Luxembourg's development co-operation increased significantly throughout the 1990s and continues to do so. In 2000, Luxembourg joined the group of countries which devote at least 0.7% of their gross national income (GNI) to Official Development Assistance (ODA). In 2005, it spent 0.87% of GNI on development co-operation (€ 263 million). In 2006, the amount is expected to be € 230 million (0.86% of GNI). Based on this achievement, during its European Union (EU) presidency in 2005, Luxembourg was able to achieve an agreement of EU Member States to bring their ODA to 0.56% by 2010 and 0.7% by 2015.

Luxembourg's ODA is made up exclusively of budget resources allocated for development co-operation in accordance with clearly defined development objectives. Since 1989, successive governments have drawn up detailed and binding schedules for the systematic increase of ODA. Given the current government's objective of 1% which it hopes to reach in the coming years, the growth of Luxembourg's ODA looks set to continue.

Luxembourg has made sustainable development and the fight against poverty the main objectives of its development co-operation policy. Its 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 Least Developed Countries. A very clear priority is given to social infrastructure and services (71.44% of total ODA in 2004), in particular education (22.05%), basic health (27.17%) and water supply and sanitation (12.98%). In future, additional efforts will be put into fields such as training and professional integration as well as micro-funds.

Overall responsibility for development co-operation in Luxembourg rests with the Ministry of Foreign Affairs, Foreign Trade, Co-operation and Defence. This ministry is the leading player within the government, since it manages about 80% (in 2004) of Luxembourg’s ODA and covers bilateral co-operation, co-operation with NGOs, technical assistance, humanitarian aid, and multilateral co-operation with the United Nations (UN) system and the European Development Fund. The Ministry of Finance handles co-operation with international financial institutions, which represents 10% of ODA. Five other ministries manage a number of ODA activities (mainly through international organisations), but these account for scarcely 1% of total ODA (the ministries of Health, Culture, Media and Communication, and Economy).

Within the Ministry of Foreign Affairs, development co-operation activities are handled mainly by the Development Co-operation Directorate. Two other directorates are involved to a lesser degree: Political Affairs – for human rights questions – and International Economic Relations – for relations with central and eastern European countries.

Lux-Development is the implementing agency of Luxembourg’s development co-operation. As such, it is responsible for the implementation of bilateral projects, mostly those of the Ministry of Foreign Affairs. The agency also deals with projects for the Ministry of Finance. In 2006 Lux-Development managed a portfolio exceeding € 60 million in aid.

The Inter-ministerial Committee for Development Co-operation was set up under the Development Co-operation Act of 1996. It comprises representatives of a dozen or so ministries, and its chief assignment is to give its opinion on the thrust of development co-operation policy and on a number of technical matters concerning development co-operation personnel.

In 2005, bilateral aid accounted for 75% of Luxembourg’s total ODA. This proportion has increased steadily since Luxembourg acceded to the OECD Development Assistance Committee (DAC) in 1992 and is above the DAC average, which in 2001 was 70%. Luxembourg’s government has established no firm percentages for allocating bilateral and multilateral aid and has adopted a pragmatic approach. Moreover, the government considers that the current mix of instruments is fairly good. Only humanitarian aid is capped at 10%, as a matter of policy, insofar as Luxembourg prefers to give priority to long-term aid.

The amount of ODA channelled through Luxembourg non-government organisations (NGOs) accounts for 12% of the total, or US$ 20 million, thanks to a relatively generous co-financing system. Most bilateral activities are financed through the Development Co-operation Fund, a budget device that allows the Ministry of Foreign Affairs to manage development projects flexibly over a number of years, due to the option of carrying unspent allocations forward from one year to the next. Luxembourg has opted for a geographical concentration approach. It relies primarily on the human development indicator when selecting its target countries. The final choice rests on neither a firm policy decision nor an absolute scientific process, and changes are possible. The current list shows a certain preference for small countries, and for French-speaking ones in the case of Africa. The geographical concentration of Luxembourg’s activity does not preclude it from intervening in a series of so-called ‘project countries’ as well.

The list of target countries comprises the following 10 countries:

• Africa: Burkina Faso, Cape Verde, Mali, Namibia, Niger and Senegal;
• Latin America: El Salvador and Nicaragua;
• Asia: Laos and Viet Nam;
• In addition, the Occupied Palestinian Territories are considered a quasi-target country.

The list of project countries comprises the following 20 countries:

• Africa: South Africa, Burundi, Guinea, Morocco, Mauritius, Rwanda, Sao Tome and Principe, and Tunisia;
• Latin America: Brazil, Chile, Ecuador and Peru;
• Asia: China, India, Mongolia and East Timor;
• Europe: Albania, Bosnia and Herzegovina, Croatia, and the Federal Republic of Yugoslavia.

Development co-operation with partner countries takes place in the framework of multi-annual co-operation programmes called ‘Programmes indicatifs de coopération’ (PICs). Luxembourg designs these instruments in co-operation with partner countries, particularly during partnership commissions which are organised every year. In 2005, the first PIC of the second generation was signed with Cap Verde. Six other documents of this type have been signed since then, while the remainder will be signed in 2007.

