The ­­BMZ 2030 Reform Strategy

In April 2020, Gerd Müller, Germany’s federal minister for economic cooperation and development, presented the BMZ 2030 reform strategy, a far-reaching programme for overhauling Germany’s development policy. It aims to focus development measures and funding “more strategically, effectively and efficiently” in order to find “answers to new challenges”. To this end, the reform is resetting the thematic focus, revising the system of partner countries for bilateral official development cooperation, adapting the planning and allocation procedures, and building capacities for data analysis and impact assessment. Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) is currently implementing the reform strategy, so it is not yet possible to draw conclusions about its success. However, in view of the growing importance of development cooperation, both as a field of German policy and at the international level, it seems appropriate to examine the strategy more closely.

Against this backdrop, the article seeks to provide a preliminary assessment of the BMZ 2030 reform strategy. It begins by studying the current and upcoming challenges for German development policy and, based on this, develops a concept of strategic effectiveness that supplements the ‘traditional’ notion of effectiveness with considerations relating to strategic partnerships for sustainable development and raising Germany’s profile compared to other donors. This concept of strategic effectiveness provides a frame of reference for examining the reform strategy.

More Complex, More Competitive – Challenges for German Development Cooperation

In addition to the ‘classic’ fields of development cooperation, such as poverty reduction and food security, new global challenges have emerged that greatly exceed the capacities of bilateral cooperation. They include tackling climate change, mitigating global health threats, and preventing and managing crises and conflicts. Since 2015, the 2030 Agenda for Sustainable Development has provided a global framework encompassing these challenges and illustrating their numerous interdependencies.

The aim of building global partnerships for sustainable development (Sustainable Development Goal [SDG] 17) as set out in the 2030 Agenda highlights a prerequisite for tackling these challenges: partnerships between a wide range of actors at the international, regional, national, and local level. In addition to bilateral cooperation, multilateral forums play a key role at the global level. However, for some years now, their ability to carry out their tasks of coordinating and setting standards has been restricted by the growing trend of countries retreating into nationalism.

Parallel to the weakening of multilateral forums, we can also observe their targeted instrumentalisation, especially by rising powers such as China. As the systemic competition increasingly plays out in the open, multilateral forums have become contested arenas in which actors try to impose their respective approaches and standards regarding international cooperation. In the area of development cooperation, the lines of conflict in this respect include the differentiated responsibilities of industrialised and developing countries for sustainable development, along with questions of conditionality and transparency.

Besides the poles of global power in systemic competition, Germany also faces growing fragmentation of the international development landscape due to an accelerated rise of emerging economies and middle-income countries since the turn of the century. As more actors enter the arena, competition between different approaches to development policy becomes greater as these countries are themselves increasingly active in this respect. Admittedly, the term ‘new’ donors is misleading when used for countries like China and India, as they have been engaged in development cooperation in terms of South-South cooperation for many years. However, the volume, geographical spread, and influence that these forms of cooperation have on the development policy discourse are new in this form.

Another challenge arises from the breadth of the Sustainable Development Goals and the financing required to achieve them. By 2020, the estimated financing gap to achieve the development goals already stood at 2.5 trillion US dollars per year. In view of reversed development progress and a renewed rise in the global development needs owing to COVID-19, it can be assumed that the financing gap is now even wider. The financial resources provided by official development assistance (ODA) continue to fall short in this respect. There is, therefore, an urgent need to mobilise additional financial resources, including in the form of higher contributions by developing countries themselves and more private investment.

Given the continuously high development needs, official development assistance nevertheless remains an important component. As the second-largest ODA donor in the world, Germany has a vital role to play in this regard. It seems clear that expectations towards Germany will grow in the years to come, partly because some other traditional donor countries are increasingly turning their gaze inward due to growing domestic needs in the wake of the coronavirus pandemic. As Germany is expected to take on a more prominent international role, the transparency and accountability of its development expenditure will, in turn, become even more important. If German development cooperation is to secure its continuing public and political acceptance and legitimacy, it must thus be able to demonstrate tangible results.

Strategic Effectiveness

The discussion about the effectiveness of development cooperation is not new. Dialogue on what needed to be done to increase effectiveness was already initiated with the adoption of the Millennium Development Goals in 2000. Four High-Level Forums on Aid Effectiveness were subsequently held to discuss the corresponding standards. These initially involved the industrialised nations and later on also incorporated developing countries. The fourth forum in 2011 eventually witnessed the launch of a new partnership: the Busan Partnership for Effective Development Co-operation.

