Private
finance
Debt
Tax
justice
Aid
Financial
architecture

Press Release: A dangerous blend? The EU must stop ‘blending’ development aid with private money until there is a radical improvement in accountability and transparency

Added 07 Nov 2013

The European Network on Debt and Development (Eurodad) today (Thursday) launches its new report which explores the EU’s practise of working with the private sector to partially fund, as well as benefit from, development programmes in poor countries.

‘A dangerous blend? The EU’s agenda to ‘blend’ public development finance with private finance’, calls for an immediate end to the controversial financing mechanisms until there is a radical improvement in accountability and transparency.

 

The report, which follows months of research, will be launched at the European Parliament.

The report finds that:

  • There is no reliable evidence to show that blending mechanisms actually meet development objectives
  • There are not appropriate mechanisms to involve developing countries’ stakeholders, which risk undermining country ownership.
  •  There is a lack of transparency and accountability, with insufficient information made available to the public.


There is a risk that these mechanisms are wasting public money that has been allocated to international development aid – grants that are already under threat from budget cuts.

The report’s author Maria Jose Romero, a policy and advocacy officer at Eurodad, said: “Blending as a concept it not new. What is new is the EU’s conviction that there can be an enormous and unprecedented scale-up in the involvement of private financiers, by using ODA to leverage private finance. In our opinion this is a dangerous trend.”

“This is a totally untested mechanism, as virtually all previous EU experience is in blending aid with other public loans. There is virtually no public information about how the blended loans and grants will be used, and whether they meet the needs of the communities they are supposed to benefit.”

Eurodad is calling for an immediate halt to these practises until there is:

·         A radical overhaul of the transparency and accountability of the current blending mechanisms.

·         A full and independent review of the effectiveness of existing mechanisms focusing on their development impacts and whether they are a suitable vehicle for ODA.

Ms Romero added: “We need to select appropriate financing mechanisms that serve in the first place the needs and priorities of developing countries. Poverty reduction and development outcomes should be the first concern. Before going forward, we need more clarity about how blending mechanisms work and how they contribute to positive development outcomes. At the moment, the European Commission’s attitude seems to be ‘just trust us’. When it comes to development aid, I am afraid this attitude is not good enough.”

To read the full report please go here.

Contacts:

For interviews and further information please contact:

Julia Ravenscroft – Communications Manager at Eurodad – on +32 2 894 48 54

María José Romero – Policy and Advocacy Officer – on +32 2 894 46 47


Notes to the editor:

 

Eurodad (the European Network on Debt and Development) is a network of 48 non-governmental organisations from 19 European countries working on issues related to debt, development finance and poverty reduction. Since it was founded in 1989, Eurodad has been pushing for development policies that support pro-poor and democratically-defined sustainable development strategies. Eurodad works on the promotion of responsible finance principles. See Eurodad’s responsible finance charter.