Multilateral aid accounts for one-quarter of Luxembourg's total ODA. Multilateral co-operation has intensified in recent years and accounts for a growing share of bilateral ODA paid in the form of ‘multi-bilateral’ contributions in target countries, in addition to voluntary contributions to international organisations. These mostly take the form of co-funding projects of United Nations (UN) organisations, an approach which may have been an effective way of using part of the sharply increasing aid budget. Luxembourg is looking for complementarity with its own activities. In a number of concrete cases, particularly well-targeted multi-bilateral activities have helped ensure the viability of bilateral activities, notably in the field of health.

The current strategy was defined in 2004 and is based on the priorities in Luxembourg’s target countries to assure the complementarity and sustainability of its bilateral interventions. In 2004 Luxemburg signed framework agreements with four of its privileged partner organisations: UNDP, UNICEF, UNFPA and the World Health Organization (WHO). The agreements allow for more predictability, better programming and co-operation between the partners.

In addition to its multi-bilateral projects, Luxembourg supports UNDP’s poverty fund and democracy and good governance fund; UNICEF’s thematic priorities in the field of girls’ education and development and support of young childhood, as well as three of UNFPA’s thematic priorities.

Norway fully supports the ICPD agenda and has made the fight against HIV/AIDS one of its key development priorities. The Norwegian government has supported HIV/AIDS interventions since 1986 and views the pandemic as a development problem undermining all efforts to enhance social development in the South. In its partner countries, Norway supports the implementation of comprehensive national HIV/AIDS programmes and the integration of HIV/AIDS into national PRSs. In Malawi, Mozambique and Uganda, the government supports sector-wide programmes in health, including SRHR and HIV/AIDS components.

The ‘Action Plan for Norad’s intensified efforts to combat HIV/AIDS’ (2001) outlines Norway’s main areas of support in the fight against the disease:

• Protection and support for HIV/AIDS orphans;
• Prevention of mother-to-child transmission;
• Prevention of HIV/AIDS among young people;
• Raising awareness and responsibility among men;
• Developing strategies that focus on HIV/AIDS at the workplace;
• Fighting social exclusion and stigmatisation linked to the disease and people infected by HIV;
• Making treatment cheaper and more accessible;
• Developing effective national HIV/AIDS institutions.

Norway has not published a strategy for sexual and reproductive health and rights (SRHR); however, it is addressing the issues of reproductive health and rights, especially for young people, in its health strategies and policies on rights of the child and gender equality. Within SRHR, Norway focuses especially on maternal health during pregnancy and childbirth (including safe abortions) and combating female genital mutilation (FGM).

The Norwegian government is one of the largest donors of ODA for SRHR and HIV/AIDS issues. In 2004, reproductive health and population programmes accounted for 6% of Norad’s bilateral ODA. Traditionally, a large share of these funds has been channelled through Norwegian NGOs. The total amount the Norwegian government spent on AIDS and population activities in 2003 was US$ 91.6 million, according to estimates by the Resource Flows Project. With US$ 33.2 million, Norway was the fifth largest contributor to the UNFPA budget in 2004. Provisional figures for 2005 suggest that Norway has since increased its funds for UNFPA and is currently the organisation’s third-largest donor. As of August 2006, Norway had donated US$ 120 million to the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM).

SRHR and HIV/AIDS were priority areas for Norad’s budget for international NGOs in 2006 (see the following paragraph).

In 2004, Luxembourg’s assistance channelled through NGOs amounted to € 22.5 million, which is 11.64% of its total ODA.

The Ministry of Foreign Affairs proposes two types of cooperation. In the first of these, NGOs can receive project co-financing for up to 75% of its total cost. The more experienced NGOs can receive block grants, whereby the government does not co-finance one project but a series of projects of restricted range, for up to 75% of total cost.

The other instrument is reserved for the most experienced NGOs and provides funding on the basis of a framework agreement for a period of two to five years on the basis of an action programme submitted by an NGO to the Ministry of Foreign Affairs. This type of instrument has the advantage of introducing a strategic dimension into the dialogue between the ministry and the NGO that goes beyond the negotiation of funding. The NGO’s action programme has to reflect a single, clear and coherent strategy that may have a geographical, sectoral or thematic dimension. The ministry finances up to 85% of the proposed programme’s budget.

The government’s main dialogue partner is Luxembourg’s development NGO platform: ‘le Cercle des ONGs de développement’ which groups together most of the registered development NGOs. The platform has a secretariat, a technical assistance office and a North–South education service, and is financed by the government. The secretariat is the main communication vehicle both among NGOs and for the general public. The technical assistance office is in charge of supporting NGOs through training and help on proposal writing. The North–South education service aims to sensitise Luxembourg’s education sector on development co-operation issues. It organises seminars and workshops for students and teachers.

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Luxemburg’s Ministry of Foreign Affairs: Annual Report 2004

Luxemburg’s Ministry of Foreign Affairs

Development Assistance Committee (OECD), Luxemburg peer review 2003

Progress and Promises, Trends in International Assistance for Reproductive Health and Population, (Population Action International, 2004)