Peer reviews of DAC members

Denmark - Leading Donor in the Process of Reform

 

26/05/2003 - Denmark has been recognised for the generosity of its aid and its innovative development co-operation policy and management. Its operational focus on a small number of priority countries and sectors make its bilateral programmes among the most strategically framed in the DAC. Preliminary figures establish Denmark's net Official Development Assistance (ODA) at USD 1.63 billion in 2002. This represented 0.96% of its Gross National Income (GNI), the highest ODA/GNI ratio among the 22 members of the DAC (down from 1.03% in 2001) and significantly above the average country effort of 0.40%.

Past DAC reviews of Denmark's development co-operation underscored the leadership that it has provided within the international donor community over the last four decades and noted the sustained strong public and political support for its development co-operation. However, recent reforms include decisions to abandon the 1% of GNI target, withdraw from three programme countries, eliminate a number of advisory committees and merge the posts of Minister for Development Co-operation and Minister for Foreign Affairs. Some of these changes have been seen as introducing discontinuities in the Danish aid tradition with the risk of a lessening of the strong political priority that it had previously received. In the context of its continued reforms, the Government is currently discussing future policies and directions for Danish aid. If, as is anticipated, this process leads to a five-year strategy (2004-2008) and budget proposal later this year, the reform process may lay the foundation for a new political consensus on Danish aid volumes and practices centred around the Millennium Development Goals (MDGs).

The DAC Chairman, Mr. Jean-Claude Faure, summarised the Committee's main recommendations to Denmark:

  • Maintain the momentum of development co-operation leadership. Denmark is encouraged to keep development issues high on the government's agenda. Similarly, Danida should further engage Danish civil society in a dialogue on development co-operation issues. The DAC welcomed Denmark's proactive approach to assessing and influencing the performance of the multilateral development banks and the United Nations system as a basis for decisions on funding these institutions. Denmark is encouraged to continue strengthening co-ordination with other key donors in this context and to continue to share with the DAC its development co-operation experience more generally, so as to promote common understanding of issues and best practice operational approaches.
  • Further untying of aid. Denmark's announcement this year of its intent to untie its aid with respect to procurement in other European Union member states was welcomed as a major step towards further untying Danish ODA. Denmark should now fully comply with the OECD Recommendation on Untying of Aid to Least Developed Countries.
  • Hold the line on funding levels in the spirit of the 2002 Monterrey Consensus. Denmark's ODA/GNI ratio could be in the 0.8% to 0.9% range over the next few years, considerably below previous levels. Denmark is encouraged to make every effort at least to maintain its current level of ODA volume.
  • Maintain a strategic geographical and sector focus. There has been political advocacy in recent years to use Danish ODA to promote special Danish initiatives. Supporting development efforts which are not priorities in the locally negotiated partnership agreements easily risks being non-sustainable, especially given the short-term one-off character of the funding provided. On another level, concerns about good governance and human rights led Denmark recently to terminate development co-operation activities in three countries with which it had entered into long-term partnership agreements (Eritrea, Malawi and Zimbabwe). Political conditions in these countries had deteriorated significantly, to the point where the Danish authorities concluded that their aid could no longer be effective. Other DAC members had reduced their aid to these countries for the same reasons while not terminating their co-operation altogether. In refining and clarifying its aid allocation policies, Denmark is encouraged to maintain its overall strategic vision of focusing on a selected number of priority countries and sectors through long-term sustainable partnerships based on country-led poverty reduction strategies. At the same time, Denmark is also encouraged to work on clarifying "exit" strategies vis-à-vis such countries and to continue its work in more problematic countries, interacting with the DAC work on Difficult Partnerships.
  • Broaden Danish capacity to support policy coherence for development. Like other DAC members, Denmark experiences the difficulty of ensuring that all relevant policies are in line with its development objective of reducing global poverty. An asset for Denmark in this context is the grouping in the Ministry of Foreign Affairs of responsibility for international financial institutions, the United Nations system, humanitarian assistance and trade together with political relations. Denmark's support for international policy coherence, including within the European Union, is helped by the intensive co-ordination of its policies in the European Union and by the positive attitudes and involvement of Danish industry and farmer associations. The DAC encourages the Ministry of Foreign Affairs/Danida to increase further interaction within government and with Parliament and civil society on these issues. Ministry of Foreign Affairs/Danida should have the capacity to play a stronger leadership role in analysing and promoting the development coherence of policy decisions.
  • Empower the field missions. Danida operates with a lean professional staff and business-like procedures. Denmark is decentralising its development co-operation. This helps Danida, a leader on this front, to collaborate with developing country partners and other donors in the field, especially in the context of strategies that are led by partner countries, such as the PRSP. Redeployment of staff and other resources from Copenhagen to the field is crucial in this respect, especially in light of overall government budget compression. High-level oversight of the new system, based on regular quality assessments, will help ensure the necessary empowerment of field missions.
  • Find operational approaches to results-based management. Danida, like many other donors, is developing a more performance-based aid management system. Danida is encouraged to maintain close collaboration with other DAC members who are currently pursuing similar endeavours, to support both its own efforts and those of other donor agencies.

During the review on 22 May 2003, the Danish delegation was led by Mr. Carsten Staur, State Secretary for the South Group of the Ministry of Foreign Affairs. The examining countries were Luxemburg and Portugal.

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