Overall framework for development co-operation
Legal and political orientations
Robust foundations and political backing for fighting global poverty
Danish development co-operation enjoys continued popular support and understanding in parliament, civil society and among opinion leaders. The Minister for Development Co-operation and Danida, informed civil society actors, and the parliamentary committees involved in development co-operation keep the debate about development in the public domain, thus maintaining critical support for and awareness of the issue. This public debate undoubtedly contributes to the continued political commitment to exceed the UN target of providing 0.7% of gross national income as official development assistance, as well as to achieving the Millennium Development Goals, implementing cutting-edge policies and taking up international leadership on global issues such as climate change, and gender equality and women’s empowerment. Nevertheless, while there is a shared consensus politically that Denmark should punch above its weight in international development, the new strategy for Danish development co-operation – Freedom from Poverty: Freedom to Change – was adopted by only a small parliamentary majority in 2010. A contributing factor may have been the divergent views between political parties on the government’s decision to freeze official aid at 2010 nominal levels between 2011 and 2013, announced shortly before parliament met to approve the strategy.
The Danida Board and the Council for International Development, both created by Denmark’s 1971 Act on International Development Co-operation (amended in 2002), are mandated to provide independent advice to the Minister for Development Co-operation on development issues. However, while the board is fulfilling its mandate to provide advice and recommendations to the minister on Danida’s strategies, policies and programmes, the council is not playing its role as a sounding board on development issues more generally. There is scope for the minister to reinvigorate the role of the council, which could play a more active role in public debates about development.
A clear new vision for development
Denmark’s new strategy, Freedom from Poverty, commits Danish development policy to the over-riding goal of poverty reduction through sustainable development, and places greater emphasis on economic growth and employment. The policy prioritises five broad areas:
i. growth and employment
ii. freedom, democracy and human rights
iii. gender equality
iv. stability and fragility
v. environment and climate.
Denmark has considerable development co-operation experience on which to draw in implementing these priorities, with the exception of stability and fragility and, to a certain extent, growth and employment. The DAC appreciates that former cross-cutting issues – gender equality and women’s empowerment and environment – are recognised as core priorities for Danida. The strategy provides for general continuity in Denmark’s choice of development priorities. It contains little explicit focus on traditional sectors such as education and water and sanitation, which Danida continues to support in several partner countries and the implications of the new strategy on these traditional areas of Danish expertise. It does not outline how Denmark’s commitment to aligning to partner country priorities and to division of labour will affect how it achieves its new priorities. The Guidelines for Programme Management, currently being revised, should clarify how the new priority directions will be put into effect so that staff can move forward and Denmark’s partners can plan accordingly.
The linkages between development, security and foreign policy goals are more explicit in the new strategy. This marks a departure from more altruistic motivations for giving aid: Freedom from Poverty notes that “development policy is also realpolitik”. This focus on Danish interests also reflects greater public pressure to justify why Denmark gives aid. Denmark’s continued commitment to the MDGs and poverty reduction is critical to ensure that short-term foreign and security policy pressures, when they emerge, do not put at risk the overall long-term interest in effective development.
Denmark considers that its comparative advantage in development co-operation stems from both the way its own society is organised and its specific experience in various sectors. Freedom from Poverty embeds core values such as freedom, democracy, human rights and gender equality in Denmark’s strategic priorities. These values are key drivers of Danish development assistance, which also emphasises zero tolerance of corruption, a focus on results, and an agenda to influence its partners, Denmark should be pragmatic in pursuing its objectives in partner countries, and should continue to respect local needs.
Freedom from Poverty identifies two particular challenges for Danida: (i) willingness to take risks to make Danish aid robust, flexible and dynamic; and (ii) engaging in fragile states. Both these challenges were highlighted in the 2007 peer review. Denmark’s focus on defining risk jointly with international partners, and the priority it intends to give to risk management at the Fourth High Level Meeting on Aid Effectiveness in Busan in 2011 are both commendable. The new concept of risk being developed by the ministry should also help it to be realistic about how it intervenes in different country contexts. It will also need to build capacity of staff to manage risks accordingly.
