The Ministry of Foreign Affairs (MFA) manages between 80% and 85% of Luxembourg’s development cooperation budget; the Ministry of Finance 15% and 1% is managed by other ministries (e.g. health). Within the MFA development cooperation activities are handled primarily by the Development Cooperation Directorate (DCD). The DCD reports to the Minister for Cooperation and Humanitarian Action and its Director chair the Inter-Ministerial Committee for Development Cooperation. Two other directorates are involved to a lesser degree: the Political Affairs Directorate, for human rights questions, and the International Economic Relations Directorate, for relations with the Central and East European countries.

Lux-Development is the implementing governmental agency of Luxembourg’s development cooperation. As such, it is responsible for the implementation of bilateral projects, mostly those of the MFA. The agency also deals with projects for the Ministry of Finance. These projects are aligned to partners’ countries priorities as outlined in the Multi-annual Cooperation Programmes.  In 2006 Lux-Development managed a portfolio exceeding €63 million in aid.

The Development Cooperation Fund is also an important tool for the management of aid in Luxembourg and a large majority of Luxembourg’s development cooperation budget passes through this fund each year. The Development Fund can only fund activities in developing countries.

The trend in Luxembourg’s aid volume over the past few years has been positive and demonstrates the country’s firm commitment to the UN target of 0.7% ODA.  During its EU presidency in 2005, Luxembourg was able to achieve an agreement amongst EU Member States to bring their ODA to 0.56% until 2010 and 0.7% until 2015. In 2008, Luxembourg spent € 287.6 million on Official Development Assistance (ODA), which corresponds to 0.97% of its gross national income (GNI) and almost reaches its personal target of 1%.

Luxembourg ODA is made up exclusively of budget resources allocated for development cooperation in accordance with clearly defined development objectives. The main goal of Luxembourg’s development assistance is to reduce poverty in the world’s least-developed countries (LDCs). It emphasises a limited number of development sectors – health, education, water and sanitation – while identifying gender and HIV/AIDS as cross-cutting priorities. However, no incentives have been established inducing NGOs to take these cross-cutting concerns into account. Luxembourg's commitment to reducing poverty can be seen first of all by its desire to work with the poorest developing countries. "Target countries" have been selected by reason of their low level of human development; more than half of these belong to the category of LDCs.

Over 70% of Luxembourg’s development assistance qualifies as bilateral aid. Its development cooperation with partner countries takes place in the framework of Multi-Annual Co-operation Programmes. These are powerful tools for strengthening coherence between Luxembourg’s development cooperation policies and those of partner countries and donors. Luxembourg has been disengaging itself from intervening in project countries such as Tunisia, Morocco and Ecuador (20 to 12 in 2007) and has instead been increasing its allocations to Multi-Annual Co-operation Programmes with priority countries.

Luxembourg’s ten priority countries include:

• Africa: Burkina Faso, Cape Verde, Mali, Namibia, Niger and Senegal
• Latin America: El Salvador and Nicaragua
• Asia: Laos and Vietnam
• In addition, the Palestinian Administered Areas enjoy the same advantages as the priority partner countries

Luxembourg’s support to multilateral organisations is also aligned to its bilateral programmes in priority countries. Bilateral aid is paid in the form of "multi-bilateral" contributions in target countries, in addition to voluntary contributions to international organisations. Multilateral aid accounts for 30% of its development assistance. Between 15% and 20% of the budget envelope allocated for each PIC is allocated to multilateral organisations. Luxembourg has strengthened its cooperation with multilateral organisations especially UN agencies. Its cooperation with these agencies became more strategic thanks to new framework agreements reached with the WHO, UNDP, UNFPA and UNICEF. These agencies demonstrate the close alignment between their activities and Luxembourg’s priority sectors and cross-cutting issues. Projects that have received earmarked financing from Luxembourg include water, sanitation and gender activities of the UNDP in Mali and the health projects of WHO and UNICEF in Cape Verde.  

Luxembourg is one of the world’s fourth most generous donors for population programmes in terms of its level of economic activity. According to estimates made by the Resource Flows Project, in 2008 Luxembourg has contributed €24 million to population activities and HIV/AIDS.

In 2007, Luxembourg and UNFPA signed a €1.1 million agreement to make motherhood safer in rural Afghanistan which aimed to put in place a comprehensive Reproductive Health Programme in three Afghanistan provinces. The agreement builds on Luxembourg’s ongoing support to UNFPA’s work which has included assistance for census and elections, reduction of maternal mortality and obstetric fistula as well as the theme of population and development. Luxembourg also has a multi-bi project in Rwanda which focuses on the fight against HIV/AIDS and mother-child transmission and has included projects such as the AMATA study: Effectiveness of antiretroviral therapy in breastfeeding mothers to prevent post-natal vertical transmission.

The fight against HIV/AIDS is one of Luxembourg’s priorities. Indeed, Luxembourg continues to support UNAIDS (€3 million in 2008), the Global Fund to Fight AIDS, Tuberculosis and Malaria (€15 million until present), GAVI (Global Alliance for Vaccines and Immunization) as well as the ESTHER initiative: Network for Therapeutic Solidarity in Hospitals. Luxembourg also continues to support the TDR (Special Programme for Research and Training in Tropical Diseases) which focuses on infectious diseases including HIV/AIDS. Luxembourg applies a global and integrated approach to the pandemic including prevention, treatment and research. Finally, UNIFEM received €1.1 million in 2008.

Luxembourg made impressive strides in support for sexual and reproductive health (SRH) activities during the 1990s. While it supports the ICPD Programme of Action, it still lacks a comprehensive formal policy for its funding of reproductive health activities. The country’s modest bilateral funding for other aspects of SRHR is complemented by its increasingly consistent support for UNFPA. UNFPA Project: Support for the Fight against Maternal Mortality project €3 million has been mobilized locally by Luxembourg Cooperation to tackle obstetric fistula. Luxembourg also contributes to programmes which are targeted towards medicines and medical equipment such as Reproductive Health Commodity Security. However, government funding for Luxembourg NGOs working in SRHR is limited due most likely to the small number of NGOs in this field and their limited ability to undertake activities overseas.  

The DAC’s 2008 peer review rated Luxembourg’s NGO project co-financing as comparatively generous. In 2008, assistance channelled through NGOs amounted to €22.5 million (12% of ODA).

Framework agreements are the preferred mode of financing agreements signed between the Ministry and the NGO. These NGO’s receive 6% of the NGO aid envelope and the Ministry co-finances up to 80% of the framework agreement programme activities.

NGOs that have not entered into a framework agreement can also receive co-financing, up to 75% for projects realised in priority countries and 66.7% for projects in other developing countries. The reason for these differentiated co-financing ceilings is to provide an incentive for national NGOs to work in priority partner countries.

Luxembourg’s NGOS, associations and foundations have been grouped into a consortium that now embraces most of the NGOs active in cooperation with developing countries. The “Cercle de cooperation des ONG” is Luxembourg’s development NGO platform.¹  Luxembourg NGOs also have a support and advice mechanism in the “Bureau d’Assistance Technique”  (Technical Assistance Bureau)² which is funded by the MFA.  

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¹ Contact information can be found in the NGO Platform Contact Information section of this Guide.

² More information can be found at: http://www.ongd.lu/article.php3?id_article=4

 

Luxembourg’s Ministry of Foreign Affairs

Luxembourg’s Ministry of Foreign Affairs: Annual Report (2008).

Luxembourg’s Ministry of Development

Development Assistance Committee (OECD): Belgium peer review (2008).

UNFPA

GFATM

UNIFEM: Annual Report (2008/2009).