The French parliament adopted the first law on development aid and international solidarity this week (10 February) and is expected bring back to the fore the debate on French assistance to developing countries.

French MPs voted with a large majority in favour of the new law, which is supported by the development minister, Pascal Canfin, and sets the guidelines for development aid for the first time in France.

More aid

The breakdown between loans and grants in development aid was the focus of the debate. For now the legislation says that the government has to submit a report to the parliament “on the use of the results from the French development agency and on the balance between loans and grants.”

“This is a big parliamentary progress even if we had to fight to obtain it,” the rapporteur Jean-Pierre Dufau said at a press conference.

Indeed, the French development agency grants a substantial number of loans to developing countries. It is a banking activity from which it gets a benefit, but only a small part is paid back to the financing of development.

Currently, “the vast majority of the dividends of the agency does not remain in the development aid sphere,” the minister said approving the MPs’ criticism, noting that the government would “strengthen the part of dividends reassigned to the agency.”

For the MPs, the revenues from the agency’s loan policy must be assigned to the money granted by France, especially to poorer countries.

“The real problem with loans is that they are attributed to creditworthy countries and those that aren’t get no loans, they get donations. And if donations cannot be financed, there’s nothing,” MP Jean-Paul Bacquet said.

Even though development budget is affected by the austerity policy of the government, France remains the fourth largest contributor to development aid. However it is still below the 0.7% of the GNI international target, with only 0.46% in 2013.

The share of grants in the overall budget of the agency is modest and decreasing. In 2013, out of the €9.8 billion for public development aid, only €312 million were grants for bilateral project, or 3.2% of the French budget.

Fight against tax evasion

Another significant achievement of the MPs is the strengthening of fiscal transparency of the development agency’s partners. This step should help fight tax evasion which severely affects developing countries.

The law stipulates that the French development agency canon “finance investment vehicles registered in fiscally non-cooperative jurisdictions.”

Sub-Saharan Africa is the first affected by this evasion, losing on average 5.7% of GDP.

The law also foresees more stringent provisions for the publication of information about enterprises than get support from the agency, country by country.

In practice, the agency will have to include a clause foreseeing that the companies it finances publish all necessary information for transparency.

This measure was already in place for large French banks through the 2013 banking law.

All companies that receive support from the agency shall be subject to the obligation of transparency. If we voted for banks, why not extend it to those companies?” Mathilde Dupré from the NGO CCFD Terres Solidaires asked.

The legislation was adopted in first reading in the National Assembly and must now be adopted by the Senate MPs, after the municipal elections in March 2014, or “late April at the earliest ," as an adviser said.