This report presents the findings of the 2024 development co‑operation peer review of Finland and includes the relevant peer review recommendations approved by the Development Assistance Committee (DAC). The report focuses on four areas of Finland’s development co‑operation identified in consultation with Finland’s government representatives and partners. Structured around these four areas, the report analyses Finland’s development co‑operation policy framework including the extent to which it supports a coherent approach. It then explores the role and mandate of the Ministry for Foreign Affairs in the context of the Government’s reform agenda as well as the extent to which programming and partnerships reflect and can deliver on Finland’s policy goals. The last section looks at results and risk management within Finland’s development co‑operation. For each of these areas, the report takes stock of Finland’s strengths, the challenges and risks it faces, and prospects for the future.
OECD Development Co‑operation Peer Reviews: Finland 2024
Abstract
A political context of reorientation
Finland’s 2024 peer review took place at a moment of political transition. In June 2023, the Government of Prime Minister Petteri Orpo began its four-year term, replacing the centre-left Marin Government that led the country from 2019 to 2023. The Orpo Government comprises a four-party coalition including the prime minister’s conservative National Coalition Party, the nationalist-populist Finns Party, the centre-right Christian Democrats and the centrist Swedish People’s Party. The Presidency, which plays a role in directing Finland’s foreign and defence policy, is held by Alexander Stubb following presidential elections in January-February 2024.
The evolving foreign and security context in Europe is contributing to a substantial reassessment of Finland’s foreign policy. Russia’s full-scale invasion of Ukraine in 2022 significantly impacted Finland’s domestic politics and foreign policy, including its formal accession to the North Atlantic Treaty Organization (NATO) in April 2023 following decades of military non-alignment (NATO, 2024[1]). These changes coincide with broader shifts in the European Union (EU) including changes in EU defence policy and a greater prioritisation of competition and EU economic interest in EU development policy. A willingness to counter the global economic influence of the People’s Republic of China is also contributing to the stronger focus on Finnish business interests in Finland’s foreign policy (Government of Finland, 2023[2]). New policy documents to take forward the government’s vision on foreign and security policy (Ministry for Foreign Affairs, 2024[3]) and on international economic and development policy (Ministry for Foreign Affairs, 2024[4]) were made public in June and July 2024, respectively.
The Government is seeking to reduce government spending and public debt through austerity measures. Finland’s economy is highly integrated into the global economy, with exports and imports making up a larger share of gross domestic product (GDP) than the OECD average (OECD, 2022[5]). After a sharp decline in 2020, the economy recovered rapidly from the COVID-19 shock, but growth stalled following Russia’s 2022 invasion of Ukraine and weaker demand in Finland’s trading partners. While economic confidence remains exposed to regional instability, GDP is expected to grow in 2024, picking up to 1.9% in 2025, and unemployment and inflation are expected to decline by late 2024 and into 2025 (OECD, 2024[6]). Citing EU fiscal rules, the current Government has set a goal of stopping the growth of government debt, with a planned reduction in government spending by EUR 3 billion over 2024-27 including EUR 1 billion in cuts to official development assistance (ODA). Finland’s National Audit Office (2024[7]) noted recently that “structural factors” underly the general government deficit, e.g. the country’s aging population, and suggested measures to control the growth of Finland’s government debt-to-GDP ratio should be directed to a greater extent at the causes of spending needs. In the latest supplementary budget of May 2024, overall spending is down, although additional appropriations were included for Ukraine and defence (Ministry of Finance, 2024[8]; Ministry for Foreign Affairs, 2024[9]), with defence spending expected to surpass the NATO target of 2.0% and reach 2.3% of Finnish GDP in 2024.
Significant cuts to the development co‑operation budget are being implemented over the Government term. The Government started its term in 2023 by outlining significant cuts to the ODA budget, with the Government Programme specifying a cumulative cut to ODA of EUR 1 billion over 2024‑27 compared with the 2023 budgetary framework (Government of Finland, 2023[2]). In April 2024, the Government announced additional cuts to ODA of EUR 50 million per year, amounting to a total reduction in ODA of EUR 1.2 billion over four years, a cut of approximately 25%. ODA to Ukraine is increasing, and from 2023, Ukraine has become Finland’s largest ODA recipient, a significant advance over its tenth-place position in 2021 (OECD, 2023[10]). ODA to Ukraine includes humanitarian aid as well as planned increases in development-related spending alongside Finland’s defence materiel support.
Overview of Finland’s development co-operation system and stakeholders
The MFA, which leads on Finland’s development co-operation, is under the direction of three ministers responsible for foreign affairs, foreign trade and development, and Nordic co‑operation. In the current government coalition, the prime minister’s National Coalition Party leads the MFA, and the Finns Party holds the international trade and development portfolio. The minister of economic affairs, who is responsible for export financing, is also from the Finns Party, as is the minister of finance.
Development co‑operation tasks are distributed across the MFA’s structure, with relevant staff sitting in the Development Policy Department as well as thematic policy and regional departments. The Development Policy Department is responsible for Finland’s international development and humanitarian policy, development finance, and overall planning and monitoring of development co‑operation including financial and risk management and quality control. The Development Policy Department co-ordinates with the Political Department on Finland’s engagement with the United Nations (UN) system and on human rights issues. Regional departments are responsible for their respective geographic areas, with development staff in embassies reporting directly to relevant country desks in Helsinki. The International Trade Department is responsible for the trade portfolio, with growing responsibilities including Finland’s engagement in Global Gateway and work on digitalisation (Figure 1).
The Foreign Service is currently undergoing a significant reform, with implications for the MFA’s set-up and management of development co-operation. Following formation of the new Government in June 2023, an internal MFA working group was established to reform the Finnish Foreign Service in accordance with the Government Programme and due to “the fundamental change in the foreign and security policy environment” (Ministry for Foreign Affairs, 2023[11]). The working group’s recommendations, published in December 2023, cut across key areas including management of the MFA, resources, and organisational structures. These changes have direct implications for the role of the Development Policy Department, Finland’s development finance institution (DFI) Finnfund, and the role and number of embassies, with the revised MFA structure in place from 1 August 2024. In June 2024, a related review of Finland’s trade and investment promotion agency Business Finland1 resulted in a decision to bring the agency’s foreign activities under the responsibility of the MFA (Ministry for Foreign Affairs, 2024[12]), a process now underway. The Ministry of Finance and the State Treasury also recently implemented a digitisation process in all government grant management systems including MFA systems for managing ODA (Ministry for Foreign Affairs, 2024[13]).
The legal framework for Finland’s development co-operation is also being updated over 2024‑26 to reflect the increasing role of the private sector and allow for the greater outsourcing of activities. Several changes to existing legislation are proposed: (1) a comprehensive reform of the Finnfund Act 291/1971 to enable the outsourcing of public administration tasks to Finnfund and the creation of a subsidiary that can, inter alia, provide technical support for project development and (2) reform of the Act on Concessional Credits Granted to Developing Countries (1114/2000) with the objectives of broadening the definition of a credit provider and streamlining processes for Finnish companies to access ODA funds. A proposed new Act on Organisation of Development Cooperation includes provisions that would allow for the transfer of development co-operation tasks from the MFA to another authority or party, for example consulting companies. Provisions to ensure a legal basis for the development policy loans and investment instruments are also envisaged. The first two amendments are expected to be finalised over 2024-25. The process to develop the new act began in mid-2024, consultations are planned for mid- to late-2025, and completion expected by the beginning of 2026.
Several other ministries and agencies are closely involved in delivering development co‑operation in co-ordination with the MFA. A range of Finnish technical agencies are involved in delivering co‑operation in partner countries. These include the Finnish Institute of Public Management (HAUS), the Finnish Tax Administration (Vero), the Finnish Meteorological Institute and the National Board of Education, among others. Several Finnish agencies are in the process of applying for an EU pillar assessment. The MFA and Finland’s embassies play an important role in co‑ordinating this work at country level. The Ministry for Economic Affairs and Employment is responsible for supervising Finland’s Export Credit Agency, Finnvera, and the Ministry of Finance and the MFA share responsibility over matters relating to the World Bank, European Investment Bank (EIB) and European Bank for Reconstruction and Development (EBRD). The MFA and Ministry of Finance also collaborate on Finland’s tax and development work.
The Development Policy Committee plays an important role in monitoring and reviewing development co-operation policy and implementation. The mandate of the Development Policy Committee, Finland’s government-appointed advisory body, is to monitor and provide advice on Finland’s activities in policy areas with an impact on developing countries in order to assess the quality and effectiveness of development co‑operation and follow the level of ODA appropriations.2 The Committee is also active in raising awareness and promoting debate on development issues in Finland (Development Policy Committee, 2024[14]). Its members represent the parliamentary parties, interest groups, civil society organisations (CSOs), researchers and the private sector as well as government representatives from line ministries. Figure 1 shows the organisation of Finland’s development co-operation system.
Note: The illustration presents the key actors in Finland’s overall development co-operation system as noted in this peer review. For an organigram of the Ministry for Foreign Affairs, see the ministry’s website: https://um.fi/the-organisation-of-the-ministry-for-foreign-affairshttps://um.fi/the-organisation-of-the-ministry-for-foreign-affairs.
Source: Authors’ elaboration based on information provided by the MFA.
Long-standing priorities and values have guided Finland’s foreign policy and underpin its international influence and effectiveness
Over the review period, Finland has been a principled, values-based international actor, enabling it to exert influence on issues it deems important. Finland is renowned globally for its commitment to human rights, transparency and effective international co‑operation, enabling it to drive change and lead by example. Longstanding, broadly owned priorities and values have underpinned this influence, including on gender equality, human rights and a human rights-based approach, and reaching those furthest behind.3 The commitment to reaching the most in need has been illustrated in Finland’s principled humanitarian assistance, where supporting the inclusion of persons with disabilities is a visible dimension of its policy (Ministry for Foreign Affairs, 2019[15]). Finland’s own domestic good governance, high levels of equality and efforts towards environmental protection have bolstered its international image (Hiilamo et al., 2022[16]) (Ministry for Foreign Affairs, 2023[17]). Recognising that how Finland is perceived internationally is important to its influence on global political and economic decisions, the MFA has also invested in understanding Finland’s soft‑power image, conducting surveys and analysing data to help guide policy making4 (Ministry for Foreign Affairs, 2023[18]).
Finland’s international advocacy and strategic influencing have contributed to positive change. Finland’s activism in international fora has allowed it to punch above its weight in shaping and influencing international decision making. Finland has substantial convening power in EU policy making, where it has been a valued coalition partner; has been able to build trust and dialogue including on gender equality (Particip GmbH and NIRAS Finland Oy, 2022[19]; Giuli, Hedberg and Ivan, 2018[20]); led a well-received Presidency in 2019 that drove forward more ambitious climate policy and support for rule of law (Tuominen, 2023[21]; European Council, 2019[22]); and consistently supports EU crisis response.5 Recent evaluations highlighted that key internal factors for Finland’s successful Presidency were careful preparation, good staffing, flexibility, and a soft, constructive and inclusive approach to meetings and negotiations (Particip GmbH and NIRAS Finland Oy, 2022[19]). Finland’s strategic influencing is also exemplified in its ability to drive improvement within the UN system, where it has contributed to a greater focus on the inclusion of women and girls and persons with disabilities; stronger capacity for results monitoring and results-based management; and efforts to combat sexual exploitation, abuse and harassment (SEAH) (Box 1 and Box 2). Consistent and coherent priorities across Finland’s international influencing and development co-operation efforts have brought further credibility to these efforts (GmbH and Oy, 2020[23]).
Transparent and inclusive approaches to policy formulation and implementation have also underpinned Finland’s effectiveness. The key values of transparency, coherence, quality and sustainable results that have underpinned Finnish development policy (Ministry for Foreign Affairs, 2021[24]) are in line with the broader Finnish approach to governance. This approach includes a strong tradition of consultation and citizen participation and engagement that also draws on Finland’s rich civil society6 (OECD, 2021[25]). Finland’s own national sustainable development policy, which succeeded at involving different societal groups, is one example of this strong citizen participation. As a result, sustainable development has become a widely accepted aim in Finland (Eurobarometer, 2022[26]; Prime Minister's Office, 2020[27]; National Commission on Sustainable Development, 2016[28]) (Prime Minister's Office, 2020[23]).7 This broad support has also enabled successive governments to advance policies that align with and support the 2030 Agenda. Diverse stakeholders consulted during the peer review consistently pointed to what they see as a weakening of this commitment to transparent and inclusive approaches since 2023 – for example the shortening of the time frame in which stakeholders can comment on policy proposals and a declining quality of consultation hearings.8
As a small country that relies on international trade and co-operation, Finland has long championed multilateralism and multilateral effectiveness. In doing so, it has successfully positioned itself as a supporter of the multilateral system, building a reputation among multilateral organisations as an efficient, approachable and trusted actor.
That an “influential Finland” was an explicit objective in the 2019 Government Programme and highlighted again in the 2021 Report on Development Policy Across Parliamentary Terms has also helped bring strategic reflection and intent to Finland’s approach. In response to this objective, two recent strategic evaluations examined Finland’s effectiveness at influencing policy within the EU and across eight of Finland’s key multilateral partners, identifying several elements that underpin its effectiveness in working with and through the multilateral system, notably:
highly experienced and skilful staff within the MFA with deep expertise, enabling Finland to build credibility and reputation
long-term, coherent engagement through multiple channels and in coalition with like-minded countries
the formulation of policy and advocacy documents (referred to as influencing plans) that help to ensure coherent messaging
an image as a strong supporter of core funding, which Finland complements with softly earmarked funding to spearhead specific themes backed up by strategically deploying visible, high-level advocacy.
To strengthen Finland’s continued effectiveness in this space, the evaluations also highlighted several areas for further action, including:
the need for more institutionalised monitoring and learning systems within the MFA to support training of staff and the passing on of good practices and knowledge, particularly within a context of diminishing human resources
the importance of leadership, clearly defined and focused priorities, and supportive systems to avoid missed opportunities
the need for greater capacity within the MFA, including as Finland seeks to capitalise on its ambition to leverage more EU funds for Finnish projects.
From 2024, planned reductions in multilateral funding and the reduction of development expertise within the MFA and its embassies will need to be carefully considered in order to safeguard Finland’s effectiveness at influencing and shaping multilateral decision making.
Source: Particip GmbH and NIRAS Finland Oy (2020[23]), Evaluation: Finnish Development Policy Influencing Activities in Multilateral Organisations, Volume 1, Main Report, https://um.fi/documents/384998/0/Kansikuva%2C+Monenkeskisen+vaikuttamisen+evaluointi+%284%29.jpg/2074e0a8-9d0c-3258-cc9d-f7c8b17d82b8?t=1591860673808; Particip GmbH and NIRAS Finland Oy (2022[19]), Evaluation of the Finnish Development Policy Influencing in the European Union: Volume 1, Main Report, https://um.fi/documents/384998/0/Evaluation_Development_Policy_Influencing_in_EU_Vol_1+%282%29.pdf/c1f3acb7-4f41-92d1-c8c9-5249b3a9306a?t=1666668788984; Ministry for Foreign Affairs (2021[24]), Report on Development Policy Extending Across Parliamentary Terms, http://urn.fi/URN:ISBN:978-952-383-709-6.
Gender equality has been a long-standing priority of Finnish foreign policy, grounded in its human rights-based approach. Finland’s efforts in this area have combined mainstreaming, targeted action and policy influencing and have been of global significance in a context of anti-gender movements and backsliding.
Mainstreaming: In 2020, the MFA adopted guidelines on how to advance gender equality as one of Finland’s cross-cutting objectives in its development policy. The guidelines, which were updated in 2023, build on Finland’s human rights-based approach and define minimum standards (do no harm checklist). The government also set a target that 85% of new development co-operation projects should support gender equality as a significant or principal objective by 2025. In 2021-22, Finland committed 67.6% of its screened bilateral allocable ODA to gender equality and women’s empowerment as either a principal or significant objective (up from 53.3% in 2019-20). To enhance the knowledge and skills of MFA staff on gender equality and gender mainstreaming, a dedicated training package is planned.
Targeted action: Gender equality is an explicit outcome in most Finnish country programmes (Kenya, Mozambique, Nepal, Somalia and United Republic of Tanzania), which have generated evidence used in the design of new projects. With the UN, Finland uses its funding to support gender equality and emphasises the intersection of gender with disability, as seen in its multi-bi programmes in Tanzania with UN Women and the UNFPA. In 2021-22, 9.8% of Finnish ODA targeted gender equality and women’s empowerment as a principal objective, well above the DAC average of 3.9%.
