Photo by MARIOLA GROBELSKA on Unsplash
The EU is unlikely to meet its goal of directing 25 % of Aid for Trade funding to the least developed countries by 2030, according to a new report by the European Court of Auditors.
While the corresponding EU strategy was updated in 2017 so as better to address those countries’ needs, auditors say the funding target never translated into an operational action plan, resulting in difficulties for the EU and its member states in terms of progressing collectively towards it.
The funding rate has actually fallen recently instead of rising.
In developing countries, trade and especially cross-border trade is important for growth, which can lift millions out of poverty. However, the least developed countries face significant challenges that affect their access to regional and global trade.
These can include a lack of productive capacity, trade barriers in terms of regulatory, administrative and governance practices, weak business environments, poor infrastructure, the lack of a sound system for standardisation and certifying exports, a weak institutional framework, and very difficult and costly access to financing for the private sector.
The EU’s Aid for Trade programme operates in a complex environment involving many stakeholders. Coordinated implementation at all levels and strong ownership by the partner country are therefore vital for success.
“It is very unlikely that the EU will meet its 25 % funding target by 2030”, said Bettina Jakobsen, the ECA Member in charge of the audit. “The reasons for this will need to be thoroughly examined. On this basis, it should then be reassessed whether the target is still appropriate, and whether an action plan with specific and realistic milestones should be drawn up.”
Between 2017 and 2022, the EU and its member states allocated €17.2 billion through the Aid for Trade programme to least developed countries, just a fraction of the €105.8 billion sent to other developing countries. Their share actually declined from 18 % (2010-2015) to just 12 % in 2022. The auditors found that the European Commission has not carried out any detailed analysis of the reasons for this decline in the least developed countries’ share, even though such analysis would make it possible to plan corrective measures.
The audit, which covered the 2017 to 2024 period, examined nine projects in Rwanda, Malawi, Angola, and Cambodia. The auditors found that the audited projects were successfully implemented and generally contributed to increasing the countries’ trade potential. They noted, however, the risk that these countries will be unable to capitalise on the results and thus ensure the economic sustainability of projects.
Also, although the Commission has made progress in monitoring and reporting the results and impacts of EU Aid for Trade in response to the 2017 strategy’s call for more results-oriented approaches, its reporting remains incomplete. This limits the ability to fully assess the overall effectiveness of the interventions.
Overall, the auditors call for improved coordination between EU delegations (offices established abroad that represent the EU) at country level and their regional counterparts so as to ensure that support aligns with the specific needs of individual countries.
