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FED EN (flash) 1/10/02 14:41 Page 1 DEVELOPMENT THE EUROPEAN DEVELOPMENT FUND IN A FEW WORDS EUROPEAN COMMISSION DE 112 1 February 2002 FED EN (flash) 1/10/02 14:44 Page 27 List of countries benefiting from the European Development Fund A CP States (Cotonou Agreement) OCT (Association decision) Africa (47) Caribbean (15) Pacific (14) Denmark Greenland Angola Mali* Antigua and Barbuda Cook Islands Benin* Mauritius Bahamas Fiji France Botswana Mauritania* Barbados Kiribati* Mayotte Burkina-Faso* Mozambique* Belize Marshall Is. St Pierre and Miquelon Burundi* Namibia Dominica Micronesia Wallis and Futuna Cameroon Niger* Grenada Nauru New Caledonia and Dependencies Cape Verde* Nigeria Guyana Niue French Polynesia Comoros Islands* Uganda* Haiti* Palau French Southern and Antarctic Territories Congo Central African Republic* Jamaica Papua Congo (DRC)* Rwanda* Dominican Republic New Guinea Netherlands Ivory Coast Sao Tome & Príncipe* St Christopher and Nevis Samoa* Aruba Djibouti* Senegal* St Lucia Solomon Is. Dutch West Indies (Bonaire, Curaçao, Saba, Eritrea* Seychelles St Vincent and the Grenadines Is. Tonga Saint Eustatius, Saint Martin) Ethiopia* Sierra Leone* Surinam Tuvalu* Gabon Somalia* Trinidad and Tobago Vanuatu* United Kingdom Gambia* Sudan* Anguilla Ghana Swaziland South Georgia and South Sandwich Islands Guinea* Tanzania* Cayman Islands Guinea Bissau* Chad* Falkland Islands Equatorial Guinea Togo* Turks and Caicos Islands Kenya Zambia* British Virgin Islands Lesotho* Zimbabwe Montserrat Liberia* Pitcairn Madagascar* St Helena and Dependencies Malawi* British Indian Ocean Territory British Antarctic Territory * Least Developed Countries The ACP Group includes 78 States including Cuba which has not signed the Cotonou Agreement and does not benefit from EDF. South Africa is a mem- ber of the ACP Group and the Cotonou Agreement, but the aid that is granted to it by the Union is charged to the Community budget, not to EDF. THE EUROPEAN DEVELOPMENT FUND IN A FEW WORDS 27 FED EN (flash) 1/10/02 14:41 Page 3 THE EUROPEAN DEVELOPMENT FUND IN A FEW WORDS 4 Introduction 5 What is the purpose of the EDF? 8 What is the origin of EDF resources? 11 Implementing the EDF 17 Who benefits from EDF financing? 20 Flexible procedures The National Programme The Regional Programme Management of EDF financial programmes 27 List of EDF beneficiary countries THE EUROPEAN DEVELOPMENT FUND IN A FEW WORDS 3 FED EN (flash) 1/10/02 14:41 Page 4 Introduction • The European Union is one of the main actors in the field of development cooperation and poverty reduction. Its contribution to development aid has grown considerably in recent years and the range of beneficiaries has broadened. From Latin America to Asia, the Mediterranean countries, the African, Caribbean and Pacific States plus many others, a large number of developing regions benefit from the Union’s financial support. • Today, the combined aid of the European Union and its Member States represents nearly 55% of public international development aid and more than two-thirds of grant aid. On its own, the European Commission, which executes all the Union’s decisions, manages 10% of the entire glo- bal public development aid, thus making it a priority partner for developing countries. Even now, when public aid is being drastically reduced worldwide, Union resources for development cooperation are still considerable. • The European Development Fund is a crucial instrument of the European Union’s development policy for ACP (Africa, Caribbean and Pacific) States. However, many people have never heard of this instrument or only know about it very vaguely. What is the purpose of the EDF? Who really benefits from it? In practice, how does it operate? These are a few of the questions that this publication attempts to answer. The idea behind The European Development Fund in a few words is to provide readers with basic facts on the objectives, characteristics and operating procedures of the main financial instrument for cooperation between the European Union and ACP States. 4 THE EUROPEAN DEVELOPMENT FUND IN A FEW WORDS FED EN (flash) 1/10/02 14:42 Page 5 What is the purpose of the EDF? I The European Union has maintained cooperative development relations with a large number of developing countries for many years. The main purpose is to promote economic and social development with a particular focus on reducing and alleviating poverty in the long-term, by providing beneficiary countries with technical and financial assistance. To achieve this, the Union draws up the guidelines of the partnership and mobilises financial resources to implement the cooperation agreements. These Community resources allocated to development come from three sources: "The European Union budget "The European Development Fund "The European Investment Bank THE EUROPEAN DEVELOPMENT FUND IN A FEW WORDS 5 FED EN (flash) 1/10/02 14:42 Page 6 • The European Development Fund, or “EDF”, is the main financial instrument used for