Policy influencing and dialogue: With gender equality being challenged worldwide, including as a part of larger efforts to undermine democracy, Finland has worked systematically to propose and strengthen relevant language on gender equality in multilateral fora such as the UN, the Organization for Security and Co-operation in Europe, the Council of Europe, the EU, and in Arctic co-operation fora. For example, Finland initiated and actively led the EU member states experts’ working group on gender-transformative approaches to build bridges of understanding and support for the EU Gender Action Plan (GAP) III.
Three lessons for future work: First, advancing transformative gender equality policy requires a comprehensive approach across foreign policy areas. While the Women, Peace and Security agenda has opened possibilities to consider gender issues in foreign and security policy, learning by Finland’s MFA shows that gender equality quickly disappears from what are considered harder policy areas – for example international security policy. Evaluations point out that regularly updating tools to advance gender equality and a clear strategy that crystallises goals can help ensure gender equality is a focus.
Second, targets can usefully guide decision making. Clear progress has been made on the 85% target, and the MFA is developing a roadmap to ensure that this target is reached. While the target indicates an increased focus in terms of development co-operation, gender equality is less sufficiently resourced within the MFA as a whole, including in security, trade and economic policy.
Third, resources must match ambition. Until August 2024, three full-time staff worked on gender equality in the MFA: an ambassador and two gender equality advisors who undertook advocacy work and provided advice on equality issues within the MFA and embassies. In the context of headcount pressure and MFA budget cuts, protecting this expertise will be critical to Finland’s continued impact in this space.
Source: Vastapuu and Lyytikäinen (2022[29]), Gender Equality in Finnish Foreign Affairs from 2019 to 2022, https://um.fi/documents/35732/0/Gender+equality+in+foreign+affairs_Vastapuu_Lyytikainen.pdf/4aef250d-4d89-41cd-d390-6059951d4aa9?t=1668426670061; OECD (2024[30]), “Creditor Reporting System: Aid activities”, https://doi.org/10.1787/data-00061-en.
Development co-operation is integral to Finland’s foreign policy, and while new policy directions are an opportunity to build on this, they also bring trade-offs
Development policy has been an integral part of Finland’s foreign and security policy with clearly defined goals. Programmes of the Sipilä (2015) and Marin (2019) Governments set out a strong commitment to sustainable development and to Finland’s global responsibility, highlighting that the promotion of human rights, the rule of law, democracy, peace, freedom, tolerance and equality in all international activities is the central element of the value base that Finland’s foreign and security policy rests on (Prime Minister's Office, 2015[31]; Government of Finland, 2019[32]). Recognising that a more stable and prosperous world is in Finland’s national interest, the 2019 Government Programme stated that “Finland will work actively towards strengthening the position of the UN and its ability to operate effectively, and towards implementation of the sustainable development goals of the 2030 Agenda” (Government of Finland, 2019[32]). The 2021 Report on Development Policy Across Parliamentary Terms echoed this point, highlighting Finland’s global interdependence, recognising the importance of having a long-term development policy for effectiveness and impact, and clearly stating that the primary objective of Finland’s development policy was to reduce poverty and inequality and follow a human rights-based approach (Ministry for Foreign Affairs, 2021[24]). Figure 2 outlines key aspects of Finland’s 2021 development policy.
Source: Ministry for Foreign Affairs (2021[33]), Goals and principles of Finland’s development policy, https://um.fi/goals-and-principles-of-finland-s-development-policy.
The 2023 Government Programme signalled a shift away from poverty and inequality reduction as the primary objectives of Finland’s development policy. Taking as its point of departure the changed European security context and situation at Finland’s own border (Government of Finland, 2023[2]), the 2023 Government Programme set out several changes to Finnish foreign and development policy. The Programme does not mention the 2030 Agenda as a guiding framework nor does it clearly define the goals of development policy, instead stating, “Development cooperation must be efficient, effective and conditional.” Key commitments include to “cut development cooperation”, to shift the focus of Finland’s development co-operation “from bilateral Country Programmes to development cooperation engaged in by Finnish civil society organisations” including through greater access to international funding, and to “increasingly utilise Finnish companies in development cooperation and development policy investments.” Finnish national interest in the context of development policy is thus defined more explicitly as the involvement and internationalisation of Finnish actors.
The Government detailed important policy shifts to operationalise its vision in two reports published in June and July 2024. That the two new reports on foreign and security policy and on international economic relations and development co-operation policy were drafted together is in line with the Government Programme statement that “there has to be good coordination between peace mediation, humanitarian assistance, development cooperation and trade policy” (Government of Finland, 2023[2]). Led by the MFA, the drafting process was conducted in co-operation with the Office of the President and the Prime Minister’s Office. An initial call for inputs was conducted by the MFA in late 2023, with approximately 80 written submissions received on the new development policy, reflecting the strong stakeholder interest. A virtual information session on the policies’ overall direction was then held with civil society and the Development Policy Committee in May 2024. In contrast to previous policy processes, key stakeholders were not given an opportunity to comment on draft text which contributed to uncertainty among staff and partners, particularly given the signalled changes in direction, budget cuts and reforms announced at the beginning of the Government term. Continuing the established practice in Finnish policy making of consulting and engaging in dialogue with experts when formulating policies (OECD, 2021[34]) would enable the MFA to effectively plan for change, explore trade-offs, and ensure policies are owned and implementable by key stakeholders.
The July 2024 Report on International Economic Relations and Development Cooperation places Finnish commercial interest at the forefront of Finland’s new development policy. The report is intended to complement the June 2024 report on the Government’s new foreign and security policy with “more detailed trade and development measures”. It comprises three parts: a first section on economic relations and trade, a second section on development policy, and a third section on stronger ties between the two. Importantly, the July 2024 report refers to the 2030 Agenda and states that the “objectives of development cooperation will be based on the Sustainable Development Goals”. The report also refers to partnerships based on “mutual benefit and respect” and frames Finland’s international climate support in terms of international targets, both of which are positive elements. At the same time, the July 2024 report describes the overarching objective of Finland’s development policy as the closer connection between trade and development. The measures to operationalise the policy frequently refer to the internationalisation of Finnish companies and institutions and creating demand for the export of Finnish technology.9 The new policy also provides for a narrowing of the thematic focus of Finland’s development co‑operation to three main areas. These are: the rights of women and girls, education, and climate action (Figure 3). A focus on sustainable economy and decent work and of peaceful, democratic societies in past policies, and their strong links to Finland’s human rights based foreign policy, has thus not been carried forward in the new document (Ministry for Foreign Affairs, 2021[24]).
Source: Ministry for Foreign Affairs (2024[4]), Report on International Economic Relations and Development Cooperation, http://urn.fi/URN:ISBN:978-952-383-989-2.
As Finland acts to more closely link trade and development policy, investing in quality decision making and clearly articulating objectives would help ensure impact. Linking trade and development is not new for Finnish foreign policy, which has supported the capacities of developing countries to connect to international value chains and engage in foreign trade in compliance with international rules (Ministry for Foreign Affairs, 2021[24]; Ministry for Foreign Affairs, 2023[35]).10 Finland’s previous efforts towards policy coherence for development also reflect its recognition that diverse policy areas impact on developing countries and can thus contribute to reducing poverty and inequality, including commercial and trade policies. The new policy documents are nevertheless more ambitious and explicit in terms of using development co-operation to “promote the operating conditions of Finnish companies in developing countries” (Government of Finland, 2023[2]). Yet the extent to which the Finnish private sector is ready to substantially increase activities in developing countries in practice is uncertain, and additional effort, co‑ordination and expertise will be required to achieve this (See section on Finland’s development programming and partnerships: finding the right mix). DAC members’ experience also shows limited evidence of development co‑operation’s ability to open trade opportunities for members’ own companies (Guillaumont, Boussichas and Dsouza, 2023[36]; Hooli, 2021[37]). Looking at the evidence of where transitions from ODA to economic partnerships have occurred, such as in Viet Nam, and thinking through how to strategically reorient partnerships over time based on evidence, strategic clarity and common objectives will be critical to support the necessary reflections on opportunity costs and trade-offs in relation to each policy goal. Differentiating between policy goals and recognising that development has discrete objectives, as the Netherlands has done with three different categories of partner countries, may help support this strategic clarity.11
New conditionalities on ODA risk unintended consequences for Finland’s foreign policy goals. The 2023 Government Programme introduced two new conditionalities on ODA, namely, the requirement for a country to not support “Russia’s war of aggression” and to accept the return of its nationals. This is in addition to the existing condition that countries support a rules-based international order 12 (Government of Finland, 2023[2]). It is not clear what criteria are used to define “support for Russia” or the implications of this policy for multilateral and CSO funding, which has generated uncertainty for partners. Conditionalities of this type also run the risk of backfiring by feeding into anti-Western Europe narratives (Sheehy and Asunka, 2021[38]; Carbone and Ragazzi, 2023[39]). Many of the most vulnerable populations targeted by Finland’s ODA are living in countries with which political dialogue is increasing constrained and where such conditionalities may make dialogue more challenging. Recent studies also indicate that making ODA conditional on the control of migration flows has little or no effect on immigration to host countries, bringing into question the efficiency of such a policy13 (Guillaumont, Boussichas and Dsouza, 2023[36]). Peer reviews and recent research have likewise pointed out the reputational risks and other unintended consequences of using negative conditionality to address migration concerns14 (OECD, 2019[40]; Rietig and Walter-Franke, 2023[41]) while agreed principles and criteria for ODA reporting stipulate that there should be no diversion of ODA towards providers’ immediate interests on migration at the expense of long-term sustainable development (OECD, 2022[42]). Further research on whether and how such conditionalities can help to build reciprocity and mutual respect with partner country governments would better guide approaches to ODA conditionality going forward.
The linkage of sexual and reproductive health with “curbing population growth” in the Government Programme and new reports signals a significant departure from long-standing Finnish policy. While the Government Programme and new policy documents maintain a commitment to human rights and the right to self-determination on the one hand, they explicitly link development co‑operation support for the sexual and reproductive health of women with “curbing population growth” (Government of Finland, 2023[2]). This is inconsistent with Finland’s strong commitment to human rights, which entails supporting people to make choices about their own lives. In addition, such an approach would misinterpret the concept of reproductive health, which implies that people have the capability to reproduce and the freedom to decide if, when and how often to do so (UN, 2014[43]).15 The forthcoming management response to the 2023 independent evaluation of Finland’s human rights-based approach is an opportunity for the MFA to identify how to concretely protect and continue to embed human rights in its programming, partnerships and advocacy. In implementing the new development policy directions, it will be important that Finland’s approach does not undermine the very foundation of reproductive health.
Drawing on past learning will help Finland effectively manage the reallocation of its declining ODA budget
Efforts to learn from the past in managing ODA budget cuts effectively are positive, but Finland is now moving further away from its international commitment to allocate 0.7% of GNI as ODA. The speed of the cuts to Finland’s ODA budget in 2015-16 meant that decisions were not always based on results and performance, which impacted partnerships and weakened Finland’s credibility (Ministry for Foreign Affairs, 2018[44]; OECD, 2021[45]). While ODA increased steadily in volume after 2019, no roadmap was put in place for meeting Finland’s 0.7% ODA/GNI target despite a commitment to do so in 2021 (Ministry for Foreign Affairs, 2021[24]). The current Government Programme commits to formulate a plan for ODA that would extend over several government terms without defining how the Government will build consensus around such a plan. In learning from the past, the current Government Programme also states that planned “cuts will be implemented gradually, taking into account commitments that have already been made” (Government of Finland, 2023[2]). This is positive. Yet, the April 2024 announcement by the Government that it will move up planned cuts has made delivering on this gradual, staggered approach more challenging. Following through on the commitment to take a gradual approach to implementing significant budget and policy changes will be important to limit the impact on key partnerships and to plan efficiently for change, while protecting results. Figure 4 shows the evolution of ODA/GNI over time and projections to 2028.
Note: As for 2018-23, for 2024-28, the dark pink refers to MFA appropriations, and light pink to “other ODA” appropriations.
Source: Authors’ based on Ministry for Foreign Affairs (2024[46]), Development cooperation appropriations (webpage), https://um.fi/development-cooperation-appropriations, and OECD (2024[47]), Total flows by donor (ODA+OOF+Private) [DAC1] (database), https://data-explorer.oecd.org/vis?df[ds]=DisseminateFinalDMZ&df[id]=DSD_DAC1%40DF_DAC1&df[ag]=OECD.DCD.FSD&dq=DAC...1140%2B1160..Q.&lom=LASTNPERIODS&lo=10&to[TIME_PERIOD]=false.
Ensuring ODA remains allocated in line with its comparative advantages will help make the most of increasingly limited resources. The Government has committed to reduce Finnish ODA by EUR 1.2 billion over the Government’s term, a reduction of approximately EUR 300 million per year over four years. While ODA volumes are marginal to public debt levels, accounting for just 0.57% of Finland’s GNI at the height of ODA/GNI in 2022 and projected to fall to 0.36% in 2025, these cuts to ODA are resulting in significant reductions to the budgets of Finland’s four remaining bilateral programmes. They also impact Finland’s multilateral spending (See section on Finland’s development programming and partnerships: finding the right mix). Alongside the reallocation of resources to Ukraine, the changes are also accelerating a shift away from Finland’s historically strong focus on LDCs.16 The removal of the target requiring that 75% of new Finnfund investments be directed towards LDCs and lower middle-income countries (LMICs) from its latest steering memorandum is a further example of a change in policy (See section on Finland’s development programming and partnerships: finding the right mix). ODA is a limited resource with unique, comparative advantages compared to other sources of development finance, among them the fact that it is non-profit-seeking and countercyclical. It is also a resource that ideally is highly targeted to where it is most needed, i.e. primarily the poorest and most fragile contexts. In the context of growing needs worldwide, there is lively debate in the DAC and wider international community on where this scarce resource should go (OECD, 2022[48]). As Finland seeks to make the most of its declining ODA resources, basing decisions of where to allocate ODA on evidence of how it can have the most development impact will be important to ensuring its efficient and effective use.
Continuing to nurture the strong networks of development expertise in Finland would ensure policies are robust, widely owned and able to be implemented
In formulating and delivering development policy, Finland’s MFA can draw on extensive expertise that exists across government and society. The MFA benefits from a range of sources to build its evidence base to inform policy including scientific panels, think-tanks, citizen engagement, and a rich and active civil society. These actors are represented on the Development Policy Committee, which plays a valuable role by bringing challenge and robustness to development co-operation policy and practice and serves as a sounding board for the MFA17 (Box 3). Strong networks of experts also underpin the comparative advantage that Finland brings to its international collaboration, for example in its work on domestic and international peace mediation and taxation and domestic resource mobilisation (Box 5) as well as in how the MFA has strengthened its own systems, such as on results-based management18 (Ministry for Foreign Affairs, 2024[13]). Continuing to build and invest in this ecosystem of experts would be in line with the Government’s ambition to more actively mobilise Finnish expertise and know-how and to enhance the efficiency of Finnish ODA (Government of Finland, 2023[2]). Doing so, however, will require continued space and resources for experts to undertake research, engage in dialogue, and partner with diverse actors both within and outside Finland. To make the most of the Development Policy Committee, there would be value in the MFA working with the Committee to jointly establish and institutionalise a set of practices on how the MFA draws on the Committee’s expertise and policy advice in its work and policy processes.
Continuing to invest in development awareness among Finnish citizens would protect future policy capability and help guard against longer-term negative impacts of the most recent budget cuts. Finland has a strong tradition of active public support for international development (Eurobarometer, 2022[26]; Eurobarometer, 2023[49]; Ministry for Foreign Affairs, 2024[50]). Alongside Finland’s robust education system, communications by the MFA and work by civil society on development awareness have contributed to this support.19 As part of the current Foreign Service reform and in light of budgetary pressure within the MFA, budget cuts have targeted communications, including development communications with activities to raise development awareness entirely discontinued20 (Ministry for Foreign Affairs, 2023[11]; Ministry for Foreign Affairs, 2024[51]). At the same time, public discourse in Finland, particularly on social media, has focused increasingly on the risks and downsides of ODA rather than on the leveraging role that it can play and synergies with foreign policy priorities (Mäkelä et al., 2023[52]). As Finland’s foreign and security context evolves and the global landscape becomes increasingly polarised, reinstating MFA communications resources and capacities will be critical for the MFA to fulfil its function of providing reliable public information on policy implementation. Recent evaluations have also found that co‑operation with CSOs has untapped potential for communicating with the Finnish public on why international engagement for sustainable development is important to Finland (Mäkelä et al., 2023[52]).