The last peer review found that criteria for selecting partner countries favoured stable and well-performing states, making Denmark appear risk averse. Denmark has now established new criteria for selecting partner countries. While recognising that partner selection is ultimately a political decision, selection criteria look at partner countries’ development needs, Danish national interests, and whether Denmark can make a difference and achieve results. These new, more flexible, criteria pave the way for Denmark’s active engagement in fragile states.
Denmark plans to withdraw gradually from 11 partner countries, seven of which have already been identified, in order to concentrate its bilateral aid in 15 priority partners. When deciding to phase out, Denmark should review how its decisions fit with the wider division of labour with other donors. Moreover, Denmark can apply lessons from previous phasing out experiences to ensure that this sensitive process is managed strategically and sustainably.
In November 2010 the MFA published Peace and Stabilisation, Denmark’s Policy Towards Fragile States, 2010-2015. In addition to global security and terrorist concerns, Denmark’s drive for greater engagement in fragile states recognises that countries furthest from achieving the MDGs are often those affected by war, conflict, violence and instability. According to its new list of partner countries, Denmark will engage in 11 fragile states over the long term, focusing on state building whilst ensuring cohesion between Danish foreign and security policy; co-ordinated military, political, humanitarian, and development approaches towards a common goal; and integrated planning. This commitment to and specific focus on fragility and stability is welcome.
A good, strategic, multilateral donor
Denmark is reflecting on the future of the multilateral aid system, and along with other donors, is seeking to assess how effective the multilateral agencies are, and how their performance could be improved. It has become more strategic in how it works with multilateral organisations, as suggested by the last peer review. It couples results-oriented three to five-year strategies with increased core contributions to several UN agencies and the World Bank; core funding now represents 88% of Denmark’s contribution to the multilateral system. Moreover, Denmark allocated funds to 87 multilateral organisations in 2009 – 69 fewer than in 2004. The number of small contributions – below DKK 5 million (approximately USD 900,000) – has also fallen from 105 in 2004 to 37 in 2009. Having missions in Geneva, New York, Rome and Washington with the authority and capacity to engage with multilateral organisations has contributed to building stronger and more strategic relations, including annual dialogue meetings to review progress and agree plans for the coming year. Nevertheless, Denmark is aware that it needs to avoid increasing administrative burdens on multilateral organisations through parallel Denmark-specific requirements. Denmark should build on the consultations its mission to the UN held with the Utstein donors on ‘Good Multilateral Donorship’ in 2010 and continue to develop its ideas on this jointly with other donors.
Denmark will seek strategic co-operation with the European Union, selected UN agencies and the World Bank Group, particularly to implement its priorities on growth and employment and in fragile states. This is an efficient approach to working with relevant partners and using their comparative advantages.
The need for more coherent communication by Danida
The Ministry of Foreign Affairs is aware that it is important to have public support for development co-operation and has a long tradition of engaging the Danish public, opinion leaders and Danish civil society organisations in the subject. The ministry is particularly sensitive to the need to communicate the results of its development co-operation work, but it is equally aware that this is a challenging task. While the ministry’s quality assurance and communication units work together to gather stories that illustrate results, they still lack solid data to demonstrate achievements and address public scepticism about whether aid is effective. How to demonstrate value for money and communicate achievements is therefore a priority. The DAC encourages Denmark to share more broadly its own experiences with other donors so as to build good practice on demonstrating results while being accountable to partner countries and Danish taxpayers.
Since the last peer review, the Ministry of Foreign Affairs’ emphasis on becoming a proactive, open, transparent and trustworthy communicator has led to a cultural change in its communications. It has also made staff more open to engaging with the media, a change brought about by efforts to build staff capacity in communication and media relations. These efforts included training all new employees in communication and contact with the media, and holding a course on press relations for communication officers and staff going on postings. The ministry is now preparing a communication strategy which will give more prominence to Danida as a brand. As it does this, the ministry should avoid “flag-raising” in order to respect and support the ownership of partners. In addition, the strategy identifies priority communication themes. All the centres, when communicating about development, should reinforce these core messages.