The principles for effective development cooperation set out in the Busan Partnership include the following:

• increasing the ownership of development priorities and approaches by developing countries;
• ensuring all measures are focused on results based on development priorities;
• cooperation of all stakeholders based on openness, trust, mutual respect, and learning;
• making sure donor countries and cooperation beneficiaries are transparent and accountable to each other and to the public and parliament for their development policy actions.

Germany is actively involved in international discussions on the effectiveness of development cooperation, including in the Global Partnership for Effective Development Co-operation (GPEDC).

In view of the challenges and changes affecting international development as outlined at the outset, however, a broader – strategic – understanding of effectiveness that goes beyond the traditional concept of the latter appears to be needed. This article, therefore, adds a further two elements to the components of effectiveness in development cooperation as outlined above:

Effectiveness through Strategic Partnerships for Global Sustainable Development

As a global framework for sustainable development, the 2030 Agenda provides a starting point for sustainable reform of development cooperation. The thematic interconnections between the SDGs, along with their universal character, highlight the need to develop strategic partnerships to achieve the goals. These must be created at the local, national, regional, and international level and involve state and non-state actors. Much needed progress on fostering global public goods, such as environment and health, will require closer cooperation with influential emerging states. Working with the private sector is also increasingly important for shaping sustainable economic systems and financing sustainable development. Any reform fit for the future must thus identify relevant partners for achieving sustainable development and consistently work towards strategic cooperation with these partners. Germany can build on existing partnerships and approaches in this respect.

Effectiveness through Partner Orientation and Raising the Profile of Germany’s Values-Based Development Cooperation

In light of increasing systemic competition and diversification of the actors involved in development cooperation, being perceived as an attractive and trustworthy partner is more important than ever. At first glance, donors who postulate more interest-driven cooperation seemingly not linked to conditionality, currently appear more attractive to many developing countries. This means that Germany ought to communicate its cooperation interests and values-based quality standards even more clearly while highlighting the value of its contribution in partner countries. To this end, it is important to improve communication about the scope and tangible results of Germany’s contributions. At present, these are often not portrayed clearly enough compared to other donors who are skillfully showcasing their activities. These efforts for better communication must be accompanied by reducing the obstacles to greater effectiveness, such as the burden of coordinating large numbers of small-scale projects. Germany should also harness its existing strong relationships with partner countries and its positive international perception as a values-based actor to help raise its profile.

Besides bilateral cooperation with partner countries, this is also a vital element at the multilateral level. As the world’s second-largest donor of ODA and a major global player, Germany is expected to actively advocate the rules-based, values-based global order in multilateral forums in terms of both subject matter and finances. More than ever before, it is time for Germany to shape the agenda more actively and prioritise which multilateral forums offer the greatest opportunities for pursuing the German approach to sustainable development.

The BMZ 2030 Reform Strategy

Within this frame of reference, how can the components of the BMZ 2030 reform strategy be evaluated for their strategic effectiveness? The key objective of improving effectiveness, as elaborated in the reform announcements and documents, provides a good starting point. The stronger orientation towards development policy priorities and increasing the BMZ’s capacity to act also require closer scrutiny in the context of strategic effectiveness.

Of Facts and Figures: Impact Orientation, Measurement, and Communication

In the core area of ‘traditional’ effectiveness, the reform strategy stipulates a greater focus on orientation towards and measurement of impacts, particularly regarding data availability and processing, as well as communication.

The BMZ seeks to consolidate its portfolio and focus its activities more strongly on results in areas it perceives to be particularly important. It does so by drawing up a new list of priority areas (see table 1). In addition to the five core areas, each fleshed out by three areas of intervention, the new model comprises ten fixed-term initiative areas and six overarching quality criteria. The structure of this list of new priorities clearly highlights the broad range of challenges for sustainable development. This also means, however, that the sum of all core areas, including areas of intervention, initiative areas, and quality criteria, remains substantial, which could make it difficult to achieve desired improvements in effectiveness through consolidation.

The reform aims to mitigate this risk by linking the list of priorities with the new list of partner countries. It envisages focusing cooperation with bilateral partners on three core areas and two subordinate areas of intervention per country. In addition to this, it will be possible to work on up to two initiative areas. The main consideration when selecting the initiative areas is supposed to be that they significantly contribute towards their respective areas.