It will also be important to ensure transparency in the context of a greater focus on working with and through the private sector. Looking at how Finland might improve its rankings in ODA transparency indexes may be one step toward helping the MFA drive a more positive discussion around ODA21 (Publish What You Fund, 2024[53]; Publish What You Fund, 2023[54]). The launch of the Openaid.fi platform in 2021 by the MFA, and its continued development, have been positive steps in this direction.22 This will remain important as Finland makes greater use of private sector channels in Finnish development co-operation, which also raises important transparency considerations. A 2019 evaluation of Finland’s sustainable development policy highlighted perceptions that “having the private sector play a primary role in development policy … has led to a situation in which information on publicly funded development cooperation is increasingly being treated as a business secret” (Berg et al., 2019[55]). As the Government seeks to prioritise funding through Finnish private sector actors, ensuring transparency and communication on the use of ODA funds will help to protect the reputation of Finnish co-operation and thereby protect scope for informed, evidence-based and constructive public debate and awareness on development assistance (See section on Adaptive systems: results and risk management).
Finland’s Development Policy Committee plays a key role in producing evidence for development policy and its sound implementation, encouraging dialogue, and serving as a sounding board for the MFA.
The Committee is independent of the MFA, other central government bodies and the Government of the day and operates based on provisions set out in Government Decree (1071/2019), which defines the Committee’s five main tasks:
formulate a common vision of political parties and stakeholders on current issues in development policy
monitor and analyse the realisation of Finland’s development policies and international commitments
promote decision making that supports sustainable development in sectors affecting the situation of developing countries (policy coherence for development)
provide the Government with recommendations on the planning and implementation of development policy
increase awareness of current development policy issues.
Committee members represent the parliamentary parties, CSOs, researchers, key ministries and the private sector and are appointed by each new government for the length of its four-year term in office. Given this cycle, the institutionalisation of the Committee in 2019 was critical to allow it to have a longer-term work programme and focus. At the same time, the Committee relies on the active engagement of its members as well as buy-in from the Government on its findings and reports to ensure effective functioning. This can mean that its level of influence varies across different parliaments.
To make the most of its advisory function and diverse expertise, there would be value in the MFA working with the Committee to jointly establish and institutionalise a set of practices on how best the MFA can use the Committee’s expertise and policy advice in its work and policy processes.
Source: Development Policy Committee (2024[14]), Development Policy Committee (webpage), https://www.kehityspoliittinentoimikunta.fi/en/; Ministry for Foreign Affairs, (2024[13]), DAC Peer Review Self-Assessment Report of Finland.
Mobilising support for tackling the negative spillover effects of policies will require strengthened political effort and commitment
In the past, Finland has championed policy coherence for development including at the OECD and EU and established a solid institutional framework to support this domestically. Strong central government leadership and direction on sustainable development as well as a long-term and wide-ranging commitment have been central to Finland’s effectiveness in implementing the 2030 Agenda (Haila et al., 2023[56]). Institutionally, implementation of the 2030 Agenda is supported by the National Commission on Sustainable Development, the secretariat for which is in the prime minister’s office. As a prime minister‑led multistakeholder forum, the Commission channels diverse views and thus has good potential to support coherent policy making23 (Finnish National Commission on Sustainable Development, 2022[57]). The Development Policy Committee also has a mandate to support evidence and discussion on policy coherence issues, and the National Audit Office has also highlighted the role of policy coherence, including its transboundary dimensions, in sound financial management (Niemenmaa and Kivimaa, 2021[58]). The use of strategic foresight to support long-term, generational policy planning is another strong practice by Finland’s government that can contribute to more coherent policies24 (OECD, 2022[59]).
There is room to build greater understanding of policy coherence for development across government. The 2023 evaluation on Finland’s implementation of the 2030 Agenda highlighted that addressing negative transboundary impacts of policies is one of the main challenges for Finland in achieving the 2030 Agenda, with key obstacles including silos in the central government, a lack of connection between monitoring and strategic goals, and the fact that awareness and expertise on sustainable development is fragmented or too tied to individual persons (Haila et al., 2023[56]). The evaluation recommended that the National Commission on Sustainable Development operate more effectively as a “transition arena” to transcend changes in government and to strengthen the connection between the committee’s discussion and the Government’s decision making. Recent OECD reviews have also pointed out that despite Finland’s highly effective governance system, working across government continues to be perceived as ad hoc and siloed, with scope to make policy trade-offs more visible and for budget, regulative and strategic steering to be more mutually reinforcing (OECD, 2022[59]). While Finland’s latest National Reform Programme (2024) refers to the SDGs and recognises the need to consider “negative externalities” in policy making, the proposed actions focus on domestic considerations, suggesting a weakening of focus on transboundary impacts in practice (Ministry of Finance, 2024[60]).
Better integrating consideration of transboundary spillover effects into regulatory impact assessments and monitoring would support greater efficiency and coherence. According to Finland’s 2020 Voluntary National Review (VNR), a comprehensive assessment of transboundary spillover impacts, particularly on developing countries, is not possible due to lack of adequate data (Prime Minister's Office, 2020[27]). In response, an expert report on the definition and indicators of global governance ordered by the Prime Minister’s Office in 2021 recommended refreshing the existing monitoring system to clarify transboundary spillover effects. The most immediate need identified was to integrate indicators describing global responsibility and coherence into the existing monitoring system. This work was due to be completed in June 2024.25 While Finland’s existing practice of regulatory impact assessments does include cross-border issues, the definition of these issues could be clarified to include spillover effects on developing countries (Government of Finland, 2023[61]). Systematically requiring regulatory impact assessments to include effects on developing countries would be a strong way forward to address the challenges identified in Finland’s VNR and in line with good practice in other EU countries.
Political commitment and informed public debate are needed to help work through trade-offs and challenging issues. Finland’s efforts to tackle antimicrobial resistance, including through a national action plan, and its high peacekeeping contributions are clear areas where its policies are particularly aligned with global sustainable development objectives (Center for Global Development, 2023[62]). On the other hand, when it comes to intellectual property rights, Finland’s trade agreements are restrictive beyond World Trade Organization standards, like those of other EU members. This hampers lower-income countries’ access to technology and knowledge. Given Finland’s large forestry sector, net emissions resulting from land use, land use changes and forestry are further areas where open and informed domestic debates on different objectives may help to work through key albeit complex policy trade-offs at both national and EU levels26 (OECD, 2021[63]). As net sinks are reducing, since 2023 Finland is now at risk of slipping off track for meeting its goal of carbon neutrality by 2035.27
Given the current ambition to use development co-operation to internationalise Finland’s private sector, following through on commitments to responsible business conduct (RBC) will be of increasing importance. Finland’s established policy of finding synergies between trade and development means that RBC is a long-standing development priority (Ministry for Foreign Affairs, 2021[24]). For example, in 2022, a group of Finnish embassies published information about RBC in their countries covering topics such as rights in work life, protection of the environment and prevalence of child labour. The MFA has also produced online trainings on business and human rights.28 CSOs such as Finnwatch have made important contributions to informed and constructive public debate on RBC issues, and in 2020, the Ministry of Economic Affairs and Employment appointed a working group to support the drafting of legislation on RBC in Finland in line with EU policy, although a decision was made not to proceed with the law recognising that the EU had already published a proposal (Ministry of Economic Affairs and Employment, 2020[64]). Recent decisions also appear to suggest a departure in policy. At the EU level, since 2024, Finland was one of the member states that sought to exert influence on the EU’s Corporate Sustainability Due Diligence Directive, despite strong support from Finnish businesses that stressed the Directive would enhance Finnish competitiveness29 (Finnish Business and Society, 2024[65]). Decisions to reduce funding to CSOs working to foster debate and understanding on RBC issues, including those that play a watchdog function, also risk undermining Finland’s long-standing efforts while being at odds with the drive to engage the private sector in contributing to sustainable development to a higher degree.30
To support robust and inclusive policy formulation and implementation, and to guide the changes in policy currently underway, Finland should continue to use evidence for decision making, including investing in strategic evaluations, tailoring its results-based management practice to more integrated objectives and drawing on the expertise in its Development Policy Committee.
In order to continue prioritising sustainable development in a changing domestic and international context, Finland should re-establish its ambition on and political leadership for policy coherence for development across government and society, ensuring that regulatory impact assessments consider transboundary development issues and the National Commission on the 2030 Agenda is adequately resourced.
In order to maintain high public support for its international development engagement and co‑operation, the MFA should continue to partner with diverse civil society actors, maintain commitments to transparency including by further strengthening digital tools, and adequately resource its development communications and awareness work.
In line with its international commitments and objectives, and to provide greater predictability across government cycles, Finland should:
reverse the decline in its ODA and build consensus for a roadmap with intermediary targets to provide 0.7% of GNI as ODA and 0.2% of GNI as ODA to least developed countries by 2030, as recommended in its 2017 DAC peer review
retain its focus on reducing poverty and inequalities as well as its commitment to untying ODA as it increasingly seeks to use development co‑operation to promote Finnish business.
The MFA has a clear mandate to set Finnish development policy and steer its implementation
The MFA’s mandate to set and steer development policy is supported by the Development Policy Department, which serves as an important locus of expertise. The department is responsible for Finland’s international development and humanitarian policy, development finance, and overall planning and monitoring of development co‑operation including financial and risk management, quality control, and the development of guidance and regulations. Prior to the Foreign Service Reform launched in December 2023, the department comprised eight units employing 104 people, 48 of whom were specialist civil servants with dedicated expertise on development. Diplomatic rotational staff are the remaining employees. Given the MFA’s integrated model, where development tasks and priorities are distributed across the ministry, specialist staff play an important role in supporting coherent policy formulation and providing development policy advice and expertise across the MFA. Other government departments and Finnish embassies have benefitted from these clear channels through which to draw on their expertise, notably via the department’s Sectoral Policy Unit, which will be dissolved as of August 2024.31
Finland’s positive reputation owes much to the MFA’s diplomats and specialists, but attracting and retaining staff with development policy expertise remains a significant challenge. Finnish development professionals are widely respected and contribute to Finland’s international reputation and credibility on areas such as gender equality, education, technology and innovation (Box 1). This has been supported by the MFA’s ability to hire policy specialists as well as training courses dedicated to development for diplomatic staff. The consideration of development experience in recruitment for diplomats has also helped to build a stronger cadre of staff in a rotational, integrated system. At the same time, the continued lack of career progression for specialist staff highlighted in previous peer reviews remains a challenge for retaining experts, with planned efforts to improve the career prospects of development experts in 2021 having not come to fruition (OECD, 2021[45]). Key development posts thus continue to be understaffed or even unfilled over the review period, putting significant pressure on Finland’s development work.
The MFA’s integrated model could be embedded further to support greater effectiveness. The MFA’s set-up and the role of four under-secretaries of state in leading policy co‑ordination have helped to mainstream policy perspectives into different departments’ work.32 However, ensuring adequate co‑operation across the MFA is a long-standing challenge, with co-ordination among departments and units managing various co-operation modalities and instruments continuing to be seen as piecemeal (Ministry for Foreign Affairs, 2022[66]; Ministry for Foreign Affairs, 2023[11]). While the MFA has made some efforts to strengthen linkages across policy areas, notably on UN and climate affairs, it recognises that key challenges remain both across departments in headquarters and between headquarters and country teams (Ministry for Foreign Affairs, 2024[13]). For instance, co-operation with different actors involved in Finland’s private sector instruments is not yet systematic, with scope for greater co-ordination across the trade and development departments. Limited staff time and human resources continue to be contributing factors to these challenges.
While the MFA has managed most of Finland’s development co-operation budget over the review period, the share and volume under its control are now declining, with possible implications for the ability of the MFA to fulfil its mandate. Finland’s development co-operation budget consists of two parts: one is an exclusive ODA budget that includes nine budget allocation items that are largely grant based, entirely count as ODA and are managed by the MFA. The other comprises non-exclusive ODA budget lines largely related to unprogrammable funds such as Finland’s contribution to the EU’s development co‑operation budget, in-donor refugee costs, and the capital increase of Finnfund and other instruments that only partially count as ODA (Ministry for Foreign Affairs, 2024[46]). In 2022, a significant increase in this second category was observed, primarily due to in-donor refugee costs (Figure 5). The growing focus on private sector instruments and plans to outsource tasks outside of the MFA are likely to continue this trend of a diminishing share of the ODA budget being managed by the MFA. Ensuring clarity over the role of the MFA and that it is sufficiently resourced and empowered will be important for the MFA to deliver on its mandate as well as the Government’s objectives set out in new policy documents.
Note: Finland’s statistical reporting to the OECD is not fully broken down by agency and includes only three agencies: the MFA, Finnfund and “Finnish Government.” Therefore, to provide a more detailed picture, this figure cross-references reporting by agency with information reported by Finland on its use of channels.
Source: OECD (2024[30]), “Creditor Reporting System: Aid activities”, https://doi.org/10.1787/data-00061-en.
Embassies play an essential role, helping Finland build understanding, form partnerships and identify opportunities for Finnish engagement
An effective network of embassies enables Finland to build relationships, problem-solve and engage in political dialogue. Finland has 74 missions abroad, including one in each of the nine partner countries where long-term development co-operation has been carried out over the review period (Ministry for Foreign Affairs, 2023[67]). Country presence has proven essential to building trust and understanding, monitoring the use of funds, problem-solving, and participating in political dialogue. A long-term and stable country presence has also enabled Finland to more effectively call in and draw on the breadth of Finnish knowledge (Ministry for Foreign Affairs, 2023[67]). It is unclear how the 2023 decision to terminate country programmes in four of Finland’s nine programme countries will impact Finland’s embassy footprint as decisions were still to be taken at the time of the review team’s visit to Helsinki. Nor is it yet clear whether the number of staff working on development in Finland’s embassies will be scaled back or reallocated across the system. Transition plans that draw on learning and knowledge in Helsinki and from country-based teams, including regional perspectives, will be important to ensure that key networks and partnerships are not lost. Such a process should also be used to support a coherent approach to reassigning staff across roles that reflects their expertise and experience.
Strengthening embassy capacities to support co-ordination would be in line with the Government’s objectives. Embassies appear to have good visibility of peer-to-peer co-operation between Finnish and local actors and agencies, and co-operation staff in embassies play an important role in building and managing these relationships. The formulation of country strategy and programme documents has supported co-ordination at country level, with some embassies complementing these documents with lists of activities to capture the full range of Finnish engagement at a given time, as seen in Tanzania. There is nevertheless important scope for greater co-ordination across private sector channels such as with Finnfund and Business Finland. At present, the limited country-level presence of such entities hinders opportunities to link up with the work of embassies (See section on Finland’s development programming and partnerships: finding the right mix). Supporting business to engage in new markets requires specialised knowledge, for example on investment law. Given the expectation in new policy documents that development co‑operation can help foster opportunities for Finnish businesses, greater country-level presence and engagement by these Finnish actors will thus be important. In this regard, the June 2024 decision to move oversight for Business Finland’s international activities to the MFA is an opportunity to address this,33 by enabling the MFA to allocate additional resources in countries and regions where there is a demand and in line with a coherent and comprehensive approach to both trade and development. Replicating the online consultations used in preparing the last round of country strategies (2021-24) and involving all relevant stakeholders in a given country would also be worthwhile at an individual country level.
The relatively centralised financial and decision-making authority of Finland’s model requires good relationships and effective knowledge management. In terms of financial resources, embassies directly manage marginal local co‑operation funds and a portion of funds for identifying and planning development co-operation, with Helsinki taking the remaining funding decisions.34 For Finland, this model is in line with its limited human resources and with its own legal obligations and normative requirements. The 2017 peer review of Finland found that this centralisation of decision making diminished embassies’ responsibilities to define and deliver an effective programme (OECD, 2017[68]). In Tanzania, working relationships between the embassy and the relevant regional department in Helsinki are well functioning, with close and regular dialogue. By contrast, in other partner countries high staff turnover on the relevant desks in Helsinki linked to diplomatic rotations and the difficulty of identifying staff with development experience have presented important challenges. Looking at how to replicate set-ups where they are well functioning would be valuable. This would include ensuring ambassadors posted to developing countries have development experience and that relevant country desks in Helsinki are stably resourced. Converting relevant positions in each regional desk where Finland has development co-operation (or where there is an expectation that development co-operation and trade are mutually reinforcing) from rotational diplomatic posts into development policy specialist posts, would be a step towards addressing the challenges relating to high staff turnover. However, doing so will require the retention of development expertise.
