GERMANY'S PROGRESS 2004–10

Germany increased its development assistance to sub-Saharan Africa by $979 million (€739 million) between 2004 and 2010, delivering a total of $3.43 billion (€2.59 billion) in 2010 and meeting 23% of its target increases by 2010. 18% of Germany's global increases between 2004 and 2010 were directed to sub-Saharan Africa, the second lowest proportion of the G7.

Germany has been a consistent supporter of improved access to water and sanitation, directing the largest volume of bilateral development assistance to the sector between 2005 and 2009 (both globally and in sub-Saharan Africa). It is also a leader in leveraging innovative finance for development, including becoming the first country to direct financing from the sales of CO2 emission certificates to development. Beginning in FY 2011, Germany also became the first donor to do this with a second income stream, a surcharge tax for nuclear power stations. /

LOOKING AHEAD: 2010–15

Germany's commitments to reach 0.7% ODA/GNI by 2015 and to allocate 50% of its development assistance increases to Africa are ambitious and praiseworthy. Although development priorities shifted with the establishment of a new coalition government in 2009 (including, for example, an increased emphasis on economic development and private sector engagement), the government's commitment to meeting its development assistance targets was reiterated in the all-Party Development Consensus on 25 February 2011.

However, Germany's budget for 2011 includes the smallest increases for development assistance since 2005, with €149 million allocated additionally for FY 2011. The top-line figures of the draft budget for FY 2012 contain an ODA increase of €114 million for the Ministry for Economic Cooperation and Development. In addition, the Foreign Office has seen an ODA increase of at least €125 million. This would be the second lowest increase since 2005. ONE hopes that Germany's ongoing budget process will increase spending allocated to development assistance, particularly through the new Energy and Climate Fund. At this pace, Germany will not reach 0.7% ODA/GNI until 2022 (based on its average ODA increases from 2005 to 2010). In a year when the country's economy is growing at the highest rate since reunification, and much faster than the European average, this trend risks undermining Germany's global leadership on development.

Germany should take the opportunity in 2011 to clarify how it intends to meet its development assistance commitments by 2015. In addition, to ensure that its increased financing for climate change measures does not come at the expense of traditional development sectors, Germany should commit to allocating a high proportion of resources towards international adaptation and mitigation measures through its new Energy and Climate Fund.

The current German government has identified aid effectiveness as a key priority for its development agenda in the coming years. It has already taken steps towards making aid more effective with the recent consolidation of three bilateral development agencies to reduce transaction costs and by reaffirming the Plan of Operations to Increase Aid Effectiveness of March 2009, which had been set up by the previous coalition.

To build on these efforts, Germany should update and implement this Plan of Operations, focusing specifically on increasing its use of country systems, improving aid predictability and implementing the IATI standard to enhance aid transparency. It should also use the merger of its bilateral implementation agencies to increase the competitiveness and transparency of its procurement mechanisms. This should contribute to significantly reducing Germany's high proportion of tied technical cooperation (27%) and increase value for money.

Finally, Germany should evaluate the impact of its cap on multilateral contributions. In 1993, the budget committee stipulated that not more than one-third of the Ministry for Economic Cooperation and Development budget should be spent through multilateral channels. The current coalition treaty has reinvigorated this rule by specifying that only one-third of all German ODA should be spent through multilateral channels, a policy that Germany's DAC Peer Review of 27 October 2010 criticised as 'not evidence-based'. Germany should review both the bilateral and multilateral development efforts it supports to ensure that future decisions to allocate financing through bilateral or multilateral channels are based on evidence and the comparative advantages of each. The recent reviews of UK development programmes can serve as a template that can be adapted to reflect the German context and priorities.

Germany will also have an opportunity to enhance its partnership with sub-Saharan Africa through its temporary seat on the United Nations Security Council, especially in a year when there are 22 elections scheduled on the continent. It is critical that this diplomatic engagement is paired with strong investments in Africa's development. At the upcoming G8 and G20 summits, Germany should report on its track record on past commitments and provide leadership by supporting agricultural investments and funding key mechanisms for global health, including by championing innovative financing proposals.