Amidst growing efforts to localise global agendas, particularly the United Nations Sustainable Development Goals (SDGs), cities and regions are increasingly recognised as key development actors. Two dedicated goals on sustainable cities (SDG 11) and partnerships (SDG 17) emphasise the role that local and international partnerships play. In addition, the G20 Rome High-level Principles on city-to-city partnerships for localising the SDGs, adopted in 2021, stressed the importance of co-operation between subnational governments from developed and developing countries in their efforts to embrace global transformations and adapt to megatrends, notably to achieve low-carbon growth while delivering electricity, water, healthcare, education, security and other social services.

Building on the findings from the OECD 2018 study Reshaping Decentralised Development Co-operation: The Key Role of Cities and Regions for the 2030 Agenda, this report offers country-specific guidance to the German federal government, states and municipalities on how to strengthen the impact, effectiveness and monitoring of their decentralised development co-operation (DDC) policies and programmes. It is the result of an 18-month policy dialogue with more than 100 stakeholders from all levels of government in Germany and peer learning with subnational DDC players in Belgium, France, Italy and Spain.

Since the 1950s, German states and municipalities have gained importance in the field of development co-operation. They provide the highest levels of official development assistance (ODA) compared to their peers in other members of the OECD Development Assistance Committee (DAC) and account for more than 60% of total decentralised development co-operation (DDC) volumes reported as ODA. While the majority of German DDC is carried out within borders, the multi-level governance system for DDC, established by the German federal government, incentivises municipalities and states to engage in international partnerships through dedicated programmes and financial support schemes. Halfway to the 2030 Agenda, these efforts to strengthen international partnerships and localise the United Nations (UN) Sustainable Development Goals (SDGs) in Germany provide an opportune moment to take stock of the German DDC approach and exchange experiences among countries.

Since 2017, the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE) and Development Co-operation Directorate (DCD) have carried out joint work on decentralised development co-operation (DDC) to assess key trends and innovative mechanisms on how cities and regions design, finance, implement and monitor and evaluate their DDC activities with partner countries and have provided specific recommendations on policies, data and reporting, capacity building, multi-level co‑ordination and partnerships (see OECD (2018[1]) and (2019[2])). These reports created an active dialogue between the OECD Regional Development Policy Committee (RDPC), which works extensively on urban and regional development policies with national governments, cities and regions, and the OECD Development Assistance Committee (DAC), which provides a forum for donors to promote development co-operation and other relevant policies to contribute to the implementation of the United Nations (UN) 2030 Agenda for Sustainable Development.

Since the 1950s, decentralised development co-operation (DDC) has gained increasing importance for German development co-operation. German local and regional governments provide the highest levels of official development assistance (ODA) in absolute terms compared to other members of the OECD Development Assistance Committee. Most states and municipalities focus their DDC on technical co-operation, advisory services and peer-to-peer learning as well as networking, mainly in the policy areas of education, environment and health. The DDC model at the state level in Germany is in many cases strongly based on the funding of civil society organisations (CSOs), which can limit the return on investment due to the lack of direct interaction. Municipalities often have long-standing partnerships with subnational governments in developing countries in place.

In terms of multi-level governance, the federal government is supporting the states mainly through the German Government and Federal States Programme (BLP) implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and co-operates with municipalities mostly through programmes offered by the Service Agency Communities in One World (SKEW).Yet, various decentralised development co-operation (DDC) multi-level governance challenges range from one-year funding cycles to lack of staff and managerial capacities and limited information sharing across levels of government. In terms of reporting, Germany is one of the few OECD Development Assistance Committee (DAC) members that report data disaggregated by regional or state-level providers of official development assistance (ODA). However, it does not disaggregate municipal financing. States and municipalities usually have monitoring and evaluation systems for DDC but only a few assess the impact on development outcomes and long-term sustainability. They mainly analyse the objectives or efficiency of the project, in particular at the municipal level.

This chapter provides policy recommendations and an action plan for the German federal government, states and municipalities on how to strengthen the impact, effectiveness and monitoring of their decentralised development co‑operation (DDC) policies and programmes. The recommendations range from strengthening the peer-to-peer function of DDC and promoting policy dialogue on the financial and non-financial tangible outcomes and benefits of DDC projects to strengthening the collaboration between German states and municipalities on DDC and leveraging the catalytic potential of official financing sources to mobilise broader resources. Furthermore, the recommendations suggest further raising awareness of DDC and official development assistance (ODA) data and developing a harmonised or standardised approach to monitoring and evaluating DDC results across states and municipalities.