Within embassies, local staff contribute deep knowledge of the contexts in which they are working; efforts to further empower these staff should be pursued and institutionalised. Previous peer reviews of Finland have highlighted the need to better engage and utilise the competence of local staff including by making Finnish systems and procedures more accessible to them. Finland’s own results reports have highlighted similar opportunities (Ministry for Foreign Affairs, 2022[66]). In its 2023 report, the working group on Foreign Service reform also pointed out that too little training is provided in English for local staff (Ministry for Foreign Affairs, 2023[11]). In Tanzania, for instance, locally employed staff are valued for their experience and expertise, and local staff themselves highly appreciate the open working environment of the embassy. Nevertheless, limited training and travel budgets and the limited choice of more tailored, advanced training opportunities that reflect their roles have hampered scope for professional development that aligns with local staff’s expertise and contributions.35 Plans in the embassy of Finland in Tanzania to provide local staff with greater responsibility – for instance to engage directly in donor co‑ordination meetings – are positive and should help the embassy draw on their knowledge while also streamlining information sharing and feedback. Similar reflections may be valuable in other Finnish embassies where development is a focus.
The ongoing reform of the Foreign Service is an opportunity to address long-standing challenges but also poses risks for development policy and effectiveness
The current Foreign Service reform is an opportunity to ensure that the MFA is fit to respond to a changing world while balancing headcount pressures. The current reform seeks to align the MFA’s structure to changes in Finland’s foreign and security policy environment and to new priorities such as NATO membership and the stronger focus on providing business advisory services, while recognising the MFA faces significant resource constraints. The working group’s recommendations cover key areas relating to the management, structure and resourcing of the MFA and include a reallocation of resources across policy priorities while identifying a number of tasks to be deprioritised or reduced36 (Ministry for Foreign Affairs, 2023[11]).
The current pressure to downsize Finland’s development co-operation administration recalls challenges raised in the last peer review. Recent reviews have highlighted that reductions to Finland’s ODA budget translated into 34 posts being cut (OECD, 2017[68]), from which the MFA and the Development Policy Department did not fully build back (OECD, 2021[45]). In 2021, it was noted that cuts in staffing levels restricted Finland’s capacity to deliver its development policy and engage fully with partners, increased workloads, and reduced capacity for analysis. Under the current Foreign Service reform, the role of the Development Policy Department is changing significantly as it takes on several tasks transferred from the regional departments and elsewhere in the MFA. Transferred tasks include responsibility for discretionary government grants, management of procurement processes and international non-government organisations, as well as responsibility for human rights. Responsibilities for EU delegated co-operation moved to the department in 2023. The department will thus be responsible for a growing share (78% in 2024) of the MFA’s ODA budget. Without concomitant human resources, these substantial additional tasks will place significant additional pressure on the department’s ability to provide evidence and knowledge-based advice as well as to effectively play its co‑ordination role.
Protecting an essential cadre of development experts and ensuring leadership for development within the MFA will be important. In the current context of compounding cuts, the Development Policy Department has recognised that it needs to adapt, including by becoming more of a service provider to other MFA departments. As part of the reform, the Development Policy Unit (KEO-10) is being transformed into a Project Management Unit.37 The Sectoral Policy Unit (KEO-20) will be dissolved as of August 202438 (Annex D). The total number staff in the department will decrease slightly,39 while the profiles and job descriptions of remaining staff are becoming broader as policy and sectoral expert staff take on more operational tasks. Staff and partners highlighted a serious risk that a core centre of development expertise is being lost. As illustrated by other DAC members with integrated MFAs, it takes many years to build back development expertise once this is lost, and rapidly losing this expertise can be reputationally damaging40 (OECD, 2018[69]; OECD, 2024[70]). As MFA staff take on broader roles and duties, the lack of protected policy expert time also risks limiting scope to access and share learning and to influence norms and standards in key policy communities, including DAC networks.41 Protecting an essential cadre of development experts and ensuring that these staff have time to focus on strategic policy and steering will be important to Finland’s credibility. Doing so is relevant even if bilateral co-operation is scaled down and Finland increasingly works through multilateral partners as evaluations consistently point out that Finland’s influence and effectiveness in multilateral fora are based on its expertise and knowledge generated at country level and on its ability to link these up across its system.
The reform is generating uncertainty among staff, making a good change management process important to its success. The current process has generated significant uncertainty among staff and may be a missed opportunity to build buy-in, benefit from diverse perspectives and strengthen the sustainability of changes the Government seeks to implement.42 Silos in the MFA described above also seem to be perpetuated in the current implementation of the reform, with each department deciding individually how to take forward the working group’s recommendations. Taking a comprehensive, whole-of-ministry approach to the reform would better ensure coherence and continue building on the strengths of the MFA’s efforts over the past decade to effectively integrate different policy areas, including trade and development. A change management approach, including effective communication with all staff and stakeholders throughout the process, is also needed, particularly where decisions result in changes to staff job functions and grades.
Planned legislative changes will also have important impacts on the role and mandate of the MFA
Updates to the legal framework over 2024‑26 aim to reflect the increasing role of the private sector in Finland’s development co-operation and allow for the greater outsourcing of activities. Planned changes include a comprehensive reform of the Finnfund Act (291/1971) to enable the outsourcing of public administration tasks to Finnfund and creation of a subsidiary. Reform of the Act on Concessional Credits Granted to Developing Countries (1114/2000) is also planned, with the objective of broadening the definition of a credit provider to include actors such as Finnvera’s subsidiary Finnish Export Credit Ltd or an international DFI, and streamlining processes for Finnish companies to access ODA funds. A new Act on Organisation of Development Cooperation is also proposed, with provisions that would allow for the transfer of development co-operation tasks from the MFA to another authority or party, for example consulting companies. International experience suggests that while outsourcing certain functions to the private sector can help manage public service headcount pressures and manage for uncertainty by enabling governments to secure capabilities quickly, it can also bring risks, for example in terms of value for money and longer-term impacts on public service capability.43 Plans to outsource functions should thus be accompanied by parallel measures to ensure that the necessary steering functions, expertise and capabilities remain within the MFA.
While exploring if and how to outsource certain functions to Finnfund, it will be important to ensure clarity of mandates. In recent years, Finland’s DFI Finnfund was positioned at the forefront of Finland’s development policy, with the goal of growing its operations, including by increasing its risk appetite towards LDCs and LMICs. Private sector instruments were further developed, and new instruments created to help achieve the goals set by the government. The 2019 and 2023 Government Programmes continued to emphasise leveraging additional finance and boosting corporate involvement and investments in Finland’s development co-operation. At the same time, the MFA has invested in building its in-house private sector capability (OECD, 2021[45]), with small increases in the number of staff working on private sector issues. In light of the current reforms and headcount pressure within the MFA, the government is currently considering establishing a subsidiary of Finnfund that could provide technical assistance and manage certain private sector instruments, thereby assuming these MFA functions. Should it do so, it will be important to create clear lines of demarcation between policy advice on one hand and investment development and decisions on the other. Outsourcing such functions also risks making it more difficult for the MFA to access knowledge and expertise, risks undermining learning across instruments and efforts, and may generate missed opportunities for coherence across Finland’s private sector and non-private sector work.
In adapting the MFA’s structure to a changing foreign policy context and in seeking to more closely link international trade and development objectives, Finland should:
address longstanding challenges in attracting and retaining development expertise in the ministry especially at senior positions
allocate resources to enable the MFA to deliver on its priorities including multilateral co‑operation, EU delegated co-operation and Global Gateway which requires development expertise and knowledge garnered from country presence
in outsourcing MFA tasks to other actors, ensure that necessary steering functions and capabilities remain within the MFA, in line with its mandate.
Finland’s bilateral programming has benefited from smart, targeted priorities in line with its policy objectives and resources
Finland’s programming has focused on reducing poverty and inequalities and reaching those most in need. Since the 2017 peer review, Finland has put into practice the explicit focus on poverty eradication in its policy by embedding poverty-related targets into various programming instruments. These are reflected in ODA allocations, which have focused on LDCs (Figure 6) and have also been incorporated into some of Finland’s private sector work. For example, in 2017, Finnfund’s then-current steering memorandum introduced a target of having 75% of new investments directed towards LDCs and LMICs.44 The MFA’s 2020‑23 investment plan for development policy loans and investments also set a target to allocate at least 60% of such funding to countries in Africa45 (Ministry for Foreign Affairs, 2019[71]).
Source: OECD (2024[30]), “Creditor Reporting System: Aid activities”, https://doi.org/10.1787/data-00061-en.
Highly focused priorities have helped Finland draw on its strengths while making the most of limited human and financial resources. Finland’s priority areas for development co-operation over the review period have been women and girls, economy and jobs, a well-functioning society, education, and natural resources (Figure 7). Within these areas, Finland defines additional, more specific objectives for development policy overall and at a priority country level. These specific objectives have informed decision making and programming in practical ways – for example guiding choices of multilateral partners and providing a basis for identifying Finnish institutional expertise. Abrupt cuts to the ODA budget from 2016 forced decisions about where resources should be allocated, resulting in more focused country programmes. This is now evident in Finland’s programmes in Tanzania and Nepal, where Finland engages in a focused set of niche issues. For instance, within its support to education, Finland’s programming in Nepal focuses on promoting inclusive education for girls and on children with disabilities and from disadvantaged groups. Support to the rights of women and girls in Tanzania aims to make progress on the specific issues of women’s empowerment and ending gender-based violence, with individual programming and partnership choices based on long-standing engagement on these issues in the country. The consistency and focused nature of Finland’s engagement ensures that its work remains visible despite constrained financial and human resources.
Finland’s work on digitalisation and on forestry shows its focused approach that draws on domestic expertise. Under the priorities of economy and jobs and well-functioning societies, Finland’s work on digitalisation has evolved from largely bilateral projects targeting capacity building to a growing emphasis on multilateral and private sector co‑operation in the development of digital infrastructure and services. As an example, under the Data Governance in Africa Global Gateway flagship, Finland leads the Digital Invest Facility, a technical assistance facility aimed at development finance to green and secure data centres and other data infrastructures in sub-Saharan Africa. The focus on forestry in Finland’s country programme in Tanzania within the broader area of natural resources is a further example of how Finland draws on relevant domestic expertise and uses long-standing, focused engagement in a specific sector and theme to achieve results. The trend since 2020 of engaging in fewer but larger projects also supports this focused approach to using limited resources effectively (Figure 8).
Note: The figure reflects Finland’s reporting on ODA by purpose code and based on Finland’s five priority areas plus humanitarian aid. It excludes in-donor refugee costs, which accounted for 20% of bilateral ODA on average over the period.
Source: OECD (2024[30]), “Creditor Reporting System: Aid activities”, https://doi.org/10.1787/data-00061-en.
Source: OECD (2024[30]), “Creditor Reporting System: Aid activities”, https://doi.org/10.1787/data-00061-en.
Finland prioritises working through partnerships, with a strong focus on multilateral organisations
The MFA has invested in a more strategic approach to multilateral partnerships since the last peer review. Finland channels approximately half of its ODA as core multilateral contributions. Given Finland’s limited human resources in development co-operation and in line with its strong commitment to multilateral effectiveness, it makes sense that Finland has invested in multilateral partnerships. To support these, the MFA has developed a multilateral strategy that outlines its approach by strategic area – including both thematic areas as well as organisational effectiveness – and via organisation-specific plans.46 Planning for multilateral allocations takes place at the start of each four-year parliamentary term, with adjustments allowed within the four years. Partners have appreciated the open dialogue over the review period that has enabled Finland to build more strategic and long-term partnerships. Formalising partnership agreements with key UN partners could help to further strengthen predictability.
Finland’s strong partnership approach is evident in funding allocations and engagement in multilateral boards. Finland’s strategic approach to working through multilateral organisations is particularly evident in its partnerships with the UN, which receives approximately one-third of Finland’s core multilateral contributions. The UNFPA receives the largest multilateral budget allocation in the MFA budget, and Finland’s core funding for UN Women makes Finland one of the organisation’s largest core donors. The MFA also combines core funding support with bilateral ODA that is earmarked to specific programmes, enabling an effective mix of global policy influencing and attributable programme-based results at country level. Finland’s engagement in these organisations’ boards, including its open and frank style, are appreciated by the organisations and other member states. Protecting capacities within the MFA and government to continue this engagement will be essential as Finland seeks to channel less money through bilateral country programmes and relies more on engaging through multilateral organisations. Finland’s greater efforts to encourage recruitment of Finnish nationals in recent years were seen by some multilateral partners as verging on conditionality and may put pressure on partnerships. Balancing the promotion of Finnish staff recruitment with funding approaches that support multilateral organisations’ effectiveness will be important.
As Finland builds on its engagement with and through the EU, human resources and expertise will be needed
Leveraging opportunities to increase engagement with the EU may be hampered by declining bilateral programming. To strengthen institutional capacities in Helsinki to attract and manage more EU delegated co-operation, the MFA created a dedicated position to cover this work in 2023. As of August 2024, the position sits within the Project Management Unit (KEO-10). Evaluations point to Finland’s success in managing EU funds for development co-operation and suggest there is more scope for Finland to play this role (Particip GmbH and NIRAS Finland Oy, 2022[19]). The visit to Tanzania shed light on challenges Finland may face in doing so. In Tanzania, two potential EU co‑operation projects were identified in the forestry and taxation sectors, where Finland has long-standing bilateral programmes and expertise. Although neither project was able to be agreed, it is difficult to envision that they would have been identified or implemented by Finland without an embassy resourced to take on this role. Where the identification or planning of an EU delegated co-operation or Team Europe Initiative take place in Brussels with MFA involvement, embassies nevertheless also play an important role in supporting implementation. A smaller country footprint, reductions in MFA capacity including sectoral policy experts in Helsinki and embassies, and less focus on development co-operation in embassies may thus constrain Finland’s ambition to increase delegated co-operation for the EU (See section on Role and mandate of the MFA: managing and responding to change).
As Finnish public sector institutions look to engage through EU delegated co-operation, the MFA will also need to be empowered and resourced to provide co-ordination and support. The MFA, which has been pillar assessed to manage EU delegated co-operation, supports other government agencies to complete the assessment process and helps to co-ordinate this at country level. Changes in European Commission procedures have slowed these additional assessments, resulting in some practical delays in project approval at country level and with the outcomes currently uncertain. A 2023 study on the role of Finnish public sector institutions found that the engagement of agencies in institutional co-operation adds value to achieving Finland’s development policy goals (Uusikylä et al., 2023[72]). The study also found scope for the MFA to more effectively co-ordinate between agencies and for better overall co-ordination with partner countries, recognising the unique contexts for project implementation and risk management. As Finnish public agencies look to scale up their involvement in EU delegated co-operation, it will be equally important for the MFA to be resourced and empowered to support this. While the current Foreign Service reform and changes to the responsibilities of the Development Policy Department aim to strengthen project management capacity, the reduction of the role of regional departments in bilateral programming and country-level co-ordination with embassies, reduced country presence, and the additional operational tasks being assigned to development policy experts may at the same time stretch co‑ordination capacities.
Country presence will be important as Finland seeks to shape Global Gateway in Brussels and at country level. The establishment of the position of Global Gateway Ambassador in the MFA in 2023 supports Finland’s goal of actively engaging in the EU’s Global Gateway, by gathering information in Brussels and communicating it back to relevant actors in Finland. Finland also works strategically with other EU member states, such as Estonia, to jointly advocate for the interests of smaller EU members and participation of small and medium-sized enterprises (Ministry for Foreign Affairs, 2024[73]). Finland’s potential to effectively contribute to Global Gateway is evidenced by its involvement in an early flagship in Africa, where Finnfund signed an agreement in 2023 on a European Fund for Sustainable Development Plus (EFSD+) guarantee and technical assistance programme on digitalisation (Finnfund, 2024[74]). As seen in ongoing discussions in Tanzania, Global Gateway opportunities emerge not only through engagement in Brussels but also between embassies and EU delegations in partner countries. The importance of country presence in both identifying and effectively implementing EU joint initiatives is also reaffirmed by the European Commission’s Global Gateway governance arrangements, which emphasise a value-based and inclusive approach involving local actors,47 and by the experience of other EU member states, which underscores the importance of a track record in a given country context. As Finland seeks to further shape the Global Gateway in Brussels and at country level, country presence will prove critical to its ability to effectively secure and add value to Global Gateway opportunities.
Finland’s country programmes promote coherence across different instruments, offering valuable lessons
Finland’s four-year country programmes provide a framework for planning and results-based management and help ground Finnish engagement in local contexts. The MFA’s country strategies consider Finland’s strategic goals in a given country, covering economic relations, development co‑operation, security, migration and humanitarian assistance. The current set of country programme documents were developed in 2021 for each of Finland’s long-term priority partner countries (Table 1). These documents look specifically at development co-operation and, like country strategies, are publicly available, which is good practice. The current cycle of country programme documents covers 2021-24 and captures activities funded by the MFA’s regional departments. As seen in Tanzania, country programme documents have promoted coherence across instruments by allowing different parts of Finland’s development co‑operation system as well as key partners and stakeholders to understand and align behind agreed objectives.48 Moreover, the documents are also based on past learning and context analysis, including human rights assessments and conflict and political economy analysis, helping to ground Finland’s engagement in the realities of the local contexts.
