Oxfam reaction to EU Development Ministers’ conclusions on social protection for the world’s poor

Today, EU Development Ministers meeting at the Foreign Affairs Council approved conclusions on social protection in development cooperation.

International aid agency Oxfam welcomes the strong signal sent by the Council to promote social protection and universal access to essential services, such as health and education, in the EU’s development cooperation.

The Agency calls on the European Commission and Member States to support reforms for progressive and fairer tax systems in developing countries, in order to make social protection financing through national budgets a reality in the long-term. In this regard, budget support is the best aid modality to support social protection schemes, as it provides long-term and predictable funding to finance recurrent costs such as teachers and doctors’ salaries.

Catherine Olier, Oxfam’s EU development expert, said:

“EU aid to strengthen progressive and sustainable tax systems will in the long-term ensure additional funding for public services like health and education, which lie at the core of social protection systems. If the EU is serious about supporting tax reform in developing countries, it should make it a priority in the next EU budget for 2014-2020, currently under negotiation.”

Building progressive and fair tax systems in developing countries implies, among other things, the need to widen the tax base, address tax dodging practises and increase transparency and accountability. To this end, Oxfam believes that the EU should focus on strengthening citizens’ and civil society’s ability to participate in decision-making and oversight processes about how public resources are collected and spent.

However, Oxfam is concerned by the Council’s support to the target of allocating at least 20 per cent of EU aid to social inclusion and development, which risks diluting the Commission’s previous commitment to allocate 20 per cent of EU aid solely to the health and education sectors. Oxfam insists that investments in social protection should not come at the expense of these indispensable essential services.

Note to Editors

• Oxfam‘s research showed that strengthening tax systems in 52 developing countries could potentially raise an additional $269 billion dollars, almost twice the amount of total aid allocated in 2010. (Owning Development, Oxfam, 2011)
• In 2008, only 1 per cent of bilateral aid was allocated to the improvement of public finance (Oxfam calculations based on OECD data).
• The International Labour Organisation (ILO) estimates the costs of universal social protection to be between only 2 and 6 per cent of global gross domestic product. 
• The illicit financial flows of potentially taxable resources out of developing countries in 2008 was estimated to be between $1.26 and $1.44 trillion (Global Financial Integrity Report, 2011). Every $100 million recovered could fund full immunisation for four million children or provide water connections for 250,000 households. 
• Budget support is an aid modality granted directly to partner countries’ budgets. It has the advantage of being long-term and predictable. It is therefore one of the best aid modalities to finance recurrent expenditures like salaries of nurses and doctors, to strengthen health systems and support social protection schemes.  It is also the best aid modality to promote aid effectiveness and to decrease dependency on aid in the long run.