWi are collaborating to incentivise more private sector involvement. They are doing this by:
establishing the Agency for Business and Economic Development in 2016 as a one-stop shop for business investments in developing countries that is implemented by GIZ and DEG
building on the existing develoPPP.de programme7 to incentivise private-public partnerships, with the private sector providing at least 50% of funding topped by BMZ funds
working with DEG and KfW in setting up (structured) funds to encourage companies to invest in high-risk countries. One example is the framework of the Federal Government’s Development Investment Fund, the AfricaGrow initiative to encourage companies to invest in high-risk countries, with a focus on start-ups in Africa, and matching private and public funds — a mechanism that private sector representatives see as essential to their engagement in some African countries (Box 2.1)
issuing export credit guarantees (Hermes) and investment guarantees
developing the Africa Business Network as the third pillar of the Federal Government’s Development Investment Fund (Box 2.1) to provide tailor-made advisory and support services for German companies accessing African markets
providing capacity development to support building up business associations in partner countries and working closely with German business associations, e.g. the German Tunisian Chamber of Industry and Commerce (Annex C).
While appreciating and respecting the diversity and autonomy of its partners to select where and in what sectors they operate, Germany is able to steer activities towards political priorities. By launching thematically focussed programmes through the Service Agency Communities in One World, which provides advisory services and support to municipalities. For example, BMZ steers activities towards sectors that are a political priority and fall within the competence of the actors concerned. Similarly, increased funding opportunities related to special initiatives, such as to strengthen climate action in partner countries, have increased activities in the civil society area. There are no special incentives to work in specific geographic regions or categories of countries beyond the MENA region.
The diversity of autonomous German actors in the development co-operation landscape may at times result in compartmentalised partnerships of civil society with political foundations, regional and municipal governments, and church NGOs. A joint country strategy defined by more regular, structured dialogue and co-operation (where relevant) between CSOs, federal states and municipalities, and the federal government on official policy, planning and delivery (similar to the consultation with civil society on the Africa policy guidelines) could enable the government to draw on actors’ expertise, partnerships, evidence and networks in partner countries to ensure a more direct link to the needs and desires of citizens in developing countries.
Multilateral co-operation
The 2019 multilateral strategy sets out three clear goals that facilitate a coherent, whole-of-government approach to engaging in governing boards and at country level (BMZ, 2020[12]). The goals include preserving a rules-based global order and making it more just, improving the performance of multilateral organisations by making them more transparent, efficient, effective and coherent, and anchoring political priorities even more firmly at the multilateral level. Germany is clear about when to use multilateral partners to advance specific policy goals, for example in the areas of health, climate change and energy. Germany’s four special initiatives are built around a global, multilateral dynamic. Beyond its substantial allocations to multilateral organisations (Chapter 3), Germany also supports the legitimate lead of multilateral institutions in policy development. Germany works to ensure that its board-level representation in multilateral organisations reflects country perspectives by engaging field offices to comment on relevant documents. Germany could also include its contributions to multilateral partners in its country strategies. Such initiatives are a good way of ensuring coherence between Germany’s bilateral and multilateral engagements. Through its active participation and leadership in the Multilateral Organisation Performance Assessment Network, Germany demonstrates its strong support for joint efforts to improve the effectiveness of the multilateral system.
Despite some rigidities in the system, multilateral partners appreciate Germany’s political backing, strong technical expertise and generosity. Germany has broadened its partnerships to include the Asian Infrastructure Investment Bank, where it has provided strong political backing and technical co-operation. Its most important multilateral partners by far are European Union institutions. Germany recently increased core contributions to UN funds and programmes and holds annual strategic dialogues with these partners; however, it does not offer predictability on core funding beyond the current year. Similar to NGOs that implement both Germany’s humanitarian and development assistance, multilateral organisation representatives speak of cumbersome and time-consuming accountability requirements linked to the Federal Budget Law, although Germany and its partners have recently found ways to manage these. Germany has plans to use mainly multilateral channels for health and basic education investments. The effort behind BMZ 2030 to concentrate on fewer partner countries and sectors may offer opportunities for different types of partnerships as Germany responsibly transitions out of bilateral co-operation in a number of countries.
References
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Notes
← 1. Belgium, Denmark, the Netherlands and the United Kingdom have conducted evaluations that look at the effect of exiting partner countries.
← 2. The BMZ 2030 reform strategy, published in 2020, consolidates these into five core areas: peaceful and inclusive societies; a world without hunger; training and sustainable growth for decent jobs; responsibility for our planet — climate and energy; and protecting life on Earth — the environment and natural resources. Health and basic education will be dealt with more bilaterally.
← 3. For information about the Eco-Business Fund, see its website at https://www.ecobusiness.fund/en/.
← 4. More information about the Women Entrepreneurs Finance Initiative can be found at its website at https://we-fi.org/.
← 5. The global project is called “reducing inequalities worldwide” and is described on the GIZ website at https://www.giz.de/en/worldwide/85796.html. Germany also played a key role in setting up Cambodia’s multidimensional poverty index, ID-Poor. GIZ produced a primer on targeting different types of poverty in 2017 and a poverty and inequality diagnostics tool in 2020, although it is not clear that other parts of German development co-operation refer to this tool. The primer and the diagnostics tool are available at (GIZ, 2017[13]), https://www.giz.de/en/downloads/PovertyTargeting_Primer_FullVersion_2019.pdf, and (GIZ, 2020[14]) https://www.poverty-inequality.com/wp-content/uploads/2020/08/GIZ-Poverty-Analysis-Tool-PAT.pdf, respectively.
← 6. The six areas are climate, rural development and food security, education, maternal and child health, biodiversity, and aid for trade.
← 7. For details, see https://www.bmz.de/en/issues/wirtschaft/privatwirtschaft/ppp/develoPPP/index.html.