Luxembourg Official Development Assistance Reached €504m in 2022

At a press conference on Friday 29 September 2023, Luxembourg's Minister for Development Cooperation and Humanitarian Affairs, Franz Fayot, took stock of the Grand Duchy's development cooperation and humanitarian activities since his tenure as minister began in 2020.

Period characterised by crises

Minister Fayot noted that the period between 2020 and 2023 has seen several crises, from the COVID-19 pandemic to Russia's war of aggression against Ukraine. He reflected on the negative impact of the former, particularly on poverty and access to education and health, and stressed that Luxembourg had recognised the need to "act immediately to ensure that all the progress made in the fight against poverty during the years preceding the pandemic was not lost." The minister noted that Luxembourg had made more than 660,000 doses of COVID-19 vaccines available via the COVAX mechanism. The development cooperation programme contributed €70.5 million to efforts to combat COVID-19 between the start of the pandemic and April 2022.

Concerning Russia’s war in Ukraine, Minister Fayot highlighted the significant needs related to humanitarian aid and the reconstruction of the war-torn country. Since February 2022, the Grand Duchy has granted more than €11.4 million in humanitarian aid and €2.8 million to support reconstruction efforts. In addition, it has contributed more than €10 million in material support, for example ambulances and medical equipment.

The minister added that food insecurity has reached unprecedented levels as a result of the war. As such, Luxembourg's development cooperation programme invested more than €80 million in projects linked to agriculture, agroecology and basic foods in 2022 (i.e. 16.5% of official development assistance (ODA)).

Bilateral cooperation

Minister Fayot also spoke of Luxembourg's strengthened bilateral development cooperation in recent years. He noted that the country had consolidated and extended several existing partnerships, but also established new ones, for example with Costa Rica and Benin. In 2021, bilateral development cooperation was restarted with Rwanda (with which Luxembourg had cooperated in this area until 2013). Between 2020 and 2023, four new indicative cooperation programme (ICP) were signed with Cape Verde, Laos, Niger and Senegal, respectively.

However, following the military coup in July 2023, Luxembourg suspended its development cooperation in Niger, which had previously been considered the former's "most stable partner in the region." In 2021, the two countries had signed their fourth ICP with an indicative budget of €144.5 million for 2022 to 2026 (Luxembourg's largest ICP at that time). Minister Fayot cited several other negative developments in bilateral development cooperation relations, namely with Burkina Faso and Mali, where several coups also took place. Several projects are still being carried out by Lux-Development, which finances them in those countries directly (rather than central funds previously managed together with governments). Due to the deterioration of the socio-political and security situation, Luxembourg also ceased its development cooperation activities in Myanmar in 2021 and closed its embassy in Nicaragua in 2022.

NGO support

Minister Fayot highlighted the importance of working together with NGOs, which have been granted about 15% of ODA for the financing of more than 150 projects and programmes in Luxembourg and abroad. Additional support was given to NGOs in 2022 after the pandemic (during which support was not reduced).

Moreover, the minister emphasised the need for awareness-raising and development education; funding for such activities rose from €2.7 million to €4 million in 2023. In addition, the co-financing of annual projects will increase from 75% to 80% in 2024; the co-financing of training costs will also see an increase. Similarly, framework agreements will be extended from three to four years.

Multilateral cooperation

Minister Fayot confirmed that multilateral development cooperation had represented about 30% of Luxembourg's ODA in recent years. He noted that several long-standing partnerships had been strengthened and extended through new strategic partnership framework agreements, for example with the United Nations Development Programme (UNDP), the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), the United Nations Population Fund (UNFPA) and UNICEF. In 2022, Luxembourg signed its first framework partnership agreement with UN Women (2023-2025) to support the rights and autonomy of women and girls worldwide.

Concerning global health, Luxembourg contributed €14.7 million in 2022 to the global fight against AIDS, tuberculosis and malaria (i.e. a 60% higher contribution than previously). Minister Fayot added that the Grand Duchy is currently the largest donor per capita to UNAIDS.

Innovation in humanitarian action

Luxembourg's Humanitarian Affairs Minister also stressed the importance of finding innovative solutions to multidimensional humanitarian crises. In 2022, the Grand Duchy adopted a new humanitarian strategy to make its action more targeted, effective, sustainable and inclusive. For the first time, this strategy set a percentage dedicated to the humanitarian budget, i.e. 15% of ODA.

In 2020, the operations of the emergency.lu crisis telecommunications platform were extended until 2026. Minister Fayot noted that the platform has been deployed more than 30 times as part of humanitarian missions since 2012.

Luxembourg also strengthened its cooperation in the areas of digitalisation and data protection by launching the first International Committee of the Red Cross (ICRC) delegation for cyberspace in the Grand Duchy in 2022. Moreover, in 2023, Luxembourg and the UN World Food Programme (WFP) launched the "Humanitarian Innovation Accelerator": sixteen organisations pitched their humanitarian projects, with eight selected to receive financial support.

Minister Fayot noted that Luxembourg's development cooperation programme had diversified its approaches in recent years, putting particular emphasis on the innovation and dynamism of the Luxembourg private sector (strengthening this, for example, through the Business Partnership Facility), but also on the establishment of new partnerships with research players, for example the Luxembourg Institute of Socio-Economic Research (LISER).

In the field of inclusive finance, Minister Fayot highlighted the creation of the "Catapult" accelerator programme, launched together with the Luxembourg House of Financial Technology (LHoFT), through which small fintech startups in developing countries receive targeted supported.

Official Development Assistance

Despite the challenges associated with the pandemic, Luxembourg devoted 1.03% of its gross national income (GNI) to development cooperation in 2020. This 1% of GNI was maintained in 2021 and 2022. In absolute figures, ODA increased from around €397 million in 2020 to around €456 million in 2021, reaching about €504 million in 2022. Minister Fayot expressed optimism for 2023, describing the forecasts as "good" and adding that "everything indicates that we will still be able to devote 1% of our GNI to development cooperation." He elaborated: "This 1% gives us very great credibility at the international level, in particular because we achieve it according to the principle of additionality, that is to say without taking into account the expenses linked to the management of refugees and climate change."

Minister Fayot concluded: "Despite the successive crises that we have experienced, Luxembourg's cooperation [programme] has left a positive impact where it has been present. And it will be essential to maintain this important commitment during the next legislature."