Promoting development beyond aid
Aid alone cannot ensure development. Alongside official development assistance, other financial flows and domestic policies of donor countries also have a significant impact on developing nations. Freedom from Poverty commits Denmark to strengthening its overall engagement in developing countries where aid is only part of the overall development picture. It plans to do this by building on Danish experience in co-ordinating civil and military efforts, and by expanding on successes in migration and climate. Nevertheless, Denmark realises that it still needs to improve coherence among domestic and EU policies in relation to development, including through greater levels of awareness in other sector ministries. This will be one of the objectives of the plan on policy coherence for development being prepared by the Ministry of Foreign Affairs. The ministry could also consider re-establishing the inter-ministerial working group on coherence (set up to prepare Freedom from Poverty) as a mechanism for building awareness and implementing the plan. The DAC encourages Denmark to finalise and start implementing this plan as a matter of priority. The ministry also plans to use its EU decision-making procedures so that they focus more consistently on development. This is welcome. Denmark should seize the opportunity of its 2012 EU presidency to increase the attention the EU gives to development beyond aid.
Domestically, Denmark still needs to build on its existing inter-governmental co-ordination committees to promote policy coherence in areas that go beyond the foreign affairs mandate, as was recommended in the 2007 peer review. There are several suitable mechanisms, across government and in the prime minister’s office, but none is mandated to ensure that policies are coherent with development goals. For example, the Co-ordination Committee chaired by the Prime Minister addresses policy coherence at the national level; inter-ministerial committees deal with specific issues, such as migration and the environment; and Denmark is working on whole-of-government approaches in a number of countries (e.g. in Afghanistan, and in Somalia). The next step for Denmark will be to design a cross-government system to promote, monitor and report on Denmark’s progress in achieving coherence.
Denmark’s foundation for development co-operation is solid, and as it implements Freedom from Poverty Denmark should:
Aid volume, channels and allocation
Denmark has exceeded the UN target of providing 0.7% of national income as official development assistance for more than 30 years, reflecting its long-standing commitment to poverty reduction and development. Danish official development assistance amounted to USD 2.8 billion in 2009, equivalent to a ratio of 0.88%, which made Denmark the 12th largest DAC donor by volume and the 4th by percentage of national income. As part of measures to reduce its deficit for 2011 to 2013, Denmark will freeze its aid commitments at the 2010 nominal level over that period. This could cause Denmark’s ratio to fall below 0.8% for the first time since 1983. Should this happen, the DAC encourages Denmark to return, as soon as possible, to its stated goal of 0.8% of aid to income ratio.
The predictability of Danish aid is assured by the Danish budgeting process at two levels. Firstly, the draft Finance Act and the annual publication of aid figures for the coming five years outline committed and planned contributions to partner countries, multilateral organisations, NGOs and other partners. Secondly, planned aid flows are included in bilateral agreements with partner countries, and a three-to-five year disbursement plan is built into programme documents. Denmark will enhance the transparency of its commitments to partner countries by publishing the relevant sections of the aid budget directly on embassy websites.
It is positive that Denmark is determined to continue to provide aid to the world’s poorest and most fragile countries. This policy is apparent in its aid figures. For example, in 2009 60% of its gross bilateral disbursements went to least developed countries. In addition, in 2011 the government committed an extra DKK 200 million to strengthening efforts in African countries, DKK 1 009 million to fragile states, and DKK 515 million for Afghanistan.