Table 1: Overview of the New BMZ Priority Area

Moreover, the new approach to managing via strategies as envisaged in the reform strategy should also be viewed in the context of improving effectiveness. The plan is to create fewer strategies that are more consistently and effectively used for management purposes. This includes a reduction from the current 35-or-so sectoral strategy papers to five core area strategies. Binding standardised indicators for all core areas will be used to improve the assessment of effectiveness. In addition, review instruments are to be enhanced to ensure that lessons learnt from strategies and programmes are more systematically applied.

One question remains unanswered in this context: how to record the results achieved in thematic priority areas and countries that are no longer the focus of bilateral official development cooperation in the wake of the reform, and how to ensure their preservation? Along with a potential loss of reputation, any ‘white elephants’ would be extremely regrettable in terms of effectiveness, too.

The reform strategy points out a clear need to improve the availability and quality of data if the goals of greater effectiveness and improved assessment are to be technically possible. To this end, the BMZ is introducing technical improvements and has made structural changes, including establishing a new department to deal with policy issues, data, statistics, and effectiveness.

A quality system for measuring effectiveness also provides the basis for communicating the impact of German development cooperation with greater transparency. This applies to regular reporting, for example, within the ODA and IATI frameworks, as well as parliamentary questions. Quantitative data is to be made tangible, for example, by providing practical examples to communicate results to the public in a clearer and more meaningful way. However, communication is afforded low priority in the reform strategy when compared to other issues relating to effectiveness. The reform strategy should not make the mistake of wasting opportunities to increase public acceptance of development cooperation.

Aid and Accountability – Towards Greater Ownership by Partner Countries?

The reform strategy underlines that partners acting on their own initiative is “key to development”. It calls on Germany’s partner countries to demonstrate even more that they are making progress in areas like good governance, human rights protection, and the fight against corruption.

There is a particularly strong focus on good governance in the reform strategy regarding the reorientation of bilateral partnerships. The BMZ’s previous country list is being replaced by a new system of partner categories (see table 2) with three overarching categories: bilateral partners, global partners, and nexus and peace partners.

The new direction for cooperation with partners has strongly shaped perceptions and discussions about the BMZ 2030 reform strategy. While most observers believe there is a fundamental need to consolidate the list of partner countries, there are also fears that withdrawal from certain countries could have a permanently detrimental effect on Germany’s influence and its perception as a global actor. Particular criticism has been levelled against the selection of ‘exit countries’ (see table 2), which will no longer receive official bilateral development assistance in future. The BMZ stresses that cooperation with these countries is not coming to an end but will continue through non-governmental channels such as non-governmental organisations and political foundations, as well as European and multilateral formats. However, changed framework conditions resulting from an end to official bilateral development cooperation with the ‘exit countries’ should not be underestimated and could potentially impede the work of non-state actors on the ground.

The comprehensibility and coherence of the country selection process, intended to reflect the stronger emphasis on accountability, has also come under fire. According to the BMZ, aspects such as good governance and willingness to pursue reform were taken into account when selecting the bilateral partner countries. However, critics note that this focus on good governance as a criterion for deciding whether to continue with official bilateral development assistance is not apparent in the case of Egypt and Tanzania, while reform-oriented and needy countries such as Sierra Leone and Liberia have been removed from the list of bilateral partner countries. To avoid undermining the credibility of both the reform strategy and German development policy, the country selection needs to be explained in a transparent and comprehensible manner and systematically evaluated whenever the underlying conditions change.

The criteria of fostering good governance and displaying a willingness to pursue reform play a particularly important role in the selection of the so-called reform partners. In 2017, the Marshall Plan with Africa ushered in this type of cooperation with its focus on particularly reform-minded partner countries on the African continent. The special quality of the cooperation is reflected not only in the level of financial commitment but also in an intensive political dialogue on mutual cooperation interests and requirements as well as in special instruments such as reform funding. The BMZ 2030 reform strategy now systematises these partnerships as a sub-category and the most intensive form of bilateral cooperation. The stated main criteria for selection are good governance, acting on one’s own initiative, and a focus on private investment. The reform presents a good opportunity to learn from the experiences of reform partnerships and to remedy identified weaknesses, including how the criterion of willingness to reform is applied. This also seems opportune considering the planned expansion of this new partnership model beyond the current partners and the African continent.

