URU, Alm.del - 2024-25 - Bilag 161: OECD-DAC’s mid-term review af dansk udviklingsbistand

Udenrigsudvalget 2024-25
URU Alm.del Bilag 161
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Organisation for Economic Co-operation and Development

DCD/DAC/AR(2024)3/5

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DEVELOPMENT CO-OPERATION DIRECTORATE

DEVELOPMENT ASSISTANCE COMMITTEE

English - Or. English

23 January 2025

Peer Review

Mid-term Review of Denmark 2024

The mid-term review of Denmark was conducted in 2024 following the 2021 peer review.

JT03558656

OFDE

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the

delimitation of international frontiers and boundaries and to the name of any territory, city or area.

URU, Alm.del - 2024-25 - Bilag 161: OECD-DAC’s mid-term review af dansk udviklingsbistand

Director

DEVELOPMENT CO-OPERATION DIRECTORATE

DCD/PG(2024)28

To: DAC Delegates and Observers

Denmark’s Mid-term Review, 7-8 October 2024, Copenhagen

19 December 2024

On 7-8 October 2024, I conducted

Denmark’s

mid-term review together with Anita King and Anjeza Llulla of the

Development Co-operation Directorate. My thanks to State Secretary for Development Policy Lotte Machon,

Director for Africa, Development Policy and Financing Ketil Karlsen and officials at the Ministry of Foreign

Affairs (MFA) for their engagement. I also thank members of the Parliamentary Foreign Affairs Committee and

Danish civil society and think tanks for taking time to meet, as well as

staff in Denmark’s

Embassy in Nairobi,

members of the Council for Development Policy and leadership of the Danish Investment Fund for Developing

Countries (IFU) for exchanging virtually as part of the review. I appreciated the excellent co-operation of Lars Olaf

Søvndahl Petersen and Idil Abdiaziz Nor for the smooth organisation of a rich visit.

The mid-term

review focused on Denmark’s progress against the

eight recommendations of the

2021 OECD-DAC

Peer Review

and the key developments that have occurred since. In 2021 Denmark adopted a new international

development strategy “The

World We Share”

and is in the process of developing a new strategy for 2025. From

2022, the development co-operation and global climate policy portfolios were combined under a single minister,

contributing to a stronger emphasis on climate action in Danish development co-operation. Leadership of the

development portfolio changed in late August 2024 when the current Minister for Foreign Affairs took over the

development co-operation portfolio and global climate policy moved to the climate ministry. We discussed the

potential impacts the loss of a separate development minister can have on how development policy issues are

elevated in foreign policy and cross government discussions, and

Denmark’s visibility in international

fora.

Continued commitment to 0.7% ODA/GNI demonstrates

Denmark’s

leadership among its peers, with the

new strategy from 2025 a chance to drive further focus on development impact for partner countries.

Denmark’s

steadfast commitment to providing 0.7% of GNI as official development assistance (ODA) is a

significant signal to other DAC members and partner countries alike on the importance it attributes to global

objectives. Following a decline in ODA to 0.67% of GNI in 2022,

Denmark’s

ODA increased to USD 3.1 billion in

2023, equivalent to 0.73% of GNI. In-donor refugee costs

remained significant

in 2023 having increased to 17% of

gross bilateral ODA in 2022 (USD 357 million). We discussed that other members have found the decision to cap

these costs as a share of the ODA budget helpful to protect longer term programming and planning. An engaged

parliament plays an important role in Danish development policy and I was pleased to learn there is continued

support across the political parties for 0.7% ODA/GNI. At the same time, there is need for a refreshed narrative for

development co-operation with public support for international assistance potentially waning in light of domestic

pressures. In responding to the expectations of politicians and the public, I encouraged the MFA to reinforce the

message that development objectives that focus foremost on poverty reduction and building the enablers for

development in partner countries is aligned to Denmark’s values as well as

Europe’s

long-term strategic interests.

A new foreign policy

strategy “Africa’s

century”

signed by the foreign minister and former development minister in

August 2024 sets out

Denmark’s evolving engagement

in the region, where the

largest share

of Danish ODA

continues to be allocated. The strategy emphasises a stronger focus on foreign and security policy in Denmark's

partnerships with the continent and greater attention on trade and people-to-people engagement as part of a new

vision for building more equal partnerships. The reduction of irregular migration and prevention of refugee flows

continue to

feature

as key priorities, with funding of at least DKK 1.1 billion (approximately USD 145 million)

allocated for three new multi-year migration programmes in the strategy, to be funded out of the ODA budget. As

part of the Africa strategy Denmark will also open new embassies in Rwanda, Senegal and Tunisia, while closing

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embassies in Burkina Faso and Mali. While it is too soon to see the implications of these decisions on the focus

and nature of Denmark’s development co-operation

programme in these regions, I noted that such changes in

diplomatic presence can have long term implications. Protecting space to engage bilaterally and on sensitive issues

that Denmark deems important will also be a key consideration as it seeks to put its vision of building more equal

partnerships into practice. The new development strategy from 2025 is an opportunity to elaborate on these trade-

offs and considerations further.

As Denmark revises its approach to working in fragile and politically constrained contexts, it should share

its learning with the DAC.

Working in fragile contexts was a priority of the 2021 development strategy

“The

World We Share”

and

in Brussels

Denmark has used its focus and experience to lead valuable reflections on working in politically constrained and

complex environments. Denmark has also brought these insights to the International Network on Conflict and

Fragility (INCAF), which has been appreciated by other DAC members. With its growing focus on migration,

displacement, and other forms of ‘people on the move’, Denmark

is well-placed to contribute to current OECD work

to ensure development and the preservation of ODA remains a core part of these approaches.