Meeting its objectives under the new strategy may require Denmark to rethink how it implements activities in the field. Sector budget support is Denmark’s default modality for government-to-government assistance. However, Denmark recognises that this modality may not always be the most appropriate for programmes focusing on and engaging with a range of state actors and that other arrangements may also be needed when the public sector is barely functional. Danida staff and key development partners need clear direction and guidance on how to work best in such situations. The Ministry of Foreign Affairs will also needs to maintain guidance, as a flexible ‘tool box’, on which approaches, other than sector budget support, can best contribute to building the capacity of partners’ financial, monitoring and reporting systems.
Cross-cutting issues and climate financing
Denmark is well regarded for its commitment to, and progress in, mainstreaming the environment, gender equality and women’s empowerment into its overall programme. Nevertheless, in light of international pressure to support climate change actions, there is a risk that Danida’s environment focus will be predominantly on climate, which could undermine its commitment to broader environmental issues.
In 2009, Denmark pledged DKK 1.2 billion (USD 231 million) to climate financing for 2010 2012. Since there is no agreed international baseline for assessing whether pledged funds are “new and additional”, each country determines whether their pledges are additional aid. According to the Danish government, its climate financing was additional in 2009 and 2010 because it did not reduce allocations to previous commitments in other development sectors. However, in light of the budget freeze, it is possible that Denmark’s contribution to fast start financing in 2011 and 2012 will squeeze out other planned activities.
Denmark is recognised and valued as a generous and predictable donor, committed to alleviating poverty in the poorest regions of the world. When implementing its new strategy, it should also:
Organisation and management
According to the Ministry of Foreign Affairs, the release of Freedom from Poverty in 2010 and the re-organisation of the ministry in 2009 into 11 units, or centres, complete the integration of development co-operation across the ministry. Under the new structure, the Centre for Development Policy is responsible for co-ordinating Denmark’s development policy and humanitarian action, while seven other centres are involved in development co-operation activities. This reorganisation was an important step towards creating a flexible organisation to address the challenges and opportunities raised by globalisation. It is too soon to determine the impact the new strategy and the re-organisation have on the ministry’s ability to address global challenges. However, creating a new layer of managers through the 11 centres has made decision making and co-ordination among staff more complex, and rendered reporting lines unclear. Fine tuning will therefore be necessary to build efficient mechanisms for decision making across the centres.
Learning from its decentralisation experience
As recommended in the 2007 peer review, Denmark has evaluated its decentralised structure and is now implementing the evaluation’s recommendations. The evaluation concluded that the decentralisation process was effective. In addition, decentralising authority to missions in Geneva, New York, Rome and Washington has helped to strengthen Denmark’s co-operation with key multilateral partners. The challenges identified in the evaluation relate to human resource capacity and the need to improve mechanisms for dialogue between embassy and headquarters staff. Co-ordination mechanisms need adjusting, however, especially to ensure coherence among headquarters, embassies and missions. Denmark also needs to maintain a minimum level of headquarter engagement with its main multilateral partners to inform its policy and allocation decisions. The evaluation also raised important lessons and recommendations for other donors, for example on tools for programme management and mechanisms for quality control. DAC members are urged to learn from Denmark’s experience.
Building on improvements in human resource management
Following the 2007 peer review, the Ministry for Foreign Affairs made a number of positive changes to its human resource management. It set up a new human resource department and wrote a human resource strategy. It is now preparing a policy to guide postings in fragile states. Moreover, the ministry has responded to the 2007 recommendation to improve the career development structure for locally-recruited employees in embassies. For example, it has established minimum standards for pay and over-time compensation and increased mobility of staff between embassies. The DAC encourages the ministry to build on its ongoing efforts to value, respect and give opportunities to their locally-employed staff in order to retain this important resource for Danida.
Human resource constraints have been a challenge for the Ministry for Foreign Affairs for several years. By 2013 the ministry will have to reduce its payroll by approximately DKK 71 million, the equivalent of 135 positions. In this context, it is essential that the ministry capitalises on the expertise of its development staff, including locally-recruited employees, and prioritises staff tasks. Denmark could also review whether its policy of focal points in embassies is the most effective way of achieving its objective to mainstream priority issues. While the ministry prefers generalist professionals over development specialists, because generalists tend to be more mobile, it must retain a core of specialists at headquarters and ensure that they have the right skills to help embassies implement Danish aid. The DAC also encourages the ministry to continue to build on its excellent approach to competence development, which is an important tool for sustaining quality.