cooperation between the European Union and the Group of African, Caribbean and Pacific (ACP) States1. For more than forty years it has financed a whole series of development programmes and projects in the group of countries that concluded partnership agreements with the Union (successively the Yaoundé Agreements, the Lomé Conventions, and the Cotonou Agreement). The European Development Fund contributes as well to the development of some twenty Overseas Countries and Territories (OCTs)2 linked to the European Union. • Since the creation of the first European Development Fund in 1957, each new partnership agreement concluded by the Union with ACP countries and OCTs is associated with an overall fund to implement cooperation during a five- year period. A separate EDF is used for the execution of each of the Conventions except for “Lomé IV” in 1990 which lasted for a period of 10 years. It covered two financial protocols, and two EDFs, the 7th and 8th EDF. The 9th EDF, which begins with the new ACP Partnership Agreement, signed in June 2000 in Cotonou (Benin) will last for twenty years. It will take effect for the first five years after the Agreement has been ratified. Like the Yaoundé and Lomé Conventions before it, the Cotonou Agreement constitutes the legal basis of the development aid granted by the Union to the ACP States. 1 Today the ACP Group comprises 78 countries. South Africa does not benefit from the EDF because of its particular situation, although it belongs to the ACP Group and the Cotonou Agreement. Cuba is a member of the ACP Group but has not signed the Cotonou Agreement. It therefore does not benefit from the EDF. 2 These are some 20 territories mainly located in the Pacific and the Caribbean, enjoying various degrees of autonomy, asso- 6 THE EUROPEAN DEVELOPMENT FUND IN A FEW WORDS ciated with four Member States (France, Denmark, the Netherlands and the United Kingdom). FED EN (flash) 1/10/02 14:42 Page 7 The advantages of the EDF in a few points I The European Development Fund offers ... Grants: The vast majority of financial resources awarded to ACP States by the European Union through the EDF are grants. About 80% are given as subsidies or non-reimbursable aid. A significant volume of resources: The EDF resources are large and have increased with successive Conventions. About €13.5 billion for the 9th EDF plus additional funds, raises the total amount of ACP aid to €16.4 billion for five years. Long-term financing: As resources are allocated on a five-yearly basis, the actions financed by the EDF can easily be extended to give long-term support. Regular reviews allow for readjustment should the need arise. Flexibility in the system of allocations: The new system for allocating EDF resources gives priority and incentives to ACP States’ performance, as well as sanctioning poor results. Co-management mechanisms: The EDF has a joint management system that gives the beneficiary countries a large role. This also applies to the development of cooperation strategies and programme implementation. Resources accessible to civil society: The partnership with civil society offers civil society organisations more flexible possibi- lities for EDF funds. Support to the development of ACP regions: The EDF is a financial instrument to support regions as well as ACP States. It provi- des support to reinforce integration and regional cooperation. Stronger support for the fight against poverty: Through its activities in the social field and other development sectors, the EDF contributes greatly to improving the living conditions of the population and to reducing poverty. THE EUROPEAN DEVELOPMENT FUND IN A FEW WORDS 7 FED EN (flash) 1/10/02 14:42 Page 8 What is the origin of EDF resources? I Whereas Community aid to other regions of the world like Asia, Latin America, the Mediterranean or Eastern European countries, comes in general from the Community budget to which Member States contribute annually, the finance allocated to ACP States and OCTs via the EDF comes from another source. • The European Development Fund’s resources are not part of the Community budget. The Fund’s financial autonomy from the Community budget is an exception to the general scheme of Community finances, and is thus a unique instrument. However, if EDF resources do not come from the European Union’s annual budget, where do they come from? 8 THE EUROPEAN DEVELOPMENT FUND IN A FEW WORDS FED EN (flash) 1/10/02 14:42 Page 9 • The European Development Fund is derived from five-yearly “ad hoc” contributions from the Union Member States. Every five years, Member Country representatives meet at intergovernmental level to decide on an overall amount that will be allocated to the Fund and to oversee its implementation. This makes the EDF different from the components of the general budget as it operates according to its own financial regulations1. From the 1st to the 9th EDF, resources have steadily increased with the enlargement of the Union, and as cooperation has evolved and the number of ACP States has increased.