Can development cooperation regain public acceptance? Jürgen Zattler, Head of Department at the BMZ until 2023, and Roger Peltzer have published an article on epo.de.
Development cooperation (DC) is being criticized. Many people are asking why Germany should spend money on building cycle paths in Peru when our bridges are collapsing, kindergartens are closing due to a lack of staff and the German mobile phone network is less efficient than in many of our partner countries in the Global South. People are also increasingly questioning whether development policy helps at all. China and many Asian tiger economies have developed and largely abolished poverty without development cooperation having made a significant contribution to this. On the other hand , African countries that have received a great deal of support remain at a low level of development.
Skepticism towards development cooperation and budget cuts
The widespread skepticism among the German public towards development cooperation contributes to the fact that funds for development policy are at the top of the list when it comes to making savings. The Ministry for Economic Cooperation and Development’s budget has been cut by 25% over the last three years (including the 2025 budget).
Successes of development cooperation in Africa
Now, development cooperation cannot solve all the world’s problems. However, child mortality in Africa has fallen dramatically in recent decades. Almost all children there now receive primary and many also secondary education. Diseases such as malaria are increasingly being combated effectively. All of this is also the result of development cooperation. So our aid has certainly been effective.
Germany’s contribution to the global energy transition
In recent years, Germany has also made a significant contribution to driving forward the energy transition in China, India and many other countries around the world through development cooperation. By initiating the reform of the Multilateral Development Banks, Germany is now channeling more funds into the green transformation of the global economy. If the electricity supply in Kenya, Morocco or Uganda today is largely generated from renewable energies, then this is not least the result of our bilateral, European and multilateral commitment. When people say that Germany, with its 2% share of global CO2 emissions, cannot do much to stop climate change, this is not true.
Efficiency gains and bureaucratic reforms necessary
However, in view of the massive needs in almost all areas of public services in Germany, those involved in development policy must also ask themselves what contribution they can make to ensuring that scarce taxpayers’ money is used more efficiently and effectively. The budgets for development cooperation have grown continuously over many years, as have the staff numbers in the institutions that handle them. A large number of increasingly detailed specifications and requirements have led to German development cooperation becoming very cumbersome and bureaucratic in many areas. It is not unusual for a year and a half or more to pass between the request for funding and its approval. For this reason, but also because German and European development cooperation in the Global South is increasingly competing with players such as China, India, Russia, Turkey or Arab states, we need fundamental reforms.
It is crucial that the individual ministries in the German government better coordinate their actions towards the global South. Foreign, economic, security, climate policy and development cooperation must be better coordinated. Political steering must be strengthened, with clear objectives and strategies that are coordinated as closely as possible between the various ministries. This could overcome the still widespread fine-tuning of implementing organizations.
Mobilization of private investment for development financing
One important area is the mobilization of additional funds from the private capital market for development financing. Massive private investment in energy and transportation systems and in agriculture is needed. Previous efforts have not been very successful, partly because we have concentrated too much on subsidizing individual private investments and have not taken a systematic approach. Above all, this also includes supporting partners in making green investments more attractive, e.g. by reallocating environmentally harmful subsidies. In addition, funding instruments should be used more intelligently, e.g. for comprehensive guarantee approaches for green investments. Corresponding proposals from the G20 are on the table.
More than 50% of KfW Development Bank’s development loans, amounting to around 10 billion p.a., are already refinanced via the capital market. This amount could be significantly increased if the German government were to extend the corresponding guarantee framework for KfW. These guarantees do not affect the budget and the default risk for the federal government is also very low. Loans to well-structured and profitable companies, such as wind power operators in Morocco, do not necessarily require an interest subsidy from the BMZ budget.
It would also be important to involve private pension funds, such as those of churches seeking ethical investments, more closely in development financing. DEG-Deutsche Investitions- und Entwicklungsgesellschaft has made initial approaches in this area. However, due to high regulatory hurdles, DEG has hardly been able to substantially expand its financing in recent years, despite increased demand. An intelligent adjustment of regulation could free up a lot of additional financing without the need for budget funds.
Acceptance of development cooperation through efficiency and new sources of funding
When people in the development cooperation community ask how more public acceptance can be achieved again, one answer is to become better and more efficient and to tap into new private sources of development funding.
Cover photo from freepik.com
