How mobilising private capital could keep the EU Development Budget in check

Category: News

The European Parliament is expected to vote tomorrow on its 2017 Budget, marked, yet again, by incremental increases in redundant spending. The European Commission requested a further 1.2 billion euros for development aid and the neighbourhood instrument, while the European Parliament added 1 billion euros for humanitarian and emergency aid.

Speaking in the European Parliament’s plenary ahead of the vote, Nirj Deva MEP, Vice-Chair of the Development Committee and Conservative Spokesman for Development, said:

“As Rapporteur for the Development and Humanitarian Aid Budget, I have sought to streamline a private sector approach in each budget line, in order to allow for public and private sector money to be brought together, in the face of growing resource scarcity.”

Less than six months ago, the European Parliament and the European Commission backed Nirj Deva’s proposals to better engage the private sector in development, shaking up the traditional patterns of EU development financing, through the External Investment Plan for Africa:

“The External Investment Plan is of paramount importance in leading our private sector approach in Africa, with 3.1 billion euros expected to leverage at least 50 billion euros in external capital for projects by 2020.”

Instead of fully capitalising on existing funds to advance partnerships with the private sector, the European Parliament remains determined to increase both the development budget and the humanitarian aid funds by a further 2 billion euros above the initial proposal by the Commission, supplementing the Migration and Asylum budget line by 850 % to finance the compacts under the Valetta Plan, the European Agenda on Migration and the Trust Funds.

Disappointed with the current trend, Nirj Deva said:

“This budget adheres to an old pattern; of reaching beyond our means; if Member States are to be held responsible for rigorous national budgets, then the EU must also be held to account.  I will not support a business-as-usual Budget; one that fails to fully realize a new way of mobilising private capital, which holds the key to wealth creation and the fight against global poverty.”

In the long run, the External Investment Plan and development finance in the form of public-private partnerships will, without a doubt, be profitable to both sides, alleviating poverty, attracting valuable business opportunities for EU companies, stopping migration and significantly relieving the pressure on European taxpayers.