Table 2: The ­BMZ’s New Country List

Your Partner or My Partner? The Role of Donor Coordination

In view of the new partnership model and the end of official bilateral development cooperation with more than 20 countries, the BMZ stresses the importance of coordinating with other donors. The scale of Germany’s contribution has already been used as a criterion in the selection of the new bilateral partner countries. Countries, where Germany’s contribution was deemed small and thus not significant compared to other donors, include Haiti, Laos, and Liberia.

However, it is not quite clear to what extent agreements were made with other donors about donor coordination when preparing for the reform strategy. It certainly does not seem self-evident that thematic priority areas previously supported by Germany in the ‘exit countries’ will now be covered by other donors – particularly in view of a trend of declining official development assistance on the part of traditional donors. This risks creating a vacuum in the ‘exit countries’ – a vacuum that could lead to an increase in influence by donors who take a less values-based approach to development. This would not be favourable for Germany’s development aspirations and German interests. Particularly concerning ‘exit countries’, it would thus make sense for Germany to coordinate more closely with like-minded donors.

With regard to coordination in partner countries, support for joint projects with other donors is also being discussed in the context of the reform. One possibility in this regard is the EU approach of joint programming, which aims to facilitate better coordination of the programmes of EU institutions and Member States in the respective countries. This concept is by no means new. It has been on the table at the EU level for some years, albeit progress has been slow. Germany announced its intention to press ahead with this issue during its Presidency of the Council of the European Union in 2020. There have been no notable advancements however – the mammoth task of dealing with the pandemic is certainly one explanation for the lower priority afforded to this issue during the German presidency.

‘Better Together’: Strategic Partnerships for Global Challenges

As discussed earlier, strategic partnerships beyond traditional bilateral development cooperation – including with emerging economies and non-state actors – are needed to address transboundary challenges and to further global common goods.

The new partnership model takes this into account with the creation of the Global Partners category. The eight global partners are emerging economies such as China, India, Mexico, and South Africa, which, in terms of their political weight and level of economic development, are able to make a significant contribution to achieving global common goods. They are, therefore, also important partners for the advancement of German interests worldwide. The BMZ 2030 reform strategy thus consolidates and systematises a component of German development cooperation that has already gained in importance over recent years. It is now important to better exploit the potential of cooperation with these countries, for example, through the strategic development of instruments such as triangular cooperation. This entails a traditional donor country such as Germany working with an emerging economy on a project in a developing country.

When looking at the aspect of strategic partnerships, the selection of countries for the new partnership model requires critical scrutiny. The combination of a technical and a strategic filter was intended to ensure a selection based on quantitative criteria such as the partner country’s level of need and strategic criteria such as geopolitical significance. In sum, these selection decisions result in a focus on Africa and the Middle East. This new orientation could lead to a loss of German influence in Latin America and Asia, something that could be exploited by countries already becoming increasingly active in these regions. To prevent a weakening of strategic relations with the ‘exit countries’, efforts should be made in coordination with other German ODA-spending ministries to maintain relations through these channels – no easy undertaking in view of the difficulty of coordinating different departments. The BMZ’s orientation also seems to run counter to the current foreign policy trend of greater German commitment in Latin America and Asia – embodied in the German Foreign Office’s Latin America and Caribbean Initiative and the Policy Guidelines for the Indo-Pacific Region – and could thus erode coherence and strategic interests in Germany’s dealings with its international partners. If this is to be prevented, the relevant ministries need to work on improving their coordination, first and foremost the BMZ and the Foreign Office.

In addition to partner countries, the private sector also has an important role to play in strategic partnerships. The BMZ’s efforts to involve and promote the private sector in sustainable development are particularly evident in the Marshall Plan with Africa with its reform partnerships and in the Development Investment Fund. The BMZ 2030 reform strategy institutionalises the category of reform partners and offers the possibility of expansion. The new thematic priorities also include aspects of private sector development. Whereas the role of the private sector receives attention, the weighting of corresponding instruments in the reform strategy seems rather restrained compared to other BMZ discussions and concepts. The implementation of the reform offers an opportunity to integrate these instruments into the portfolio more strategically, ensuring that activities are in line with the social, environmental, and economic aspects of the 2030 Agenda.