Revising its results-based framework
Denmark, like the rest of the donor community, faces the challenge to improve reporting and document development results, a core priority addressed in Freedom from Poverty. In the current set up to manage programmes, results are determined using partners’ reporting systems, while embassies have their own systems to feed into the comprehensive and public project database. However, it is hard to aggregate results to demonstrate how overall achievements relate to strategic priorities. In addition, embassies and missions report annually on more than 350 selected output indicators. In these self-assessments, embassies rate their level of satisfaction with progress made against indicators, and aggregate satisfaction rates are listed in the annual report submitted to parliament. However, this measures progress against output indicators only. The ministry is therefore revising its results-based framework and is aware that it needs to be both realistic for monitoring and reporting, and sufficient to meet the constant need to demonstrate results. To this end, annual roadmaps are being prepared where goals will be set in key areas and monitored annually. Denmark also needs to identify how risks can be factored into indicators and performance reporting. The DAC welcomes the research programme launched by Danida in 2010 on measuring and documenting the results of development co-operation. Denmark is encouraged to broaden the involvement of other DAC members in this work as well as in its efforts to couple managing risk with managing for results.
In order to fine tune its organisational set up the Ministry of Foreign Affairs should:
Practices for better impact
Denmark is an internationally-recognised advocate and a leader in implementing more effective aid in line with the Paris Declaration principles and the Accra Agenda for Action. Danida puts partner country ownership at the heart of planning and programming, works to align sector support to partner country priorities, and targets a limited number of sectors in each partner country to maximise its value and efficiency. Danida’s engagement with civil society organisations and international organisations also focuses on improving the quality of aid.
The Ministry of Foreign Affairs has addressed the 2007 peer review recommendation to become more effective at country level by participating in joint donor assistance strategies and creating incentives to deliver aid more effectively. For example, sector budget support is now Denmark’s default aid modality. In Mali Denmark shows a good example of how it provides budget support in sectors with weak institutional structures, requiring intense support and capacity development. Together with Sweden, Denmark has set deadlines and clear conditions for providing sector budget support for water and sanitation. This has motivated the Government of Mali to strengthen its institutions and capacity within a specific timeframe. If Mali does not achieve the objectives set jointly with Denmark and Sweden within the timeframe, the date for providing sector budget support will be pushed back until the objectives have been met. Malian officials are satisfied with the approach, which instils a sense of mutual accountability.
Denmark’s embassies, with good support from headquarters, have sufficient flexibility to implement Paris and Accra commitments. They have several tools to manage programmes, including obligatory action plans for implementing these commitments, which embassies seek to deliver jointly with other donors and the partner government. Aid effectiveness goals and achievements are included in each embassy’s annual results contract with the ministry, monitored by its department for quality assurance. At the same time, to sustain the staff commitment and capacity that is required of embassies to move forward with aligning and using partner systems, and working jointly with other donors, the ministry needs to ensure that they continue to receive adequate support from the quality assurance and technical advisory departments in the Centre for Development Policy. Moreover, current tools for supporting embassies may need to be adapted for operations in fragile states and situations, and as Denmark implements its approach to risk management.
Denmark is well placed to contribute at the international level to make aid more effective. Its upcoming presidency of the EU in 2012 and the high level forum in Busan in 2011 provide good opportunities for this. It should share its experience on decentralisation, managing risk, using country systems, capacity development and mutual accountability. These experiences could be of significant help as the donor community moves forward on these challenges.