Continuing to formulate effective strategic documents will help guide Finland and partners, particularly in the absence of bilateral country programmes. Significant changes to Finland’s ODA priorities and budgets have delayed the cycle to develop country programme documents after 2024 as the MFA awaited publication of the new policy reports. The Government Programme also makes clear the intention to move away from bilateral country programmes and towards development co‑operation through Finnish CSOs and to promote business activities49 (Government of Finland, 2023[2]). With this, there is a risk that Finland’s engagement becomes more ad hoc and fragmented. Finland’s own past experience has shown that the discontinuation of bilateral country programmes increased fragmentation across different instruments, sectors and institutions (Particip GmbH and NIRAS Finland Oy, 2021[75]). Making use of the systems and tools that Finland’s MFA has already put in place, including developing multi-year, public strategic documents, will be important for avoiding fragmentation. In preparing the next round of country programme documents starting from 2025, taking a more comprehensive approach across different MFA teams and channels, and building in flexibility to focus more on outcomes and less on results indicators would enable programme documents to better support steering and adaptive management. Recent evaluations have also found a mismatch between the amount of time and expertise needed to update the documents and available staff capacities in the MFA and identify relevant ways to simplify documents to better support programmatic planning and implementation (Particip GmbH and NIRAS Finland Oy, 2024[76]).
Note: 1. The format and structure of the next iteration of Country Programmes is currently being developed.
Source: Ministry for Foreign Affairs (n.d.[77]), Finland’s partner countries for bilateral development cooperation (webpage), https://um.fi/bilateral-partner-countries).
The integration of transition and exit planning into future strategies can also draw on experience within the MFA and from key stakeholders. The MFA’s experience over 2008-20 in Viet Nam in transitioning away from bilateral development co-operation and towards other co-operation and partnership modalities, particularly those focused on the private sector, can offer useful lessons (Particip GmbH and NIRAS Finland Oy, 2021[75]). The importance of a gradual transition timeline was a key takeaway from the Viet Nam experience, with the 2021 evaluation noting that abrupt changes damage long-term relationships. It will therefore be worthwhile to invest in transparent transition strategies in countries where bilateral country programmes are to be discontinued. The formulation of strategies will also benefit from having a clearly articulated offer on the suite of partnerships available, which can help ensure informed discussion and decisions with key stakeholders. In seeking to replicate the approach in Viet Nam, Finland should also be guided by each country context. For example, while Nepal will graduate from LDC status in 2026 and its government is preparing to adjust to receiving less grant funding, there will be fundamentally different opportunities to move towards partnerships based on economic co-operation given the specific private sector landscape in Nepal.
Finnish development CSOs are expected to receive a growing share of ODA, so continuing to empower them to work to their comparative advantages will be important
While the Government has committed to continuing to use ODA to support Finnish CSOs working on development co-operation, how it does so is in flux. On average over the review period, Finland provided approximately USD 140 million in gross bilateral ODA to and through CSOs each year (average over 2016-22), with the majority of this ODA directed to Finnish CSOs. In 2023, the Government initially presented a cumulative ODA budget that spared Finnish development CSOs from overall ODA cuts (Government of Finland, 2023[2]). It subsequently announced a revised budget in May 2024 that provided an increase in funding to Finnish CSOs of EUR 10 million per year over 2024-27. In light of reductions to the overall ODA budget, funding to CSOs will thus amount to 18% of the MFA’s total ODA budget over this period. While these decisions reflect an appreciation for the positive contributions of Finnish civil society to development policy, other changes have raised questions about the operating context for CSOs. These include the expectation that CSOs collaborate more with the Finnish private sector and focus more on implementing projects and less on advocacy and awareness-raising work. The DAC Recommendation on Enabling Civil Society in Development Co-operation and Humanitarian Assistance highlights the diverse mandates of civil society to support not only implementation but also advocacy, accountability and awareness raising. A series of subsequent budget decisions in 2024 have also impacted Finnish CSOs working on key foreign and security policy issues such as peacebuilding and peace and security and on global development education.50 Such decisions, as well as the decision to exclude development CSOs from recent taxation changes aimed at incentivising private donations, have brought uncertainty to the civil society sector in Finland as a whole and risk undermining its ability to fulfil its role.51
Despite prioritising funding through Finnish CSOs, Finland is also able to support local civil society in partner countries in two ways. One is by funding Finnish CSOs that must demonstrate how they will support and equitably partner with local CSOs, with no limits on overheads for local partners or costs for their capacity strengthening. The other is the Local Cooperation Fund (LCF), which is used by some Finnish embassies to provide small amounts of funding directly to local CSOs through competitive calls for proposals. Following the 2017 peer review recommendation, Finland has improved the predictability of LCFs by extending the timeframe for calls for proposal projects from one year to two years, and there is no formal limit on the amount each CSO can be granted. Where the LCF instrument is used, local CSO partners see scope to strengthen it further through greater engagement by embassies in dialogue across actors to boost opportunities for cross-learning. Continuing to publish information on the outcomes of the LCF calls for proposals would also support predictability and transparency.
Strengthening the alignment of private sector instruments to policy objectives remains a work in progress
Since the last peer review, Finland has continued developing and evolving a range of instruments to support its focus on private sector-led development. Over the review period, Finland’s private sector work has had three objectives: mobilising private finance for sustainable development, strengthening the private sector in partner countries, and strengthening the trade environment and capacities for partner countries. Different instruments to achieve these objectives are funded by different budget lines: the MFA’s ODA budget; a special budget (development policy loans and investments and blended finance) that is fully ODA but must be repaid; and non-ODA funds (used for example for Finnvera). Development policy loans and investments were introduced by Finland in 2016 and are specific in the sense that the invested capital is expected to be returned with a profit and must be deficit neutral in the budget. Involving Finnish companies is the main, explicit objective of several MFA-funded instruments, including Finnpartnership, the Public Sector Investment Facility (PIF) and the Developing Markets Platform (DevPlat) and is a cross-cutting objective for other instruments (Figure 9).
Note: PSI = private sector instrument; FP = Finnpartnership; MDBs = multilateral development banks; FIs = financial institutions.
Source: Authors’ elaboration based on information provided by the MFA.
Finnfund is an asset of the Finnish development co-operation system, having invested in aligning its investments with a focus on poverty reduction and development impact. Finnfund has had a strong focus on the LDCs, with 43% of its 2022 investments in LDCs and 92% in LDCs and LMICs combined (Finnfund, 2023[78]). It has also developed solid tools to assess additionality and development impact on an ex-ante basis such as its Development Effect Assessment Tool (DEAT) (Finnfund, 2024[79]) and has taken the novel approach of providing its portfolio managers with financial incentives linked to the development impact of investments. Finnfund also manages, on behalf of the MFA, the Finnpartnership programme, which offers grants to Finnish companies for commercial projects with development impact in developing countries. In 2023, 73% of Finnpartnership’s 70 projects (amounting to EUR 6.8 million) targeted LDCs or LMICs (Finnpartnership, 2024[80]).
Reinforcing Finnfund’s focus on additionality and impact will be especially important as it is encouraged to work more with Finnish companies. Finnfund’s new steering memorandum for 2024‑27 emphasises that Finnfund is expected to play a central role in implementing the government’s Global Gateway policies particularly in digitalisation (Ministry for Foreign Affairs, 2023[81]). While the new steering memorandum no longer has an indicator on the share of investments in the poorest countries, Finnfund senior management has expressed confidence that they will be able to retain a high investment ratio in such contexts. This may be challenging as the steering memorandum expresses a clear expectation that Finnfund will use its funding to provide opportunities for Finnish companies, which may be more feasible in upper middle-income countries given their stronger regulatory frameworks and more stable investment climates. A new indicator tracks the participation of Finnish companies in Finnfund projects, although no targets are set. In addition to these changes, as plans are explored for Finnfund to take on new responsibilities in providing grant-based technical assistance to public administrations (See section on Role and mandate of the MFA: managing and responding to change), it will be important to avoid introducing a conflict of interest in contexts where Finnfund is involved as both financier and public sector advisor.
Clearly articulating objectives across different private sector instruments would help ensure a focus on development results. The 2017 peer review recommended that Finland clarify its approach to partnering with the private sector. In response, Finland invested in strengthening individual instruments, for instance by improving quality and impact requirements,52 and country strategies now also consider how private sector partnerships fit within overall strategic goals53 (Ministry for Foreign Affairs, 2024[13]). At the same time, the MFA acknowledges challenges in forging coherence across the trade and development agendas (Ministry for Foreign Affairs, 2024[13]), and partners consulted for the review perceive that the MFA has yet to develop sufficient strategic clarity on how different private sector instruments and investments contribute to development results. An example of this is Finland’s efforts to work with the private sector to mobilise private capital for climate action, where the lack of a clear overall climate finance strategy or plan has led to a complex portfolio of projects, fund contributions and work through multilateral development banks (MDBs), making it difficult to assess effectiveness54 (Particip GmbH and NIRAS Finland Oy, 2023[82]). With a reduction in country programmes and a shift towards more demand-based private sector instruments, the MFA may find value in looking across instruments and investment channels to more clearly articulate how each channel separately and collectively contributes to achieving different types of development results. Such an effort would also help Finland communicate with partners on its track record and offer amid geopolitical competition for private sector engagement in partner countries.
Greater clarity over the extent to which different instruments constitute tied aid would support Finland’s commitment to untying with a view towards untying ODA to the maximum extent. The 2017 peer review encouraged Finland to consider how the increasing focus on private sector instruments could undermine its commitment to untie aid (OECD, 2017[68]). Since then, the share of Finnish ODA covered by the Recommendation on Untying Official Development Assistance that is not tied to Finnish actors has been on an increasing trend (OECD, 2022[83]), reaching 98.2% in 2022 (OECD, 2024[30]). Several of Finland’s grant mechanisms that aim to promote private sector development constitute tied aid by definition, including Finnpartnership, the PIF and the DevPlat.55 While these represent an overall small share of Finnish ODA, the greater emphasis on such instruments in new policy documents and plans – in general and in particular in relation to Ukraine – signals a need for Finland to continue its concerted efforts to untie ODA to the maximum extent, as per the Recommendation (Box 4 describes Finland’s support for Ukraine). With regard to Finnfund, the Finnfund Act 291/79 (Finnfund, 2024[84]) states that it “shall finance companies … in which a Finnish interest is involved”. Finnfund officials explained that this has been interpreted as a requirement to serve the interest of Finnish development policy rather than as requiring involvement of a Finnish company.56 Finland may consider protecting against slippage on its progress on untying by more clearly spelling out that Finnish business involvement is not a precondition for funding.
Finland has supported Ukraine since 2014 through development co‑operation, civilian crisis management and humanitarian assistance and through the Council of Europe, CSOs and NATO funds. Since 2022, the government has expressed strong political commitment to provide additional humanitarian aid and to support Ukraine’s reconstruction together with other EU member states. Under the 2023 Government Programme, the largest share of Finnish development co‑operation funds will be directed to Ukraine (Government of Finland, 2023[2]) and Ukraine became the biggest recipient of Finland’s humanitarian assistance as of 2023. As of April 2024, Finland’s defence materiel assistance to Ukraine totalled approximately EUR 2 billion, humanitarian assistance and development co-operation amounted to EUR 220 million and material assistance through the EU’s Civil Protection Mechanism totalled about EUR 18 million.
Priority has also been given to preparing a national plan to guide Finland’s support to the reconstruction of Ukraine. Part one of the plan, published in December 2023, focuses on the involvement of Finnish business. Part two, which is still being developed, will focus on the broader use of development co‑operation funds in Ukraine and the engagement of other stakeholders beyond the private sector.
Part one envisions the engagement of Finnish business through the use and adaptation of existing instruments that combine ODA and non-ODA budgets including Finnfund, Finnpartnership, the PIF and Finnvera. A new mixed credit instrument, the Ukraine Investment Facility, will also be created.
Among these instruments, Finnfund is expected to play a central role in financing investments for the reconstruction of Ukraine, including by engaging Finnish business. The plan provides for a capital increase of EUR 25 million to Finnfund for investments in Ukraine as well as additional risk financing in the form of a government guarantee to cover up to 80% of risks, up to the amount of EUR 20 million. Finnfund’s 2024-27 steering memorandum includes an indicator to measure the total value of its investments in Ukraine (Ministry for Foreign Affairs, 2023[81]).
As the measures outlined in part one are operationalised and part two is being elaborated, stakeholders have raised various concerns that could be taken into account. These include:
the acknowledgement in part one that “the business environment in Ukraine has its challenges when it comes to for example corruption” (Ministry for Foreign Affairs, 2023[85]), which therefore has important implications for strengthening and adapting the MFA risk management systems
anticipated challenges of attracting private sector investment, including from Finland, while there is still active conflict, even with additional risk financing available
how grant instruments for civil society will be developed or adapted to encourage its engagement in Ukraine and broader questions about whether CSOs will be incentivised to also pivot to Ukraine at the cost of scaling down or discontinuing engagement in other contexts
questions around how to co‑ordinate planned interventions within the DAC community, and with the government of Ukraine in particular, in what is expected to be the highly competitive post-conflict reconstruction Ukraine.
Source: Government of Finland (2023[2]), A Strong and Committed Finland: Programme of Prime Minister Petteri Orpo's Government 20 June 2023, https://julkaisut.valtioneuvosto.fi/handle/10024/165044; Ministry for Foreign Affairs (2023[81]), Government Ownership Steering Memorandum in 2024-2027 (in Finnish), https://www.finnfund.fi/en/finnfund/strategy/government-ownership-steering; Ministry for Foreign Affairs (2023[85]), Reconstruction of Ukraine: Finland's National Plan Part One, https://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/165346/UM_2023_25.pdf?sequence=1&isAllowed=y.
Recognising that ODA alone cannot meet development financing needs, Finland is exploring how to further leverage ODA to mobilise sustainable private finance
Finland mobilises private sector finance for development primarily through direct investment in companies and special purpose vehicles (SPVs), although the amounts remain relatively modest. Over the period of 2018-22, Finland mobilised on average USD 134 million of private finance annually, ranking tenth among DAC members. The overall amounts remain moderate and have fluctuated significantly year on year (Figure 10).
Note: CIVs = collective investment vehicles.
Source: OECD (2024[30]), “Creditor Reporting System: Aid activities”, https://doi.org/10.1787/data-00061-en.
Finland is exploring how it might mobilise larger amounts of private finance for development. As Finland seeks to focus more on mobilisation, stronger incentives in its development system will be valuable to mobilise private finance more consistently. A new investment plan will be prepared in mid-2024 with a focus on capital mobilisation by the private sector and Finnish added value, and the MFA is also exploring the feasibility of working with privately managed funds. The national legal framework on blended finance is under review by the government and is expected to be updated to correspond with the new investment strategy (Ministry for Foreign Affairs, 2024[13]). As Finland looks to revise its blended finance framework, considering the DAC Blended Finance Principles (OECD, 2018[86]) and the more recent Guidance (OECD, 2021[87]) will be valuable. Moving beyond SPVs and collective investment vehicles to focus on using instruments with higher mobilisation potential, such as guarantees, would contribute to mobilising larger volumes. Joining larger fund structures and working more with actors specialised in guaranteeing financial institutions’ lending in developing countries would be useful, as would continuing to work collaboratively to scale up the Investment Mobilisation Collaboration Alliance (IMCA) and IMCA-like structures.
Realising the ambition to involve more Finnish business in development co-operation will take time, expertise and human resources. The Finnish private sector comprises predominantly small and medium-sized enterprises, particularly compared with that of other EU member states such as France, Germany and Sweden (OECD, 2024[88]). Thus, its main contribution to sustainable development finance is unlikely to be in mobilising large amounts of private finance. Finland’s bilateral development co-operation programme has importantly contributed to strengthening the private sector enabling environment in partner countries. For example, in Tanzania, the programme includes technical support to the Tanzania Revenue Authority (Box 5), and in Tanzania’s forestry sector, a component of Finland’s Forestry and Value Chains Development Programme (FORVAC) focuses on removing barriers in the legal and policy framework to improve value chains. While there are genuine opportunities in partner countries for Finland’s private sector, Finland’s significant experience in these sectors also demonstrates that change takes time, should be accompanied by a focus on factors such as human rights, and is unlikely to lead to significant or rapid changes in Finnish business investment in the short to medium term.
