Luxembourg

Total aid in 2011: €297m

About Luxembourg's aid commitments:

Changes in 2011

Luxembourg has slightly decreased ODA levels from 1.05% of GNI to 0.99% which represents decrease by € 6,6 million from € 303,6 million in 2010 to € 297 million in 2011. However Luxemburg keeps its own individual commitments of 1% of GNI and consequently plans to increase the ODA next year up to 2015. This led Luxemburg to top the rank of EU donors in terms of GNI % and individual commitments together with Denmark and Sweden. Apart from the positive records of Luxemburg in aid quality, Luxemburg has still room for improvements. Mainly in climate finance, policy coherence for development and development education and awareness raising.

Aid Quantity

Luxemburg leads the genuine aid ranking by AidWatch with 0.99% of GNI and only 0.08% of GNI of inflated aid. However, Luxembourg NGOs remain vigilant on potential use of ODA to fund Luxembourg’s financial climate responsibilities, especially since Luxembourg has a very alarming record of climate change issues.

System

Luxemburg has a dedicated Minister for Development Cooperation and Humanitarian actions. The Ministry of Foreign Affairs and its respective Directorate on Development Cooperation are responsible for development cooperation policy making and strategies. LuxDev is the agency responsible for the implementation of the development cooperation. LuxDev has a status of a private company which is 98% owned by Luxemburg and 2% owned by a bank (Société nationale des Crédits à l’Investissement). The Board of LuxDev consists of the representatives of the Luxemburg governments, trade unions, NGOs, independent person and director of LuxDev.

Countries and sectors

Luxembourg development cooperation is focused on 10 “partner countries”, with which the Luxembourgish government signs country programmes. These are mainly from the West part of Sub-Saharan Africa (6), Asia (2) and Latin America (2). NGOs are however not bound to this “restriction”. Apart from partner countries, Luxemburg provides aid to 3 Balkan countries (Kosovo, Serbia and Montenegro), Rwanda and Mongolia. The selection of the sectors was inspired by the MDGs and Luxemburg focuses mainly on health, education and local development which aim at water, the sanitation, decentralization and microfinance.

Challenges in 2012 and beyond

Climate finance is one of the major challenges for Luxemburg’s ODA as it does not count climate finance as ODA and is one of the strongest advocates within the EU for its additionality. Based on the lack of leadership of the EU to contribute to solving the global climate problem, Luxemburg committed to contribute only € 9 million for the fast start finance for 2010-2012. Luxemburg has also faced delays in its disbursements, caused by administration hurdles. Until now Luxemburg has not developed steps to increase this amount until 2020. Another challenge will be the election campaign for a new government in Luxembourg starting in 2013 which might open a debate of tying ODA to national interest.

Recommendations

 The government should apply the Greenhouse Development Rights Framework in order to estimate Luxembourg’s fair share of climate finance and calculate amounts which correspond to Luxembourg’s real climate obligations.

 Not to use the positive record of ODA commitments to escape its responsibility in climate financing. Continue to avoid double-counting of funding as ODA and UNFCCC funding and give a clear public definition of their understanding of additional finance.

 Improve development education and awareness raising by increasing the share of ODA allocated to education/awareness raising and advocacy work from currently 0.55% (2010, down from 0.68% in 2009).