Financing for Development

Financing for Development

What is financing for development?

Financing for Development (FfD) is about promoting a comprehensive and integrated approach to providing the policies and resources needed to support sustainable development around the world.

FfD is a broad concept. It includes the mobilisation of domestic resources (such as tax revenues), international financial resources (such as Official Development Assistance (ODA) and other international public flows), harnessing the role of the private sector in financing development, maximising the use of innovative financing sources and mechanisms, increasing trade capacity and investment to create jobs and drive economic growth and promoting debt sustainability.

The principles of aid and development effectiveness apply to all of these areas and can help to ensure that resources are effectively and efficiently targeted. All components of the FfD approach must be underpinned by an enabling policy environment at all levels, as set out in the Addis Ababa Agenda for Action.

European policy on financing for development

The Third UN Financing for Development Conference in Addis Ababa in July 2015 agreed a comprehensive Means of Implementation package for the 2030 Agenda. The Addis Ababa Action Agenda (AAAA) helps establish a new sustainable development paradigm, with good governance at the core and an emphasis on responsibilities for all, the primacy of domestic action, the importance of good policies, the role of the private sector and a commitment to policy coherence.

The EU played a leading role in shaping this agenda and in helping to maintain a high level of ambition. The AAAA reflects the EU's priorities well.

The EU brought forward some important contributions in the context of the conference. Official Development Assistance (ODA) will continue to play an important role, and the EU- collectively already the world's largest provider of ODA-  has taken a particularly ambitious collective commitment to achieve the UN 0.7% target within the timeframe of the 2030 agenda. This includes a specific commitment to provide 0.15-0.20% ODA/GNI to Least Developed Countries (LDCs) in the short-term and to reach 0.20% within the timeframe of the post-2015 agenda. The Commission will continue to work with Member States to monitor progress against the ODA targets.  

ODA is only a small part of the development finance landscape. In line with the AAAA, the EU's actions go beyond ODA and help to bring together aid, investment, trade, domestic resource mobilisation and good policies. For example, the EU is investing EUR 42 million in its flagship Domestic Resource Mobilisation support programme, using its blending facilities to leverage more private sector investment in developing countries and maintaining 'duty free and quota free' market access to the Least Developed Countries.

The EU Accountability Report on Financing for Development

The annual EU accountability reports have assessed where the EU and its member countries stood in relation to their common commitments on financing for development, especially in relation to the UN Millennium Development Goals (MDGs), aid effectiveness, aid for trade, fast-start climate finance and good governance in tax matters and development. Future reporting will be adapted to fit the new indicators and monitoring process of the 2030 and Addis Ababa Action Agendas.

Past accountability reports (see below) provide a good overview of the development policies that were being enacted, and were based on a survey of all EU countries and various European Commission services. The reports were also used as a basis to profile EU member states as donors.


Accountability Reports

Related links

Key documents