Multilateral Development Cooperation: Germany Faces New Challenges

Bonn, 24 June 2025 – Multilateral development cooperation plays an important role in tackling global challenges. The German Institute for Development Evaluation (DEval) has therefore analysed the multilateral engagement of the Federal Ministry for Economic Cooperation and Development (BMZ), focusing on financing and interplay. Particularly in the light of the current crises, DEval recommends that the BMZ strengthen the ability of multilateral organisations to act by means of stable core funding. Moreover, it advises dismantling barriers that make it more difficult to interlink bilateral and multilateral development cooperation.

A new role for Germany in the multilateral system

In order to achieve the Sustainable Development Goals (SDGs) and to secure global public goods, multilateral development cooperation is of great importance. In politics, the term 'multilateral' is used when several states work together on an equal footing to solve cross-border problems. International organisations such as the United Nations and development banks such as the World Bank are important actors in this context.

Fundamental challenges are currently emerging in the multilateral development system. The main reason for this is the US government's decision to drastically downsize the agencies responsible for development cooperation, and to make massive cuts in development funding.

This is also changing Germany's role in development policy. On the one hand, its importance as a contributor is growing. On the other hand, it should become more engaged and at the same time more focused.

The Federal Ministry for Economic Cooperation and Development (BMZ), which currently has the largest share of multilateral cooperation of all German ministries, has a key role to play here. Within this framework, the BMZ promotes a wide range of topics, such as health, climate protection, food assistance and social security.

Stable funding necessary for multilateral organisations

The BMZ spends almost 30% of its budget on multilateral development cooperation. A distinction is made between

• contributions from core funding, which are paid directly into the budget of the respective multilateral organisation and are used independently by the organisation itself; and

• earmarked contributions, which must be used for certain defined topics. The earmarking of funds can be soft (e.g. for the topic area of 'education') or tight (e.g. for the specific topic of 'teacher training').

"Studies show that both types of financing have their respective strengths and weaknesses. However, tightly earmarked contributions can be problematic, as they often involve high transaction costs and simultaneously limit the performance of multilateral organisations," says Amélie Gräfin zu Eulenburg, department head at the German Institute for Development Evaluation (DEval). "Stable and appropriate core funding is necessary to enable multilateral organisations to fulfil their original mandates independently and not simply act as implementing organisations on behalf of individual states. Core funding of this kind also counteracts the problem of internationally fragmented development cooperation."

In view of the current challenges, DEval recommends reducing tight earmarking and encouraging stable core funding to ensure the ability of multilateral organisations to act in the face of global crises.

Improve interplay between bilateral and multilateral development cooperation

The BMZ is committed to ensuring that bilateral cooperation (with one partner country) and multilateral cooperation (with several states) are interlinked in development cooperation. In practice, however, interplay is hampered by various obstacles, such as a lack of information about the activities of other actors, or administrative processes that are difficult to harmonise. Furthermore, requirements and incentives for interplay with multilateral activities are often unclear.

In order to better interlink bi- and multilateral development cooperation, DEval's evaluation recommends that the BMZ and the implementing organisations (Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and KfW Development Bank) clearly identify and remove these barriers.

Data basis

The evaluation is based on primary data collected in 2024 via interviews and a survey, as well as on secondary data on Official Development Assistance (ODA) covering the period from 2011 to 2022. In addition, secondary data from the implementing organisations and the Organisation for Economic Co-operation and Development (OECD), evaluations and scientific literature were used.

The complete report 'The BMZ's multilateral engagement: financing and interplay' is available on the DEval website.