Development challenges as investment and business opportunities: France's policy and practices
France gives high priority to mobilising resources additional to official development assistance (ODA), including private investment for development and steady and predictable innovative financing. The Agence Française de Développement's (AFD group) strategy towards the private sector aims at supporting the growth of sound and sustainable private companies and businesses which are central stakeholders for economic development, job creation and income for private individuals in the countries where it operates. Activities aim to support: 1) better business-enabling environments for the private sector; 2) the emergence of intermediary public or private business services for small and medium enterprises (SMEs); and 3) the direct development of SMEs, notably through a facilitated access to finance.
Through its subsidiary Proparco, the AFD, along with the Ministry of Economy and Finance (through UBIFRANCE12) supports private investment in emerging and developing economies for growth, low-carbon, sustainable development. The main priorities of its strategy are to increase focus on Africa, fragile and conflict affected states, and on climate change. It offers a range of financial instruments, such as loans, equity, guarantees and financial engineering. Its focus lies mainly on infrastructure, especially for renewable energies and energy efficiency, agriculture and agro-industry, the banking sector, health, and education.
According to the 2015 DAC Survey on Mobilisation (Benn et al., 2016), France mobilised USD 1.6 billion from the private sector through guarantees, syndicated loans and shares in collective investment vehicles in 2012-14. The AFD was the most active institution in this area, in particular through its guarantee programme ARIZ. Credit lines were also very important over the same period, although they were not included in the survey.
Financial flows from France to developing countries
France uses ODA to mobilise other resources for sustainable development
France promotes aid for trade to improve developing countries' trade performance and integration into the world economy. France committed USD 2.6 billion to trade-related activities in 2014 (37.6% of its bilateral allocable ODA), an 8.6% increase in real terms from 2013. The trend has been fluctuating over the past few years.
France has pledged USD 1 billion (EUR 775 million) to the Green Climate Fund, which plays a key role in channelling resources to developing countries and catalysing climate finance at the international and national levels. In 2016, France will also contribute a total amount of USD 26.5 million (EUR 25 million) to the Least Developed Countries Fund, which addresses urgent and immediate adaptation needs and supports national adaptation planning processes to reduce medium and long-term vulnerability to the impacts of climate change.
France's official development assistance
In 2015, France provided USD 9.2 billion in net ODA (preliminary data), which represented 0.37% of gross national income (GNI) and a 2.8% increase in real terms from 2014, the first since 2010. France is the 11th largest Development Assistance Committee (DAC) provider in terms of ODA as a percentage of GNI, and the 5th largest in terms of volume. France is committed, at European level, to collectively achieve a 0.7% ODA/GNI ratio by 2030. France's share of untied ODA (excluding administrative costs and in-donor refugee costs) was 92.3% in 2014 (increasing from 90.1% in 2013), compared to the DAC average of 80.6%. The grant element of total ODA was 85.6% in 2014, higher than in 2013 (when it stood at 84.4%) but below the DAC compliance grant element norm of 86%.
France reported USD 485.1 million of its in-donor refugee costs as ODA in 2014. These costs represented 4.6% of its total net ODA.
In 2014, 66.3% of ODA was provided bilaterally. France allocated 33.7% of total ODA as core contributions to multilateral organisations, compared with the DAC country average of 28.3%. In addition, it channelled 1.4% of its bilateral ODA for specific projects implemented by multilateral organisations (multi-bi/non-core).
In 2014, 68.9% of French gross bilateral ODA was programmed at partner country level. France's share of country programmable aid (CPA) was higher than the DAC country average (52.9%) in 2014. Project-type interventions made up 81% of CPA.
In 2014, USD 268.8 million of bilateral ODA was channelled to and through civil society organisations (CSOs). France's ODA to and through CSOs increased between 2013 and 2014 in terms of volume (it more than doubled), and as a share of bilateral aid. This share (3.2% in 2014) was, however, low compared with the DAC country average of 17.4%.
In 2014, bilateral ODA primarily focused on sub-Saharan Africa and the Middle East and North Africa. In 2014, France allocated USD 2.8 billion to sub-Saharan Africa, USD 1.1 billion to North Africa and USD 258.8 million to the Middle East.
In 2014, 39% of bilateral ODA went to France's top 10 recipients. France has 16 priority partner countries in sub-Saharan Africa, which should receive at least 50% of French grant ODA. Its support to fragile states reached USD 2 billion in 2014 (22.8% of gross bilateral ODA).
In 2014, 17.7% of gross bilateral ODA was allocated to least developed countries (LDCs), amounting to USD 1.5 billion. This is a decrease from 2013 (22.9%), and is lower than the 2014 DAC average of 25.6%. Upper middle-income countries received the highest share of bilateral ODA in 2014 (30.6%).
At 0.09% of GNI in 2014, ODA to LDCs was lower than the UN target of 0.15% of GNI.
In 2014, 37.1% of France's bilateral ODA was committed to social infrastructure and services, amounting to USD 3.4 billion, with a strong focus on support to education (USD 1.5 billion) and water and sanitation (USD 1.1 billion). USD 2.1 billion (23.6% of bilateral ODA) was allocated to economic infrastructure and services, mainly to transport and storage (USD 1.3 billion) and energy generation and supply (USD 788.9 million).
USD 958.9 million of bilateral ODA supported gender equality in 2014. France has made positive steps to integrate gender equality into its development co-operation with a new “gender and development” strategy (2013-17) and a “cross-sectoral framework on gender” framing the AFD's support (OECD, 2014). In 2014, 15.2% of French bilateral allocable aid had gender equality and women's empowerment as a principal or significant objective, compared with the DAC country average of 34.7%. This was a decrease from 19% in 2013. Education, population and reproductive health are the only sectors in which the focus on gender is strong.
USD 3.6 billion of bilateral ODA supported the environment in 2014. France has made positive steps to integrate the environment and climate change into its development co-operation (OECD, 2014). In 2014, 52.2% of French bilateral allocable aid supported the environment and 40.7% (USD 2.8 billion) focused on climate change, compared with the respective DAC country averages of 32.2% and 23.9%.
Note to reader:Annex B provides “Methodological notes on definitions and measurement for the Profiles of Development Assistance Committee members” .