Partner Orientation and Profile Building: Germany as an Attractive, Values-Based Partner

As explained above, the strategic effectiveness of German development cooperation depends even more than before on being perceived as an attractive, reliable partner. Its competitors in this respect are donors such as China, which pursue other development approaches and are skilled at marketing and showcasing their activities in partner countries. To remain relevant as a donor and partner in this situation, it is vital to carry out an evaluation of existing weaknesses in Germany’s development cooperation compared to other donor models and make the appropriate adjustments. Potential starting points include clearly communicating mutual cooperation interests and financial commitments as well as the coherence of instruments and implementation structures. It is, at the same time, important not to fall into the trap of neglecting Germany’s values-based approach and quality standards so as to compete with development policy approaches perceived to be more efficient. Instead, the added value of German development cooperation must be clearly implemented and demonstrated through the interaction of both these components to increase awareness and appreciation of German activities among political decision-makers and the public in partner countries.

The BMZ 2030 reform strategy addresses this issue in several ways. By dovetailing the lists of thematic priority areas and countries and the planned consolidation of bilateral portfolios, the BMZ seeks to reduce the large numbers of separate, small projects in the partner countries. This harbours potential for reducing transaction costs on both sides and strengthening the impact and significance of the German contribution in partner countries. This goal is also supported by the plan to develop the instrument of official government negotiations. In future, all commitments in the partner country, i. e. including special initiatives, climate financing, regional and global projects, and KfW development loans, are to be communicated in a combined form that will emphasise Germany’s contribution as a total package. The idea of reflecting the commitments of other German ministries in this context should be pursued further, particularly in light of the increasing ODA share of other ministries. However, experience has also shown that the at times divergent interests and procedures of individual ministries and German donor agencies make it difficult to bundle commitments in this way.

Furthermore, its values-based approach is a key component of German development cooperation. These values are embedded in the new list of priority thematic areas as “overarching quality criteria” to be applied to all measures. These include human rights, gender equality, anti-corruption, environmental and climate impact assessment, and conflict sensitivity. In principle, the idea of mainstreaming issues entails the danger that they will be side-lined. When implementing the reform, care should thus be taken to ensure that the quality criteria are consistently applied.

In addition to bilateral relations, the multilateral level also plays an important role in raising Germany’s profile as an attractive development partner. Both the BMZ’s Strategy Paper “BMZ Priorities for a Strong European and Multilateral Development Policy” and the BMZ 2030 reform strategy envisage making Germany’s contribution to rules- and values-based international cooperation and sustainable development in multilateral forums even more strategic and effective – especially regarding setting a thematic agenda and strengthening Germany’s development cooperation model. Germany’s influence is to be further increased through the targeted secondment of personnel to strategically important organisations.

Implementation Is Now the Key

How effective will German development cooperation be in the future, considering the changing requirements? Based on the above analysis, does the BMZ 2030 reform strategy help to increase its strategic effectiveness?

So far, the answer is mixed. First, the reform strategy’s claim to actively shape policy should be welcomed. The BMZ is underlining its understanding of development policy as a key component of German foreign policy and strengthening its orientation towards strategic interests. At the same time, the global framework provided by the 2030 Agenda and its long-term sustainable development goals remains the point of reference for German development policy.

Based on its aim to actively shape German development policy, the reform addresses a number of aspects with a view to increasing effectiveness in bilateral relations with partner countries and at the multilateral level. Along with adjustments targeting traditional aspects of effectiveness, particularly in terms of a stronger orientation towards and better measurement of impacts, the reform provides a launchpad for building more strategic relationships with partners and raising Germany’s profile as an attractive partner. Meanwhile, certain elements of the reform strategy still lack coherence and would benefit from re-evaluation and adjustment.

It is impossible to make a final assessment of the reform strategy at this early stage of implementation. This implementation now offers a vital opportunity to learn from existing weaknesses and build on approaches that work. It will also be important to monitor the reform’s indirect effects on non-state actors, such as political foundations. Entirely in line with the results-oriented approach, necessary adjustments will have to be made in this process so that, in the end, the reform strategy can actively contribute to shaping a strategically effective, sustainable German development policy.

– translated from German –

Veronika Ertl is Advisor for Development Policy in the Analysis and Consulting Department at the Konrad-Adenauer-Stiftung.