Finland’s support to strengthening domestic resource mobilisation (DRM) in partner countries reflects a commitment to empowering developing countries to meet their needs independently. In line with this commitment, Finland disbursed a relatively higher a share of its ODA to DRM (0.5% of bilateral allocable ODA) in 2022 compared to a DAC average (0.2%), and it backs up country-level support with strategic efforts to influence global tax policies.
Finland’s approach to advancing this policy priority offers valuable experience for others:
Work on DRM has had political buy-in in Finland. Two Global Action Plans (2016-19 and 2020‑23) have articulated overarching objectives for the government while steering technical and influencing work. Independent evaluations and partnerships with academia such as the United Nations University World Institute for Development Economics Research (UNU-WIDER) have also guided this work.
Finland takes a multi-level approach to supporting DRM through initiatives at global, regional and country level. Evaluations have found that Finland has influenced the global tax agenda through its support to the OECD Tax Inspectors Without Borders and its long-standing support to the Addis Tax Administration Forum. The 2020-23 Global Action Plan also focuses on ensuring the tax responsibility of companies receiving development co-operation support.
Deploying Finland’s own institutional knowledge through partnerships with partner country agencies has been instrumental. In Tanzania, for example, a bilateral programme in planning with the Tax Revenue Authority draws on relationships with HAUS and Vero.
Finland has also recognised that technical support to DRM can have broader catalytic effects in terms of improving the trade and investment environment in partner countries.
Finland is preparing a third Global Action Plan, and a recent evaluation of its DRM work offers ways to improve on existing good practice (Particip GmbH and NIRAS Finland Oy, 2023[89]). These include strengthening the whole-of-government approach, which could benefit from OECD guidance on tax capacity building (OECD, 2022[90]). Measures to improve tax-related policy coherence, such as conducting a spillover analysis of Finland’s tax legislation and practices (as Ireland and the Netherlands have done) would also be important. Finland committed in 2015 to the Addis Tax Initiative to double support to strengthen partner countries’ taxation capacity by 2020; it did so for the first time in 2022. However, Finland did not meet the target in 2023. How recent ODA cuts affect Finland’s ability to sustain this achievement will be another important consideration in framing a third Global Action Plan.
Sources: OECD (2024[30]), “Creditor Reporting System: Aid activities”, https://doi.org/10.1787/data-00061-en; Ministry for Foreign Affairs (2016[91]), Tax and Development: Finland's Action Programme 2016-2019, https://um.fi/documents/35732/48132/tax_and_development_finland%E2%80%99s_action_programme_2016%E2%80%932019.pdf/b720eebf-343b-aca6-e8b3-fc99b1f108bc?t=1560450206884; Ministry for Foreign Affairs (2020[92]), Taxation for Development: Finland's Action Programme 2020-2023, https://um.fi/documents/35732/0/Finland_Tax4D_Action_program_050620.pdf/cf6f8dae-434c-96e5-be1c-b9e79e0dc102?t=1591620474451; Particip GmbH and NIRAS Finland Oy (2023[89]), Evaluation of Finland's Initiatives Focused on Enhanced Domestic Resource Mobilization (DRM), https://um.fi/documents/384998/0/DRM_evaluation%20report.pdf/02f2c302-ef94-30ba-a2ab-f3ca3314b424?t=1702629120408; OECD (2022[90]), Tax Capacity Building: A Practical Guide to Developing and Advancing Tax Capacity Building Programmes, https://doi.org/10.1787/c73f126f-en.
As Finland closes bilateral country programmes, the MFA should ensure that co‑operation continues to be led by partner country-owned development priorities, and manage for the risk of fragmentation through continued strategic planning that takes into account all Finnish engagement in a given context.
To maintain its influential approach to multilateral partnerships with fewer resources and more limited country presence, Finland should ensure its funding to the multilateral system is flexible and predictable and prioritise joint approaches.
As the MFA seeks to involve a greater number of Finnish private sector actors in development co‑operation, it should:
continue to focus on additionality, development impact and a human rights-based approach drawing on evidence from recent practice
ensure that Finnfund remains an effective development finance institution with a poverty focused mandate as its responsibilities and legal framework evolve.
The MFA’s robust results-based management and learning systems generate valuable evidence for decision making and support accountability and communication
The MFA has developed an impressive results-based management system and culture that captures results from across programming levels and tools. Finland has been a leader in the DAC Results Community and the MFA’s guidelines for results-based management updated in 2023 align with best practice,57 and seeks to align projects’ objectives to those of partner countries.58 At the level of Finland’s overall development policy and within each priority area, the 2023 guidelines map theories of change, which are linked to the SDGs and are supported by a pool of aggregate indicators that staff and partners can draw from in developing results frameworks at the project level (Ministry for Foreign Affairs, 2023[35]). Based on the guidelines, which are publicly available, results-based management is in-built from the early stages of project formulation and approval (Figure 11); with results frameworks and results from previous relevant interventions or project phases taken into consideration when projects are up for approval before the Quality Board.59 MFA officials highlight that results information has also been used to inform decision making about programming, for example during the 2008-20 transition in Viet Nam from bilateral development co‑operation towards other modalities. The guidelines also usefully articulate the links between results and risk management, as considerations of both need to be considered in tandem rather than as standalone issues, which is good practice.
Source: Authors’ elaboration based on Ministry for Foreign Affairs (2023[35]), Theories of Change and Aggregate Indicators for Finland's Development Policy, https://um.fi/documents/35732/0/theories-of-change-and-aggregate-indicators-for-finlands-development-policy-2020.pdf/7bc4d7f2-ffc8-5f4d-8382-43193fd887e8?t=1619609986346; Ministry for Foreign Affairs (2022[66]), Finland's Development Policy Results Report 2022, https://um.fi/documents/78278153/0/Finlands_Development_Policy_Results_2022.pdf.
The institutionalised cycle of results-based management also supports accountability and communication. Finland’s results approach is underpinned by annual results analysis, synthesis and reflection. The MFA’s results cycle aims to have results synthesis reports prepared annually for each priority area, bilateral country programme, and partnership or engagement channel (Figure 11). The synthesis reports are prepared annually by the MFA’s country teams and/or sectoral experts and partnership leads, who rely on sectoral expertise to analyse results and learning. Together with evaluation findings, the synthesis reports are discussed at the MFA’s annual development co-operation Results Day, a forum for collective learning that informs decision making and budgeting for the following year. These processes feed into the preparation of comprehensive four-year results reports, which present results in accessible language accompanied by visuals and infographics.60 Due to staff turnover and other capacity issues, there have been gaps in preparing the reports annually for all modalities and partnership channels. Nevertheless, the presentation and discussion of the four-year results reports in plenary sessions of the Finnish Parliament in 2018 and 2022 helped reinforce the use of results information for both accountability and communication.
Finland has similarly put in place a solid practice of strategic evaluations. The Development Evaluation Unit within the MFA undertakes comprehensive and strategic evaluations. The unit is independent and reports directly to the Under-Secretary of State responsible for development co‑operation. Strategic evaluations commissioned by the Development Evaluation Unit are timely, useful and of high quality. The process is based on the evaluation manual,61 an interactive, public online learning tool developed by this evaluation unit that includes evaluation concepts, processes and tools drawing on OECD standards. Equally important is the MFA’s development evaluation norm, which provides the legal basis for evaluation of Finland’s development policy and co-operation (Ministry for Foreign Affairs, 2015[93]). Norm 1/2015 requires that evaluations be made public, that management responses are developed and published and subsequent implementation plans are reviewed within two years; and that a schedule of planned evaluations should be developed on a rolling two-year basis. The current rolling plan for upcoming evaluations over 2022-24 provides concrete examples of how the evaluation findings will be used. For instance, a meta-analysis of country programme results completed in 2024 was selected because of the time-bound need to draw on the findings for formulating the forthcoming country programmes as the current timeframe covers 2021-24 (Ministry for Foreign Affairs, 2024[94]). Notwithstanding the robust guidance on paper on the use of evaluation findings, interviews suggested that there is scope in practice for more systematic follow-up on and uptake of evaluation findings and recommendations.
The MFA recognises the need to continue improving on current systems, particularly considering human resources constraints, plans to more closely integrate trade and development policy, and the increased focus on private sector engagement. The MFA considers results management a work in progress that requires continual improvement. This is demonstrated in the decision to evaluate Finland’s results-based management approach in both 2011 and 2015. Given recent cuts and the reorientation of Finland’s ODA, maintaining robust monitoring and evaluation mechanisms will be critical for identifying what works and what does not and thus enable efficient allocation of resources to drive more value for money. The greater focus on private sector investments and partnerships, including on leveraging ODA to mobilise private finance, is a further area where partners have observed a need for a more robust results approach to ensure continued attention to development results and additionality (See section on Finland’s development programming and partnerships: finding the right mix) (Finnish Development NGOs Fingo, 2023[95]). Similarly, as Finland plans to channel a growing share of its ODA multilaterally, thinking through how to capture the results from this work will be important. Other DAC members with integrated foreign ministries have also been exploring how to tailor their results frameworks and systems to more closely integrated foreign policy objectives such as trade, among them countries with relatively small public administrations such as New Zealand (OECD, 2023[96]). These experiences of tailoring results systems to integrated, whole-of-ministry priorities may provide valuable learning for Finland.
The MFA could build on its investments in strengthened risk management systems by moving towards a portfolio approach to risk management
Finland’s MFA has invested in strengthening its systems for risk management in line with international norms and practice. Since the 2017 peer review, the MFA has significantly invested in systems, policies, guidelines and processes to manage risks, including by developing in 2021 a risk management policy for development co‑operation (Ministry for Foreign Affairs, 2021[97]). The policy is based on relevant legal provisions that apply across the government such as for the use of discretionary funds (Finland Ministry of Finance[98]) and in relation to the national anti-corruption strategy (Ministry of Justice, 2021[99]) also recognising the complexity of managing development co‑operation risks in contexts of fragility and weak governance and in view of new instruments and partnership arrangements. Following the introduction of an online public portal for whistleblowing and reporting cases of misconduct in 2014, the MFA has also further developed the portal since the last peer review in response to OECD and EU standards.62
Internal systems are in place for reporting, investigating and tracking suspected cases of misconduct, and the MFA is committed to continuously improving these. Since 2023 the MFA collects data on the number of misconduct cases reported through the online reporting portal and has differentiated cases by type, for instance reports relating to fiduciary risks or case reports on SEAH. It has also developed an internal case management system with protocols specifying the MFA officials who are to be informed of reported cases and their role in investigating reports and communicating with partners about the cases. The number of reported cases has, on balance, increased over time.63 The MFA positively interprets this increase as an indication that partners are complying with policies that require reporting when there is any suspicion of misuse of funds.
Managing risks through dialogue with partners, including at country level, has proven effective and should be continued. The visit to Tanzania provided insight into how risks are managed in practice, showcasing positive practices of managing risks through dialogue and by working collaboratively with implementing partners. Management of potential risks involves dialogue among embassy staff and partners as well as regular discussions between embassy staff and country teams in Helsinki. These teams in Helsinki also liaise with other relevant units in the MFA to bring in expertise on risks in particular programme areas. Staff in Finland’s embassies value the additional guidance and support on risk management developed in recent years. A notable good practice is the introduction of weekly open drop-in sessions where MFA and embassy staff can discuss risk matters with MFA legal experts. Reducing the complexity of the risk management matrix and requiring more regular review of risk management plans could support greater use of these instruments as a management, rather than simply a reporting, tool. Building on the good practice of dialogue with partners at country level, Finland could also support partners to improve their own risk management systems as per the OECD Recommendation for Development Co‑operation Actors on Managing the Risk of Corruption (OECD/LEGAL/0431).
Continuing to ensure proportionate responses to risks that materialise will be important to balance risk and reward and support the achievement of development results. The MFA regularly engages with partners on risk management policies and practices, particularly with Finnish CSO partners. Where cases of misuse are reported, the Norm for the Misuse of Funds (Norm 5/2023), and in the case of CSOs the Act on Discretionary Government Grants (688/2001), give discretion to the responsible MFA unit as to whether to suspend payment for the duration of an investigation. As the potential immediate freezing of funds may be a disincentive for partners to report suspicions, the MFA may consider increasing communication with partners about the basis for freezing funds following reporting of early suspicions of potential misuse, thereby ensuring that responses are proportionate to the risk and balance risk levels with opportunities to achieve development impact and results.64 Continuing to communicate with partners on the MFA’s expected low threshold for reporting incidents, and backing this up with continued dialogue that focuses on prevention, solutions and learning will be key to further embedding the MFA’s good practices. Understanding local corruption vulnerabilities, including through political economy analysis and Finland’s country-level presence, and implementing proportional applications of zero tolerance to corruption are also important for achieving and protecting development results. A forthcoming OECD policy brief on applying zero tolerance recommends ensuring zero tolerance for inaction instead of strict zero tolerance for incidents themselves and identifies practical ways to achieve this, for example, using conditional non-debarment measures when partners comply with investigations and agree to reform systems.
There is scope for more attention to operational and contextual risks. The MFA’s 2021 risk management policy classifies several categories of risk that are to be considered in the risk analysis and monitored throughout project implementation.65 While on paper, the focus on fiduciary or reputational risks is not especially disproportionate, it is in practice. The difference may stem from the political climate in Finland, where some media attention has focused on uncovering cases of the misuse of development co‑operation funds. The July 2024 report on trade and development policy likewise refers to risk only in the context of misuse of funds, which is just one element of the broader MFA risk management approach. A small but important step would be for the MFA to revise the language on its website to invite reporting specifically on cases of suspected misconduct rather than grouping all risks under the heading of misuse of funds. This could encourage more reporting on other serious issues such as SEAH, which is now listed incongruently under the heading of misuse of funds. Strengthening practices around how project staff identify and understand corruption risks specific to the operating environment would also be useful – for example by reviewing evidence on the main agencies or companies most at risk (including by checking debarment lists), and ensuring that country-specific analysis undertaken to inform country programme and strategy documents considers specific corruption risks in the country. Recommendations in the recent evaluation of Finland’s human rights-based approach relating to the value of more and deeper contextual analyses of power relations, human rights contexts and risks of doing harm, including the MFA’s human resource-constrained context, could also be valuable in this regard (Particip GmbH and NIRAS Finland Oy, 2023[100]).
Plans to move towards a portfolio approach to risk management will be useful to support decisions about where Finland can achieve the most impact. In 2023, the MFA developed and rolled out a new online system for risk management across the project lifecycle. Relevant data are considered in the Quality Board’s approval process for a project as well as for risk management during project implementation. A key objective of the system is to gather data on the type of risks that materialise and their impact on results. Over time, data gathered through the system on individual projects and programmes will provide an evidence base for moving towards a portfolio approach to risk management. Such an approach will support the MFA in aggregating risk across different interventions – balancing higher risk and lower risk projects – in order to better manage the level of risk across the whole portfolio in line with a clearly articulated risk appetite. A shift in this direction will be useful especially as Finland pivots to having Ukraine as its biggest partner country and given the heightened risks of corruption in the context of Ukraine reconstruction, as discussed in Box 4. Building up such portfolios would also benefit from the integration of indicators on country-level risk (beyond project-level risk). The outlook of the MFA’s Unit for Administrative and Legal Development Co-operation Matters – that is, viewing risk management as a practice of iterative learning and course correction – provides a solid basis on which to further develop Finland’s approach and supported by an evaluation of the risk management policy planned for 2024.
Building on existing MFA practice, Finland should ensure risk management systems and tools continue to support informed decision making, including by moving towards portfolio approaches to risk management and ensuring risk analyses are grounded in the context and go beyond an emphasis on fiduciary risks and control to take a comprehensive and risk-informed approach.
In taking forward its unwavering support for Ukraine’s reconstruction and as it prepares the second element of its national plan, Finland should ensure its support is guided by development effectiveness principles, considers the complex governance landscape, takes into account private sector appetite and is well co‑ordinated among all Finnish actors including civil society.
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[89] Particip GmbH and NIRAS Finland Oy (2023), Evaluation of Finland’s Initiatives Focused on Enhanced Domestic Resource Mobilization (DRM), Ministry for Foreign Affairs, Helsinki, https://um.fi/documents/384998/0/DRM_evaluation%20report.pdf/02f2c302-ef94-30ba-a2ab-f3ca3314b424?t=1702629120408.
[100] Particip GmbH and NIRAS Finland Oy (2023), Evaluation of Human Rights-Based Approach (HRBA) in Finland’s Development Policy and Cooperation, Volume I, Main Report, Ministry for Foreign Affairs, Helsinki, https://um.fi/development-cooperation-evaluation-reports-comprehensive-evaluations/-/asset_publisher/nBPgGHSLrA13/content/evaluointiraportti-ihmisoikeusperustaisuus-suomen-kehityspolitiikassa-ja-yhteistyossa/384998.
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[19] Particip GmbH and NIRAS Finland Oy (2022), Evaluation of the Finnish Development Policy Influencing in the European Union: Volume 1, Main Report, Ministry for Foreign Affairs, Helsinki, https://um.fi/documents/384998/0/Evaluation_Development_Policy_Influencing_in_EU_Vol_1+%282%29.pdf/c1f3acb7-4f41-92d1-c8c9-5249b3a9306a?t=1666668788984.
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[21] Tuominen, H. (2023), “In defence of common values: The Finnish EU Council Presidency 2019”, Cooperation and Conflict, Vol. 58/1, pp. 23-41, https://doi.org/10.1177/00108367221077639.
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[29] Vastapuu, L. and M. Lyytikäinen (2022), Gender Equality in Finnish Foreign Affairs from 2019 to 2022, Minstry for Foreign Affairs of Finland, Helsinki, https://um.fi/documents/35732/0/Gender+equality+in+foreign+affairs_Vastapuu_Lyytikainen.pdf/4aef250d-4d89-41cd-d390-6059951d4aa9?t=1668426670061.
← 1. According to its website (accessed 20 May 2024), "Business Finland is Finland's official government agency for trade and investment promotion, innovation funding, travel promotion and talent attraction." See https://www.businessfinland.com/.
← 2. The Development Policy Committee appointment letter lists the general main goals for each Committee term. The appointment letter for 2020-23, for instance, included monitoring the implementation of key international agreements and commitments (including the Paris Agreement on climate change), the Government Programme and the Government’s Development Policy Programme; promoting policy coherence that supports sustainable development in national decision making; increasing awareness of the global responsibility related to sustainable development and providing the entire Government with recommendations on these themes; promoting co-operation among stakeholders and interest groups and especially parliamentary co-operation to achieve development policy goals and link them with sustainable development goals; and co-operation with parties evaluating and researching development co-operation to improve its quality and effectiveness. See https://www.kehityspoliittinentoimikunta.fi/wp-content/uploads/sites/27/2020/12/KPT_tyoohjelma_ENG_FINAL.pdf.
← 3. A 2023 in-depth evaluation analysed how human rights and the human rights-based approach (HRBA) have been implemented in Finland’s development policy and co-operation during 2019-21, including their linkages with risk management. This evaluation found scope for improvement and recommended that the Government reaffirm the HRBA as a core principle guiding Finland’s development co-operation and suggested that a broader approach to putting HRBA into practice and monitoring its implementation and results is needed to enhance effectiveness. In particular, the evaluation highlighted the need for strengthened capacities for human rights assessments, conflict and power analyses, and do no harm assessments across partners and the MFA. It also recommended that the MFA strengthen its screening practices related to risks associated with human rights. For more information and the evaluation’s findings, see https://um.fi/documents/384998/0/Evaluation+report+Volume+1+-+Main+report+%281%29.pdf/3c31e625-861a-0620-1181-61a43c938005?t=1698219364711.
← 4. A “globally influential Finland” was also an explicit objective in the 2019 Government Programme, that is available at https://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/161935/VN_2019_33.pdf?sequence=1&isAllowed=y.
← 5. For example, Finland’s 2019 Presidency of the EU Council led to a Council conclusion on the role of the EIB and the European Fund for Sustainable Development as well as compromises on migration. Under Finland’s Presidency, the annual report on the Gender Action Plan II was adopted by consensus (see https://um.fi/documents/384998/0/Evaluation_Development_Policy_Influencing_in_EU_Vol_1+%282%29.pdf/c1f3acb7-4f41-92d1-c8c9-5249b3a9306a?t=1666668788984). Under its Presidency, in terms of climate policy and rule of law, the Council also adopted conclusions on evaluation of the rule of law dialogue, the linking of economic competitiveness to well-being, and a global biodiversity framework and protecting and restoring forests. Finland made a concerted effort on transparency, including the publication of a report at the end of its Presidency on transparency measures and on the development of the Council’s working methods. More information is available at https://www.consilium.europa.eu/media/56249/2019-jul-dec-fi-results.pdf.
← 6. The 2022 Sustainable Governance Indicators report on Finland found that the “government’s executive capacity is strong” and “interest organizations, various civil society groups and increasingly the general public are consulted when legislation is drafted”. See https://www.sgi-network.org/docs/2022/country/SGI2022_Finland.pdf.
← 7. See also the Blog Post “What makes Finland happy?” in the Civil Service Quarterly, https://quarterly.blog.gov.uk/2019/07/04/what-makes-finland-happy/. In terms of Eurobarometer findings, the 2023 survey highlighted strong Finnish support for a focus on peace and security (50% of respondents) and democracy and human rights (39% of respondents) in EU international co-operation. Only 4% of Finnish respondents considered a focus on migration to be important (see https://europa.eu/eurobarometer/surveys/detail/2952. The 2022 survey’s findings are also illustrative: “Since 2020, respondents in Finland have become more positive about a number of aspects of development aid. Nine in ten (90% vs EU average of 89%) think it is important to partner with countries outside the EU to reduce poverty around the world, an increase of eight percentage points since November‐December 2020 and one of the largest increases in any Member State”. See https://europa.eu/eurobarometer/surveys/detail/2673.
← 8. Stakeholders consulted included civil society, the private sector, government employees and the Development Policy Committee (Annex C). This was also captured in the Development Policy Committee’s joint submission to the review during consultations in Helsinki in April 2024. Among the documents referred to by different stakeholders in consultations were Finland’s 2023 national plan on Ukraine reconstruction (https://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/165346/UM_2023_25.pdf?sequence=1&isAllowed=y); the 2024 government report on foreign and security policy (http://urn.fi/URN:ISBN:978-952-383-929-8); and the 2024 government report on international economic relations and development co-operation policy (http://urn.fi/URN:ISBN:978-952-383-989-2).
← 9. For example, the aims of the first measure listed in subsection 4.2.2 of the report on education are to “[p]romote closer cooperation between Team Finland actors to strengthen export and internationalisation of companies and educational institutions” and to “[t]ake steps to strengthen the participation of Finnish actors in the EU’s Global Gateway initiative”. Two of the measures on climate action presented in subsection 4.2.3 are to “[p]romote the export of climate and environmental technology and circular economy solutions produced by Finnish companies to developing countries by utilising a range of development cooperation instruments” and to “[c]reate demand for Finnish climate and environmental technology in developing countries as part of the implementation of international climate and environmental agreements [and] [p]articipate in international climate and environmental funding in accordance with international obligations”. See http://urn.fi/URN:ISBN:978-952-383-989-2.
← 10. This has also generated significant learning that goes back several years. For examples, see an evaluation of Finnish aid for trade at https://www.oecd.org/derec/finland/49442624.pdf and a report on the private sector in Finland’s development policy at https://www.kehityspoliittinentoimikunta.fi/wp-content/uploads/sites/27/2017/02/dpc-private-sector-in-finnish-development-policy.pdf.
← 11. The Netherlands has invested significantly in working at the intersection of trade and development agendas, and the link between trade and ODA was the focus of work in 14 of what the Netherlands calls combination countries since 2022. This reflects the Netherlands’ approach to have three different categories of partner countries. In addition to the 14 combination countries where it pursues synergies between development co-operation and trade promotion with a focus green and digital transitions, the Netherlands works with 12 development co-operation focus countries for with a broad relationship and 10 focus countries with a specific relationship. For more details, see https://doi.org/10.1787/67b0a326-en.
← 12. Specifically, the 2023 Government Programme contains several passages describing these conditions. It states, “Bilateral financial assistance to be provided to third countries will be made conditional upon the country readmitting their citizens who are to be returned”. It also states, “The Government will make the readmission of nationals and support for the international rules-based order conditions for Finland’s development cooperation. Finland will not give development aid to governments or entities that support Russia’s war of aggression. Finland will support the EU’s efforts to encourage third countries to readmit their nationals by means of development cooperation instruments and visa policy, for example.” See https://julkaisut.valtioneuvosto.fi/handle/10024/165044. The July 2024 report on international economic relations and development co-operation also refers to such conditions (see http://urn.fi/URN:ISBN:978-952-383-989-2). Subsection 4.1 (“reciprocity with developing countries”) of the July 2024 report notes as well that the “Government will make the readmission of nationals and support for the international rules-based order conditions for Finland’s development cooperation” and while this is addressed in its new foreign and security policy, “international economic relations play an important role in terms of migration and refugees”. The report presents three measures the Government will undertake to operationalise the policy: “[s]upport for the international rules-based system and cooperation in the readmission of a country’s own citizens are conditions for the targeting of development cooperation and in work with partner countries”; “[e]stablish flexible funds to help achieve sustainable returns and readmissions” as the funding “enables fast and flexible advocacy throughout central government for jointly surveyed sites”; and “[d]esign country-specific development cooperation projects on a means-tested basis in a way that links the implementation of programmes and projects relevant to returns to the promotion of effective and sustainable return solutions”. See http://urn.fi/URN:ISBN:978-952-383-989-2.
← 13. As a working paper for the Expert Group for Aid Studies concluded, “On the effect of aid on immigration to host countries, most studies point in the same direction: increasing aid for this purpose does not reduce migration in host donor countries … nor the number of migrants apprehended at Europe’s borders”; making aid conditional on the control of migration flows “would therefore be illusory”. See https://eba.se/wp-content/uploads/2023/09/Bistandskonditionalitet-September-2023-webb.pdf.
← 14. An example is the 2019 OECD peer review of Switzerland’s development co-operation, which noted that Swiss ODA was “under increasing pressure to limit irregular migration… with some discussions on granting support on the condition that partner countries adjust their migration policies.” The report highlighted that “A programme that focuses on preventing migration to Switzerland at the expense of supporting partner countries’ priorities for long-term sustainable development could lead to reputational risk for Switzerland: the country’s renowned neutrality may be at risk, diminishing its influence on global policy.” The peer review recommended that Switzerland establish safeguards to ensure the development programme remains focused on long-term investments towards poverty reduction and sustainable development in partner countries” (for more information, see https://doi.org/10.1787/9789264312340-en). Related issues were also explored in Austria’s 2020 peer review (https://doi.org/10.1787/03b626d5-en).
← 15. Paragraph 7.2 of the 1994 International Conference on Population and Development (ICPD) states, “Reproductive health therefore implies that people are able to have a satisfying and safe sex life and that they have the capability to reproduce and the freedom to decide if, when and how often to do so.” See https://www.unfpa.org/sites/default/files/event-pdf/PoA_en.pdf.
← 16. LDCs and other low-income countries have been a strong focus of Finland’s long-standing development co-operation priorities in line with the principle of leaving no one behind. Policy documents and statements reflected this focus, explicitly directing Finland’s development co-operation to LDCs. The MFA website, for instance, states that “a: “Almost all of Finland’s partner countries belong to the group of the least developed countries (LDCs) in Africa and Asia.” (See: https://um.fi/bilateral-partner-countries accessed 18 July 2024). At the same time, the share of Finnish ODA to LDCs has fallen in recent years: as a share of GNI it was 0.16% in 2021 and fell to 0.11% in 2022, with corresponding declines also in volume from USD 199 million to USD 178 million over the same period.
← 17. The 2021 DAC Mid-term Peer Review of Finland noted that the “recent institutionalisation of the Development Policy Committee … has allowed it to have a longer-term work programme and focus”, adding that the Committee “plays a key role in producing evidence for policy and encouraging dialogue, serving as a sounding board for the MFA”. See https://one.oecd.org/document/DCD/DAC/AR%282024%293/22/en/pdf.
← 18. For more information on Finland’s peace work, see https://um.fi/peacemediation.
← 19. Recent evaluations have found the MFA’s communications functions effective and in high demand, albeit under resourced. See, for example, https://um.fi/documents/384998/0/32216229_Evaluation_of_Development_Communications_vol_1_23_05_16+v4+%281%29.pdf/48622f3f-f752-2a0b-3476-8acdf54b51bf?t=1685098514461. Based on Finland’s reporting to the OECD, ODA for development awareness has declined from approximately USD 1 million per year at the time of Finland’s last peer review in 2017 to USD 416 000 in 2021, according to the latest data reported to the OECD and available at https://doi.org/10.1787/data-00061-en.
← 20. Funding for civil society’s awareness-raising activities has also been significantly cut. See also section on Finland’s development programming and partnerships.
← 21. The MFA’s performance on the Publish What You Fund Index improved slightly between the 2022 and 2024, but Finland remains in the lower half of the rankings, in the “fair” category. Its performance could be improved to reach “good” in line with peers such as Canada, New Zealand and Sweden. See https://www.publishwhatyoufund.org/the-index/2024/.
← 22. For more information on the Openaid.fi platform and its dashboards, see https://openaid.fi/en/.
← 23. The Commission meets at least twice a year and supports implementation of the national 2030 Agenda roadmap developed in 2021. For more information, see https://kestavakehitys.fi/en/commission.
← 24. The Government prepares a Report on the Future and presents it to the Parliament at the beginning of each parliamentary term. The report forms the basis for dialogue between the Government and Parliament about the future, and its task is to identify issues that are important for decision making and require special attention with a view towards building the Finland of the next generations and strengthening Finland's preparedness for the future. The last report was published in 2023 under the Marin government, and is available at https://valtioneuvosto.fi/en/foresight-activities-and-work-on-the-future/government-report-on-the-future).
← 25. It should be noted that the website that described plans and commitments to update the monitoring framework for Agenda 2030 by June 2024 is no longer active, as of July 2024: https://kestavakehitys.fi/en/monitoring. Finland’s MFA advised that the monitoring system previously maintained by the Prime Minister’s office, based on the Agenda 2030 indicators considered most relevant to Finland, was considered burdensome. As of 2024, indicator-based monitoring of the implementation of Agenda 2030 is carried out by Statistics Finland. The sustainable development secretariat at the Primie Minister’s Office uses as a tool articles (commissioned to an external consultancy company) that focus on six areas of change described in the 2022-2030 Strategy of the national Sustainable Development Committee. Summaries are published online: https://kestavakehitys.fi/kestavan-kehityksen-strategia-seuranta. The latest summary in English (2024) can be found here: https://kestavakehitys.fi/documents/205289881/212129447/Monitoring+of+the+Strategy+2024+-+summaries.pdf/6d4b1202-fea9-80a1-913d-37e2948b70bb/Monitoring+of+the+Strategy+2024+-+summaries.pdf?t=1717073596041.
← 26. For example, following significant domestic debate, Finland did not support the EU’s Nature Restoration Regulation that was adopted by qualified majority in 2024: https://valtioneuvosto.fi/en/-//1410903/eu-s-nature-restoration-regulation-supported-by-member-states-regulation-into-force-in-july-august.
← 27. For more information on Finland’s goal of carbon neutrality by 2035, which is set out in the Climate Act that entered into force in July 2022, see https://www.treasuryfinland.fi/investor-relations/sustainability-and-finnish-government-bonds/carbon-neutral-finland-2035/. For more information about possible slippage against this target, see https://wwf.fi/tiedotteet/2024/07/ymparistojarjestot-suomi-ei-edes-yrita-esittaa-riittavia-toimia-ilmastotavoitteiden-saavuttamiseksi-energia-ja-ilmastosuunnitelmassaan/.
← 28. For more information, see https://um.fi/current-affairs/-/asset_publisher/gc654PySnjTX/content/vastuullisen-liiketoiminnan-tietoa-yrityksille-eri-maista.
← 29. While Finland eventually supported the Directive (see https://tem.fi/en/-/eu-corporate-sustainability-due-diligence-directive-receives-qualified-majority-of-votes-in-coreper) it was one of the Member States that advocated to weaken its substance.
← 30. In June 2024, the Government announced significant budget cuts to Finnwatch. For more information, see https://finnwatch.org/fi/uutiset/finnwatchin-haetaekeraeys-saavutti-tavoitteensa-ennaetysajassa.
← 31. The breakdown of the Development Policy Department’s policy desks and number of staff in each prior to the 2024 reforms is as follows: development policy (9 persons); humanitarian assistance (8); sectoral policy (17); sustainable development and climate policy (21); civil society (10); development finance and private sector co-operation (15); and administrative and legal development co-operation matters (15). Beyond the Development Policy Department, regional departments have been responsible for bilateral development co-operation in their respective geographic areas and the Development Evaluation Unit is in charge of strategic and policy level evaluations of development policy and development co‑ordination.
← 32. The integrated structure has also facilitated the transition in partner countries from ODA-centred co-operation to a relationship more focused on trade and investment, as seen in Viet Nam: https://um.fi/documents/384998/0/Evaluation_Transition+of+Finnish-Vietnamese+Cooperation_VOL1_web+%284%29.pdf/9b0268fe-25f1-0887-f7a3-8b1d00a8878d?t=1624341970063.
← 33. For more information on the June 2024 decision relating to changes to the management structure and foreign functions of Business Finland, see https://um.fi/current-affairs/-/asset_publisher/gc654PySnjTX/content/team-finland-verkoston-johtaminen-ja-ulkomaantoiminnot-uudistetaan/35732.
← 34. The Minister for Foreign Trade and Development makes all funding decisions for amounts above EUR 500 000 as well as all funding decisions for CSOs and institutional co-operation. The director general of the Department for Development Policy can make funding decisions for amounts up to EUR 500 000, and the director for Humanitarian Assistance has the authority to make urgent humanitarian funding decisions.
← 35. For example, the MFA provides annually a basic course on development policy and development co-operation in Helsinki. Courses on Local Cooperation Funds are organised in English, and courses on topics such as risk management were organised in English in the form of two-day workshops in Helsinki in 2023 and 2024. While the MFA has encouraged locally employed staff members to attend these trainings, limited travel budgets can pose a constraint and local staff report that more practical scenario-based training would better support their day-to-day embassy work.
← 36. The January 2024 report of the working group on reform of the Foreign Service recommended that based on the strategic objectives, resources should be channelled at least to the following priority areas: the United States and other key like-minded partners; Northern Europe; exercise of influence within the EU as well as security policy; great power relations and geo-economic competition (including the Group of Seven (G7), Group of Twenty (G20) and BRICS). Exports and investments promotion should be intensified by concentrating resources and focusing economic and commercial promotional activities on key markets. The operations and management of the Team Finland network is to be reformed as set forth in the Government Programme. “Non-prioritised tasks should be incorporated into bigger sets following clear-cut deselections,” according to the report. Specifically, the report stated, “With the reduction in development funding and country programmes outlined in the Government Programme, departmental resources can be reviewed in the light of the priorities”. See http://urn.fi/URN:ISBN:978-952-281-802-7.
← 37. Prior to the reform, the tasks assigned to KEO-10 (the Unit for General Development Policy) were: developing the effectiveness, results-based management and monitoring of development policy, including co-ordinating reporting on results, and co-operating with the EU and the OECD in development policy matters including the co-ordination of development policy done in Finland, the EU and the OECD. The Unit for General Development Policy was also responsible for international development policy questions unless the task fell under the competence of other units; strengthening the quality of development co-operation and the implementation of the international focus-on-results principle; co-ordinating and developing the guidelines, methods and instruments used in development co-operation; providing related advice to improve knowledge and competence related to development policy and development co-operation; co-ordinating related training; co-ordinating the work of the Quality Assurance Group and providing advice. See https://um.fi/unit-for-development-policy (accessed 16 July 2024).
← 38. Prior to its dissolution, KEO-20 (the Unit for Sectoral Policy) was responsible for the following issues: the preparation and application of sectoral and thematic policies and strategies and participating in international co-operation that did not fall under the competence of other MFA units; providing expert services to departments and units in charge of development co-operation issues; monitoring the quality of development co-operation, upgrading development co-operation instruments and providing advice; and improving regulations, instructions, methods and administration of development co-operation related to sectoral policies as well as for the development policy dimensions of trade and development and Aid for Trade matters and co-ordinating the work of the Quality Assurance Board. See Annex D and https://um.fi/unit-for-sectoral-policy (accessed 16 July 2024).
← 39. From 1 August 2024, the total number of staff in the Development Policy Department will be 100. A digital advisor and an innovation advisor will move to a new technology unit in the International Trade Department. The Global Gateway ambassador will also move to the International Trade Department. One EU desk officer will move to the new EU unit in the new Europe and North Atlantic Department. According to new terms of reference, the Development Policy Department is expected to continue to provide thematic and development policy and co-operation advisory services to other departments, prioritising areas where most of ODA funding is targeted. It will also be expected to provide early support to other departmental desks to ensure successful and efficient project execution and provide support for Finnish agencies and other institutions domestically and in the utilisation of national as well as EU funding. The new Project Management Unit KEO-10 (formerly the Development Policy Unit), will also be expected to engage in the EU Practitioners Network to create EU partnerships and for lobbying the European Commission. It will also be responsible for the centralised management of discretionary government grants, research and higher education operators and will continue to be responsible for the centralised management of EU delegated co-operation. The new KEO-10 will have nine staff. In addition to the director, the unit will consist of a four-person quality and training team and four development co‑operation specialists in charge of backstopping project implementation.
← 40. As another example, there have been several efforts to address similar challenges for Canada’s integrated foreign ministry, including the creation of a dedicated rotational international assistance stream within the Foreign Service and the commissioning of several strategic evaluations on the coherence between diplomacy, trade and international assistance. See https://www.international.gc.ca/transparency-transparence/audit-evaluation-verification/2023/egm-coherence-report-rapport.aspx?lang=eng.
← 41. Other DAC members that have relatively fewer staff working as experts on development co-operation in the responsible ministry have reported limited staff time to engage in DAC networks and communities of practice as an important issue. For example, in the case of Poland, staff time spent managing project and funding agreements significantly limits the scope for ministry staff to benefit from and engage in DAC networks and has implications for Poland’s ambitions towards more effective development co-operation. For more information, see https://doi.org/10.1787/deae8fba-en.
← 42. Ensuring that staff have opportunities to contribute to the improvement of public service delivery and are engaged as partners in public service management issues would also be in line with the 2019 Recommendation of the OECD Council on Public Service Leadership and Capability, available at https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0445.
← 43. Several OECD studies, taking note of the broader trend towards outsourcing in recent decades, contain useful findings relating to value for money in the use of consulting services and in outsourcing tasks to the private sector. For instance, Public Employment and Management 2021: The Future of the Public Service (https://doi.org/10.1787/938f0d65-en) highlights opportunities and potential drawbacks associated with outsourcing public administration tasks. The report State of the Public Service (https://doi.org/10.1787/9789264047990-en) also looked at key trends across OECD governments, including their growing use of direct or indirect contracting to the private sector based on an idea that this would be more efficient. Among the findings pertaining to France, the Netherlands and other OECD countries was that the costs of services produced by the private sector and funded by governments are prone to greater instability and have increased while government employees’ compensation costs as a percentage of GDP, on the other hand, are relatively stable over time. Recent experiences in Australia and the United Kingdom also provide relevant learning and insights on potential limitations of outsourcing of public tasks to consulting services, in terms of both cost and effectiveness. The United Kingdom National Audit Office, in a 2016 report, found that outsourcing tasks to external specialist staff is more costly than relying on staff, noting: "Used well, consultants and temporary staff can be an important source of specialist skills and capabilities for departments that need to transform how they do business. But such specialist staff can be expensive, costing twice as much as their nearest permanent staff counterpart” (https://www.nao.org.uk/reports/use-of-consultants-and-temporary-staff/). A 2024 Australian parliamentary inquiry highlighted that it is important to consider knowledge transfer back to the public service and the potential impact of using consulting firms on public sector capability and made several recommendations in the context of value for money (https://apo.org.au/sites/default/files/resource-files/2024-06/apo-nid327127.pdf). Additional considerations were cited in a 2019 DAC peer learning exercise that included a module on building, buying and borrowing skills for development co-operation (https://one.oecd.org/document/DCD/DAC&282020%2948/en/pdf).
← 44. While the most recent Finnfund steering memorandum (2024-27) is available on the Finnfund website, the content of previous memoranda is described in Finnfund annual reports. For example, page 28 of the 2022 Finnfund annual report (published in 2023) includes reference to the 75% target for the value of new Finnfund investments in low- and lower-middle-income countries (see https://www.finnfund.fi/wp-content/uploads/2023/05/Finnfund_Annual-Report-2022-1.pdf). Finnfund’s steering memorandum for the period of 2024-2027 does not include such a target for investments to LDCs and LMICs.
← 45. A new plan for development policy loans and investments is also under development in 2024.
← 46. These plans are not publicly available.
← 47. According to the European Commission Global Gateway portal, “EU Delegations, Member State embassies and project offices help coordinate and implement Global Gateway projects and Team Europe initiatives.” See https://international-partnerships.ec.europa.eu/policies/global-gateway/governance_en.
← 48. Finland’s support for the UONGOZI Institute in Tanzania, born out of the 2002-08 Helsinki Process on Globalization and Democracy, is an example of how development co-operation advances its strategic goals, The institute, an arm of the Tanzania president’s office, promotes the role of leadership in development in Tanzania and the wider African continent. Finland supports the institute with core funding and technical support provided through HAUS and the UNU-WIDER. Its support is focused particularly on women’s leadership. For more information, see https://uongozi.or.tz/ (accessed 24 May 2024).
← 49. The MFA has indicated that country programmes are concluded, as was the case in Viet Nam and Zambia, as a country approaches middle-income status and thus will benefit more from co-operation in areas such as trade, research and education. It is not clear whether the MFA intends to offer support through demand-based instruments only to such country contexts or also to LDCs. For more information, see https://um.fi/bilateral-partner-countries.
← 50. While the Government have increased funding for Finnish CSOs engaged in development co-operation, it has announced to date in 2024 significant cuts for other CSOs in Finland. For more information on cuts to various Finnish CSOs, see public statements (in Finnish) by various Finnish organisations including: https://fingo.fi/ajankohtaista/tiedotteet/yli-60-kansalaisjarjestoa-vetoaa-hallitukseen-alkaa-lakkauttako-vgk-tukea/; https://rauhanliitto.fi/rauhanliitto/ajankohtaista/tiedotteet/valtioneuvosto-on-paattanyt-lakkauttaa-rauhantyon-rahoituksen; https://www.ykliitto.fi/uutiset-media/tiedotteet/ulko-ja-turvallisuuspoliittisen-valtionavun-lakkautus-romahduttaa; https://2250finland.fi/nuoret-rauha-ja-turvallisuus-toiminnan-kaikki-rahoitus-lakkautetaan/ (all accessed 18 June 2024).
← 51. Development and humanitarian aid CSOs were not included among the types of CSOs for which private donations will be tax exempt from 2026, a decision that has drawn criticism. For more information, see https://www.hs.fi/politiikka/art-2000010458590.html (accessed 18 June 2024).
← 52. In Finland’s self-assessment, the MFA refers to a range of efforts to strengthen the quality and impact requirements of private sector instruments since the 2017 peer review. For example, Finnfund’s steering memorandum during the period 2017-23 targeted over 75% of new investments in LMICs or poorer countries, with Finnpartnership also focussing funding support to business partnerships in such countries.
← 53. An example is the 2021-24 Ethiopia country strategy, which refers not only to private sector instruments (Finnfund, Finnpartnership, PIF, DevPlat) but also to engagement in policy dialogue to improve the Ethiopian business environment. It also identifies sectors with potential synergies between development co-operation and economic relations between the two countries. See https://um.fi/documents/35732/0/finlands-country-strategy-for-ethiopia-2021-2024.pdf/66c5870f-53a5-f560-b5ff-026e2b981834?t=1624974582623.
← 54. While the November 2023 evaluation of Finland´s international climate finance points out that the MFA’s interventions are consistent with major global commitments under the Paris Agreement and UNFCCC processes and are aligned with policy ambitions and priorities of developing countries, it recommended that the MFA develop a clearer strategy for its overall climate finance that brings together the various channels and instruments (https://um.fi/documents/384998/0/CF_evaluointi_VOL_1.pdf/41d25448-3c4c-68e6-42eb-fd35fa9e0d4f?t=1699615517317). A 2021 National Audit Office of Finland report stated that programming and funding allocation has been broadly coherent and sensible despite the lack of a strategic framework, but concluded that “there are no clear objectives and implementation plans”, making it “difficult” to form an overall picture of effectiveness”. See https://www.vtv.fi/app/uploads/2021/09/NAOF-Audit-6-2021-Finlands-international-climate-finance.pdf. An analysis by the Development Policy Committee in 2022 came to similar conclusions (https://www.kehityspoliittinentoimikunta.fi/en/activity/finlands-climate-financing-needs-a-clear-direction-analysis-by-the-finnish-development-policy-committee). Positively, at COP28, Finland joined Denmark, Sweden and the United States Agency for International Development in launching the Investment Mobilisation Collaboration Arrangement. For more information, see https://www.prnewswire.com/news-releases/the-united-states-and-nordic-countries-launch-joint-funding-initiative-to-increase-climate-investments-in-emerging-and-developing-markets-world-climate-foundation-302004370.html (accessed 18 June 2024).
← 55. Finnpartnership defines eligible business partnerships as between a Finnish and local company (https://finnpartnership.fi/wp-content/uploads/2024/01/Terms-and-conditions-of-Business-Partnership-Support_01012024.pdf ). The Public Sector Investment Facility, funded in part by development co-operation funds, requires that a company is registered in Finland and that the project has sufficient Finnish content (https://um.fi/public-sector-investment-facility). This is also the case for DevPlat (https://www.businessfinland.fi/en/for-finnish-customers/services/funding/research-and-development/co-innovation-in-developing-markets). The Secretariat and WP-Stat have done work to reach a collective understanding on the tying status of such instruments. With regard to DevPlat, for instance, other members have similar types of B2B grants on a de minimis basis. If the grants are restricted to donor businesses, the OECD considers them as tied. This issue has been discussed recently among members; see https://one.oecd.org/document/DCD/DAC/STAT%282023%2942/en/pdf, paragraph 63. Members also have confirmed that these grants should be reported as tied; see (https://one.oecd.org/document/DCD/DAC/STAT%282024%294/en/pdf, item 8. Likewise, for Finnpartnership, similarly, if the financing is available to Finnish companies only, it should be considered tied. This has also been clarified by members in the context of WP-Stat.
← 56. In its 2022 annual report, Finnfund states, “We advance Finnish development policy interests. We are happy to invest in projects involving co-operation with Finnish companies, but this is not a precondition of investment”. See https://www.finnfund.fi/wp-content/uploads/2023/05/Finnfund_Annual-Report-2022-1.pdf.
← 57. See the 2019 DAC Guiding Principles on Managing for Sustainable Results (https://doi.org/10.1787/44a288bc-en) as well as the 2019 DAC Evaluation Criteria (https://doi.org/10.1787/15a9c26b-en).
← 58. This analysis on Finland’s practice on alignment is based on results submitted for Nepal as part of data reported to the 4th Global Partnership for Effective Development Co-operation (GPEDC) monitoring round (2023-26), which is being conducted on a rolling basis. GPEDC monitoring assesses alignment of bilateral co-operation projects. Nepal is the only partner country to which Finland reported data in the current monitoring round at the time of drafting. Additional data will be available at the conclusion of the current monitoring round in 2026, enabling a more comprehensive assessment of Finland’s alignment of bilateral projects as well as the performance of the multilateral organisations that Finland supports. For more information and the full GPEDC monitoring dataset for Nepal, see https://www.effectivecooperation.org/Nepal-Monitoring-Results-2023%20-%202026 (accessed 20 June 2024).
← 59. The Quality Board (Quality Group for Development Co-operation) reviews plans for development co-operation projects and programmes to be funded, to ensure they comply with the MFA’s current development policy and meet quality requirements. It makes proposals for decisions and/or provides feedback. It is chaired by the Deputy Director General of the Department for Development Policy and vice chaired by two other representatives of the department. Members of the Quality Board rotate among representatives of departments relevant to the issues being discussed. For more information, see: https://www.finlex.fi/fi/laki/ajantasa/2008/20080550 (accessed 18 June 2024). At present, it is unclear if and how the ongoing Foreign Service reform will affect functioning of the Quality Board.
← 60. Such periodic results reports link results measurement to accountability at the highest level. The MFA in its self-assessment, indicated that the plenary discussion of the 2018 report, for example, informed the process of preparing the 2022 report.
← 61. For more information on the evaluation manual, see https://www.eoppiva.fi/kurssit/evaluation-manual-2/#/.
← 62. For more information and to access the reporting portal, see https://vaarinkayttoilmoitus.fi/#/?lang=en (accessed 25 May 2024).
← 63. Since 2014, the MFA has recorded the total number of reports made through the public reporting portal, which may include general inquiries and feedback to the MFA that are unrelated to suspicions of misconduct. It also records the subset of these reports that are recorded in the case management system and followed up on as legitimate reports of potential misconduct; the highest number of such reports (35) was recorded in 2023.
← 64. In cases of intended suspension of payment, the Administrative Procedure Act (893/2015) requires a hearing of concerned partners. Informal discussions with partners about the basis for freezing funds would be additional to any formal hearings required by law.
← 65. The policy identifies strategic, operational, financial and risk of damage as risk categories.