Rethinking the approach to capacity development
Developing partner country capacity cuts across all aspects of Danish development co-operation. Most of Denmark’s country programmes include components to build institutions or technical capacity in the sectors it supports. Denmark’s recent reflection on how it can best support capacity development, and how well its new framework for capacity development reflects international discussions, is positive. These include instilling a more strategic focus, having realistic expectations, placing a stronger focus on results, increasing joint efforts, and conducting a frank analysis of risks and ambitions. Denmark is also revisiting its approaches to develop capacity in fragile and conflict situations, where needs are different.
Denmark’s 2008 strategy for civil society organisations paves the way for implementing the Accra Agenda for Action commitments to such organisations. In particular, the overall objective of the strategy is to contribute to developing a strong, independent and diversified civil society in developing countries. In line with this, a condition for support to Danish organisations is that their work with developing country civil society has a strong component on developing capacity. Denmark’s civil society strategy is a model for other donors.
Denmark’s food aid and technical assistance have been fully untied since 2005 and 2008 respectively. The fact that 97% of its total aid is untied puts Denmark in the top category of OECD donors with respect to untying aid. However, there is still room for Denmark to untie the partially-tied Mixed Credit Scheme and the Business to Business Programme. Further untying was also recommended by the 2007 peer review.
Denmark has made good progress at headquarters and in country in delivering aid more effectively. It should now:
Denmark has taken bold steps towards ensuring good humanitarian donorship. As recommended by the previous peer review, Denmark has developed a new Strategy for Danish Humanitarian Action 2010-2015. This document sets out Denmark’s overall objectives in the areas of vulnerability, climate change and natural hazards, and protecting conflict-affected populations. Denmark will narrow its partner base and deepen its engagement in a limited number of crises, focusing on ensuring added value and linking up with other Danish initiatives, thus effectively leveraging its comparative advantages in line with the principles of good humanitarian donorship.
Denmark’s strategic prioritisation of climate change and natural hazards supports mainstreaming disaster risk reduction across all Danida programming. Since reducing risk of disasters is both a protection strategy for development investments and a key to avoiding costly emergency responses, the ministry should ensure that this work is not seen as a purely humanitarian issue. Assigning senior-level responsibility for risk reduction and adding risk reduction to the standard performance reports from its embassies could help raise the profile of risk reduction.
Denmark will continue to place a high value on strengthening mechanisms to deliver humanitarian aid. It believes that better results in the field come from operational flexibility and more strategic engagement with partners, and Denmark has adapted its humanitarian portfolio accordingly. There are now strategic relationships with a smaller number of partners; stronger linkages between humanitarian initiatives and development programming; and a longer-term, more predictable funding approach for strategic partners. The Ministry of Foreign Affairs is now looking at new approaches to monitoring results and impact, using a new model that builds on its partners’ own monitoring systems.
The ministry has begun to recruit humanitarian specialists for advisory posts in embassies with a humanitarian portfolio. These specialists report directly to their ambassador, but also have good informal links to the humanitarian team and the Regions of Origin staff in Copenhagen. Their expertise means they can engage at a high level with all stakeholders, which is seen as a major strength by partners.
In order to mainstream humanitarian programming across its work, the ministry’s new organisational structure brings humanitarian and development programme staff together. This allows for a closer working relationship and greater cross-programme linkages. The next step should be to standardise decision-making for humanitarian funding with the path followed for development programmes, while keeping a rapid response option open for sudden onset crises. This process should ensure that lessons are applied in new programme design and approval processes while ensuring timely disbursement of funds.
As noted in the last peer review, Denmark must continue to be vigilant in ensuring that humanitarian principles are not compromised under whole-of-government approaches in fragile states, especially where Denmark has a military presence. To help counter this risk, Denmark’s new humanitarian strategy explicitly recognises the Oslo and Military and Civil Defence Assets guidelines and the humanitarian principles of humanity, neutrality, impartiality and independence. It should continue to ensure that these core principles are respected on the ground.
Denmark has adopted a courageous and innovative approach to its humanitarian programming. To support the implementation of the new humanitarian strategy further, Denmark should: