Germany

At a glance

Funding trends

  • Germany is the second-largest donor country, spending US$25.0 billion on official development assistance (ODA) in 2018. This corresponds to 0.61% of its gross national income (GNI), making it seventh-largest donor relative to the size of its economy.
  • According to the Organisation for Economic Co-operation and Development (OECD), Germany’s ODA in 2018 decreased by 4% compared to 2017. This is due to lower in-country refugee costs, which fell from US$6.5 billion to US$3.9 billion. When excluding these expenditures, ODA actually increased by 8%.
  • While total ODA is expected to drop due to further decreasing in-country refugee costs, the Ministry of Economic Cooperation and Development’s (BMZ) budget, which stands at €10.9 billion (US$12.8 billion) in 2020, is planned to maintain this level in 2021. BMZ’s budget accounted for 34% of total ODA in 2017 (latest year for which data is available) and its share is expected to rise as refugee costs decrease.

    3 - Total ODA Germany

    This chart depicts ODA according to the grant-equivalent measurement system. Statistics using this system became official in 2018. For further details on methodology, see our Donor Tracker Codebook.

Strategic priorities

  • Germany frames its development policy under an overarching narrative of “fighting the root causes of displacement”, with a focus on the Middle-East and North Africa (MENA). 
  • During its Group of 20 (G20) presidency in 2017, Germany demonstrated strong leadership on global health by including health on the G20 agenda for the first time.
  • Thematically, Germany’s development policy is expected to maintain its focus on migration, forced displacement, food security, and climate protection. It is also likely going to continue targeting Africa and the MENA region.

    4* - Germany bilateral by sector

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Outlook

  • Germany is assuming the Presidency of the EU Council in the second half of 2020. Due to the ongoing COVID-19 outbreak, Germany is likely going to feature global health and crisis response as central themes of its Presidency.
  • In 2020, the Federal Ministry of Health is expected to publish Germany’s new cross-ministerial global health strategy.
  • The BMZ is currently revising its strategy for collaboration with bilateral partner countries. The new concept is expected to be released in 2020. 

Policy Priorities

Development cooperation focuses on displacement and migration, climate change, agriculture, and food security

The government’s coalition treaty (for 2017 to 2021) lists the following development prioritites: 1) fair trade, 2) Marshall Plan with Africa, 3) gender equality and education, 4) social and health systems, 5) poverty eradication, 6) climate change mitigation and adaptation, and 7) fighting the root causes of flight and migration. Building on those, the Federal Ministry for Economic Cooperation and Development (BMZ) highlighted its three priority areas for the current legislative term (2017 to 2021): 1) displacement and migration, 2) climate change, and 3) agriculture and food security (for more information, see box).

In October 2018, BMZ published a strategy paper entitled ‘Development Policy 2030’, which outlines the various tools it will apply to meet the challenges associated with five major global trends: population growth, climate change, globalization, scarcity of resources, and digitalization. These include increasing national and European funds for development assistance, promoting  sustainable private investments, and strengthening multilateralism


Germany’s key development priorities:

  • Flight and migration, through the special initiative ‘Tackling root causes of displacement, stabilizing host regions, supporting refugees’, BMZ plans to spend €505 million (US$596 million) on this issue in 2020;
  • Climate change and renewable energy, with a pledge of €1.5 billion (US$1.8 billion) to the Green Climate Fund (2020 to 2023); and
  • Agriculture and food security, with investments of over €1.5 billion (US$1.8 billion) per year, e.g., through BMZ’s special initiative ‘ONE WORLD - No Hunger’.

Through its G7 and G20 presidencies, in 2015 and 2017 respectively, Germany further strengthened its focus on global health, climate and sustainability, women’s empowerment, financial inclusion, and its relationship with the African continent. During the G20 presidency, health ministers held their first high-level G20 meeting with a focus on anti-microbial resistance (AMR) and pandemic preparedness. Discussions around AMR resulted in the planning and launch of a G20 AMR research and development (R&D) Collaboration Hub, based in Berlin. In February 2019, the Global Health Hub Germany was launched with the aim of serving as an independent and interdisciplinary exchange and networking platform. The German Federal Ministry of Health (BMG) is currently developing a new government-wide global health strategy.

Since 2014, BMZ’s increasing budget has been channeled through ‘special initiatives’, which are programs spearheaded by the development minister. In the 2017 to 2021 legislative period, three special initiatives are prioritized: ‘tackling the root causes of displacement, reintegrating refugees’, ‘stability and development in the MENA region’, and ‘ONE WORLD – No Hunger’. In addition, in 2018 another special initiative on ‘vocational training and jobs’ was launched.

The German government is engaged in a new approach to development in Africa focused on fostering private investment and good governance across the continent and is advocating for a concerted EU-Africa Policy at the EU level. In 2017, the Development Minister presented a ‘Marshall Plan with Africa’ laying out initiatives to improve economic and social development. The plan suggests that countries willing to implement reforms would benefit from increased ODA and German support for private investment. To date, Germany has ‘reform partnerships’ based on this principle with six countries: Tunisia, Ghana, Ivory Coast, Ethiopia, Morocco, and Senegal. These reform partnerships serve as Germany’s bilateral contribution to ‘Compacts with Africa’, a G20 initiative which was developed by the German Ministry of Finance and launched during Germany’s G20 presidency in 2017. ‘Compacts with Africa’ brings together African countries, bilateral partners from the G20, and international organizations to work on country-specific agendas to increase investment opportunities to private investors.

ODA Breakdown

Germany channels the majority of its ODA bilaterally

The German government has a strong preference for bilateral funding. In 2018, bilateral funding stood at 78% of total ODA (DAC average: 59%). This includes earmarked funding to multilateral organizations (13%), which is reported as bilateral ODA. Germany’s preference for bilateral funding is driven by its two large government-owned implementing agencies, GIZ and the KfW Development Bank. Germany channels only small shares of its bilateral ODA through non-governmental organizations (NGOs) (7%, DAC average: 18%) and through multilateral organizations (17%, DAC average: 23%).

5 - Germany bi-multi ODA

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Most bilateral funding is directed to hosting refugees in Germany and humanitarian assistance

In response to the influx of refugees to Germany since 2015, spending on ‘humanitarian aid’ and migration has increased significantly. In 2018, most bilateral funding was directed toward hosting refugees in Germany (17% of total bilateral aid in 2018) despite a 40% decrease in volume compared to 2017. Humanitarian aid (12%, down 6% compared to 2017) and education (11%, up 13% since 2017) received the second and third largest share of Germany’s ODA. However, more than half of Germany’s education ODA (US$1.4 billion, 56%) represents costs for students from partner countries studying in Germany.

Health (4%) and agriculture and rural development (4%) receive relatively small shares of bilateral ODA. Funding for both sectors is supported through Germany’s contributions to multilateral organizations. (For more information, see the Sectors: 'Global Health' and 'Agriculture' for Germany).

Germany channels the largest share of its bilateral ODA as grants (76% in 2018, DAC average: 91%). The remaining component of Germany’s bilateral ODA, disbursed as loans and equity investments, stood at 24% in 2018 (down from a peak of 35% in 2014).

4 - Germany bilateral by sector

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The German government has a strong preference for bilateral funding. In 2018, bilateral funding stood at 78% of total ODA.

Bilateral ODA is expected to shift towards fragile and conflict-affected areas

A large share of Germany’s bilateral ODA is not allocated by region (31% in 2018) or income group (42% in 2018). This is partly due to the high share of costs of hosting refugees in Germany. For this reason, the following analyses exclude such funding to avoid misrepresentation of trends in key recipients of Germany’s ODA.

Germany allocates the largest share of its bilateral ODA to Asia (30% in 2018) and the Middle East and North Africa (MENA) region (25% in 2018). Funding to sub-Saharan Africa accounts for one fifth (20% in 2018). When only looking at ODA in the form of grants, the largest individual country recipients are Syria, Iraq, and Afghanistan. Given the German government’s increasing focus on fighting the root causes of migration in the Middle East, North Africa, and sub-Saharan Africa, larger portions of its ODA will likely go to these regions in the coming years.

7 - Germany top 10 recipients

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The portion of bilateral ODA going to low-income countries (LICs) is relatively low (25% between 2016-2018). It is also below Germany’s ambition to spend between 0.15% and 0.20% of GNI as ODA on LICs, which was affirmed by the 2017 to 2021 coalition treaty.

Germany channels 76% of its bilateral ODA to middle-income countries (MICs). Indonesia, India, and China are the largest individual country recipients. Most funding to Indonesia (89%) and more than half of the funding to India (67%) is provided in the form of loans or equity investments. The majority of grants to China and India are made up of costs for students from those countries enrolled in German universities. (For more information, see the Sector: 'Education' for Germany.) The Federal Ministry for Economic Development and Cooperation (BMZ) has not made any new bilateral commitments to China since 2010 and plans to phase out bilateral funding to China completely. In February 2020, Federal Minister for Economic Cooperation and Development presented a draft of a new concept for BMZ’s collaboration with bilateral partner countries to the German Parliament’s (Bundestag) Committee on Economic Cooperation and Development (AWZ). The concept is currently being revised and discussed, before public announcement.

6 - Germany bilateral ODA income group

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Only 22% of Germany’s ODA is channeled multilaterally; however, earmarked funding to multilaterals has increased

Until 2013, the German Parliament had capped multilateral spending at one-third of total German ODA. Even though this cap no longer exists, core funding to multilaterals remains low at only 22% of total ODA (DAC average: 41%). In 2018, the largest recipients of Germany’s core funding to multilaterals were the institutions of the European Union (53%), the World Bank (17%), other multilateral institutions including the Global Fund to Fight Aids, Tuberculosis and Malaria (Global Fund), Gavi, the Vaccine Alliance (14%), United Nations (UN) agencies (9%), and regional development banks (7%).

Earmarked funding to multilaterals, which is funding channeled through multilateral development organizations for use in a specific sector or country (reported as bilateral ODA), has increased significantly in recent years from US$1.2 billion in 2015 (6% of ODA) to US$3.8 billion in 2018 (13% of ODA). Growth has largely been driven by funding to humanitarian assistance and crisis response.

Unless otherwise indicated, all data in this section is based on the cash-flow basis measurement system. For more information, see our Donor Tracker Codebook.

Main Actors

The Development Ministry steers strategy; two development agencies execute

Germany is governed by a renewed ‘Grand Coalition’ made up of Chancellor Angela Merkel’s center-right Christian Democratic Union (CDU), its Bavarian sister party, the Christian Social Union (CSU), and the center-left Social Democrats (SPD). Under the overall guidance of the Chancellery, which is responsible for determining policy guidelines, the Federal Ministry for Economic Cooperation and Development (BMZ) sets development priorities. BMZ has been led by Development Minister Gerd Müller (CSU) since 2013.

BMZ is organized across six directorates-general. The regional subdivisions allocate Germany’s bilateral development assistance according to BMZ’s strategy and priorities. Sectoral subdivisions formulate Germany’s sector strategies, interface with multilateral development institutions, and advise on bilateral programs.

Programming of bilateral funding to partner countries is guided by regional strategies, which are developed by BMZ’s regional divisions. Country strategies — developed for all priority countries — reflect the regional strategies and are created by country desk officers in cooperation with embassies, Germany’s state-owned development agency (GIZ), and its state-owned development bank (KfW). Bilateral cooperation with countries that are not classified as priority partners is based solely on the applicable regional strategy.

Germany’s two major state-owned development agencies, GIZ and KfW, play key roles in Germany’s policy development, priority setting, and implementation.

Germany’s two major state-owned development agencies, GIZ and KfW operate under the political supervision of BMZ. Both play key roles in policy development, priority setting, and implementation.

  • GIZ plans and executes Germany’s technical cooperation with partner countries. GIZ also provides consulting services to BMZ’s sectoral divisions through its ‘sector initiatives’ (‘Sektorvorhaben’).
  • KfW Development Bank leads on Germany’s bilateral financial cooperation with partner countries. It receives funding from BMZ and raises own funds on capital markets using KfW’s own resources.

The Federal Ministry of Finance (BMF), led by Minister Olaf Scholz (SPD), develops caps for the federal budget and individual ministerial budgets. This makes it an important stakeholder when it comes to overall ODA levels, BMZ’s budget, and long-term ODA contributions.

Other ministries have significant influence on the strategic direction and funding allocation in some development sectors. For example, the Federal Foreign Office (AA) leads on humanitarian assistance and crisis prevention. The Federal Ministry of Health (BMG) is developing a new, government-wide strategy for global health and is responsible for the majority of funding of the World Health Organization (WHO).

Germany_devcooperation

GERMANY'S DEVELOPMENT COOPERATION SYSTEM

Parliament: The role of the German Parliament (Bundestag) is to scrutinize development policymaking, resource allocation, and implementation, mainly through its Committee on Economic Cooperation and Development (AWZ). The AWZ may also suggest changes to funding allocations in the government’s draft budget. However, it is the Budget Committee which makes final budget decisions and is thus a key stakeholder when it comes to modifying funding allocations.

Civil Society: Civil society interacts in several ways with government and Parliament including via petitions and conferences. Civil society organizations (CSOs) are frequently invited to parliamentary hearings and government consultations. Many CSOs implement their own in-country programs and are funded by the German government (mainly by BMZ and the Foreign Office). About 120 development and humanitarian assistance-related civil society organizations coordinate their activities through the Association of German Development CSOs VENRO. Another important association is the Forum Umwelt und Entwicklung, which coordinates advocacy work for sustainable development and humanitarian assistance.

Budget Structure

BMZ manages largest share of Germany’s ODA

Germany’s ODA is sourced from the budgets of fifteen ministries. The largest share of ODA comes from the Federal Ministry for Economic Cooperation and Development (BMZ) (34% in 2017, latest year for which total ODA data is available from the ministry). Its share is expected to increase again as refugee costs decrease. BMZ’s budget for 2020 stands at US$12.8 billion. This is a 6% increase from 2019 (US$12.1 billion).

On March 18, 2020, the German Cabinet passed spending caps for the 2021 federal budget (Eckwertebeschluss), as well as the medium-term financial plan (until 2024), as presented by the Ministry of Finance (BMF). BMZ’s budget is set to remain at 2020 levels through 2021, after which it will be cut, reaching US$11.0 billion by 2024 (a decrease of 14% compared to 2020). Since the Eckwertebeschluss marks only the first step in Germany’s budgetary process (see ‘Budget process’) and the costs incurred by the ongoing COVID-19 outbreak have not yet been quantified, the budget caps are still volatile and are subject to change.

BMZ’s budget (see table) is composed of different budget envelopes, including:

  • ‘Bilateral development cooperation’, which contains budget lines for major regions and is further broken down by annual allocations to specific country programs.  
  • The ‘European development cooperation, United Nations (UN), and other international organizations’ envelope includes budget lines for multilateral organizations related to climate change and biodiversity, most of the global health multilaterals, as well as for various UN programs.
  • The ‘Multilateral development banks’ envelope includes contributions to the World Bank Group, as well as the African Development Bank and Asian Development Bank.

The largest share of ODA comes from the BMZ. Its share is expected to increase again as refugee costs decrease.

Other ministries responsible for managing ODA include, the Federal Foreign Office (AA), which handles most of the funding for humanitarian assistance and for UN peace keeping missions. In 2017, it accounted for 14% of ODA overall. Another 9% of Germany’s ODA was raised by Germany’s development bank (KfW) on capital markets.

Overview: 2020 BMZ Budget


€, millions


US$, millions

Bilateral Spending 4,666 5,507
Financial cooperation 2,193

2,588

Technical cooperation 1,574 1,858
Crisis response 800 944
Other contributions 99 117
Multilateral Spending 2,529 2,985
European Development Fund 967 1,141
Multilateral organizations related to climate change and biodiversity 714 843
The Global Fund to Fight AIDS, Tuberculosis and Malaria 350 413
UN organizations 413 487
World Food Programme 28 33
The Global Agriculture and Food Security Program 35 41
International Fund for Agricultural Development 22 26
Development Banks 1,026 1,211
World Bank Group 689 813
African Development Bank 273 322
Asian Development Bank 50 59
Cooperation w/ CSOs, private sector & others 1,309 1,545
Other commitments (incl. special initiatives) 1,160 1,369
International efforts to fight climate change 80 94
ONE WORLD – No Hunger 375 443
Tackling roots causes of displacement 505 596
Stability and Development in the MENA region 100 118
Vocational training and jobs 100 118
Administrative and personnel expenses 173 204
Total spending 10,884 12,845

Budget Process

Major ODA increases or changes are confirmed early in the year; Parliament debates the budget between September and November

Germany_budgetprocess

  • Cabinet agrees on caps for federal and ministerial budgets: In February/March each year, the Federal Ministry of Finance develops caps for the federal budget and individual ministerial budgets. At this point, decisions on increases in ODA and the overall funding allocation are taken. The Finance Minister plays a central role and the Development Ministry provides input. Major funding decisions are budgeted at this time of the year.
  • Negotiations happen within ministries: Ministries develop their budgets in April and submit them to the Ministry of Finance. Allocations to individual international organizations, are determined during this period. In parallel, between April and September, the Federal Ministry for Economic Cooperation and Development (BMZ) plans its bilateral spending (For more information, see Germany’s ‘ODA breakdown’) and multilateral funding envelopes.
  • Draft budget is negotiated, and medium-term financial planning takes place: In June, the Cabinet negotiates the budget and publishes the government’s budget draft before the summer break. Key players at this stage are the Chancellery, the Finance Ministry, and the Development Ministry.
  • Parliament debates and proposes amendments to the budget: First reading in Parliament takes place in September. Parliament usually debates the budget until November.
  • Amendments are reviewed and recommendations are made to committees: The Development Committee (AWZ) makes recommendations on budget amendments in September/October. In October, BMZ’s budget is debated by the Development Committee and Budget Committee.
  • Amendments and decisions on each ministerial budget are made, and parliamentary voting takes place: The Budget Committee makes its final decisions in November. Members of the Budget Committee (especially those of the government coalition parties) are central during this phase.
  • Final budget draft is voted upon: The final budget draft is voted on my members of parliament in plenary and signed by the President.

Between April and September, BMZ plans its bilateral spending and multilateral funding envelopes.