Denmark’s new

Africa Strategy also sets out plans to work more through regional organisations as countries in the Sahel, including

Burkina Faso and Mali, are covered from Copenhagen. In adapting its approach to staying engaged in politically

constrained contexts, I encourage Denmark to continue sharing its experience with other DAC members. I also

encouraged Denmark to make the most of its strong track record of working to advance the development objectives

of LDCs in Africa as it takes on positions of leadership at a critical moment for international co-operation, including

in the context of

Denmark’s

EU Presidency in 2025 and during its 2025-26 seat on the UN Security Council.

Denmark’s

engagement in Ukraine

–

since 2022 its largest bilateral programme

–

has also generated significant

learning. Staff shared that working in a context where conflict is ongoing has demanded more flexible and agile

approaches by the MFA, while a stronger emphasis on country ownership through ongoing and close dialogue

with authorities at national and subnational levels have also taken up considerable resources. This has relevant

lessons for how Denmark and other DAC members can deliver on their commitments to strengthening local

ownership elsewhere. We also discussed the challenge of limited absorption capacity of the local governments as

well as the critical need for good donor co-ordination at both national and sub-national levels, in what is likely to

be a crowded context of reconstruction.

The ongoing reform of IFU is an opportunity to maximise the contribution of Danish instruments in support

of poverty reduction and inclusive growth.

The major reform of IFU launched in September 2023 has focused on strengthening IFU’s contributions to

Danish

development policy and reflects an important evolution in the Danish development co-operation system. Key

changes include greater steering of IFU by the MFA and

a significant increase in the capital under IFU’s

management, essentially doubling its size by 2030 to an expected total of

EUR 4.7 billion.

As part of the reform,

IFU has also introduced a set of

targets

that at least 50% of investments should be in Africa, that 30% should be

in poor and fragile states, and that 50% are made in projects where climate and green impact are the main

objective. To ensure focus on development impact, the Development Policy Council continues to approve new

appropriations

and now also discusses IFU’s 7-year

forward planning on an annual basis. To deliver on

IFU’s new

targets relating to investments in Africa and in fragile states will also require IFU to be empowered to take on more

risk, which will require long term and stable support from the government. In the past, IFU has also set a positive

example among DAC DFIs in terms of its ability and success in mobilising Danish pension funds.

IFU’s SDG Fund

II mobilised DKK 1.6 billion from four Danish pension funds as of November 2024. The total fund target is DKK 5

billion. As this is typically an area where other members have struggled, I encourage Denmark to share this

experience with DCD and other members.

IFU

has also played an important role in Denmark’s

climate action since the 2021 peer review alongside the

government’s high level political engagement on climate finance and climate issues.

Denmark’s contributions

the Least Developed Countries Fund and the Loss and Damage Fund

a commitment to allocate 60% of Danish

international climate finance to adaptation and a concerted effort to link work on climate and development have

also put Denmark in good stead to meet commitments in the 2021 OECD DAC Declaration on aligning development

co-operation with the Paris Agreement. Denmark should consider sharing with the DAC this experience in setting

and delivering on targets for adaptation funding in LDCs, which remains a difficult challenge for many.

URU, Alm.del - 2024-25 - Bilag 161: OECD-DAC’s mid-term review af dansk udviklingsbistand

Following the rich discussions in Copenhagen, I was happy to see that Denmark has made progress against almost

all of the recommendations from 2021, with good progress on three recommendations in particular. I am looking

forward to seeing how the MFA’s planned work to further embed

adaptive management approaches, mobilise

whole-of-government Danish expertise including through growing use of the Strategic Sector Co-operation

modality and recent investments in

MFA’s

staff numbers and development knowledge will bear fruit in advance of

Denmark’s next full peer review.

Yours sincerely,

Pilar Garrido

Director

Development Co-operation Directorate

CC:

Ambassador Carsten Staur, DAC Chair

Robin Ogilvy, DCD

Renwick Irvine, DCD

Anita King, DCD

Anjeza Llulla, DCD

Table on progress against

the 2021 peer review’s

recommendations

Annex:

URU, Alm.del - 2024-25 - Bilag 161: OECD-DAC’s mid-term review af dansk udviklingsbistand

Keywords

Policy,

fragmentation,

poverty and

inequalities

Recommendation

To provide a strong framework for decision making, Denmark’s

next development co-operation and humanitarian assistance

strategy should:

•

reinforce the important contribution of development co-

operation policy and partnerships to Denmark’s longer-term

interests, while safeguarding the integrity of its ODA

•

include criteria that will allow Denmark to focus its resources

on a limited number of policy priorities and reinforce the

linkages between these priorities

•

clarify the extent to which Denmark’s development

co-operation and humanitarian assistance is expected to

contribute to reducing poverty and addressing inequalities.

In order to formulate and implement Denmark’s policy objectives

in a complex and interlinked policy context, its Ministry of Foreign

Affairs should continue to restore staff numbers and build the

skills and knowledge it needs.

Progress

Some Progress.

The World We Share (2021-25) provides a solid narrative for Danish

development co-operation focused on democracy and human rights, fighting poverty

and climate change. Delivery of the strategy’s priorities has been supported by a 2022

approach note

which clarifies how development and humanitarian assistance are

expected to contribute to reducing poverty and inequalities. While fragmentation of

the budget will require further attention, the MFA is seeking to move towards fewer,

larger projects. Migration continues to be high on the political agenda and is among

the priorities in the 2024-27 four-year spending framework, as well as in

the MFA’s

new Africa Strategy (2024). How directions set in new foreign policy documents,

including a greater focus on trade priorities and a stepped-up focus on migration

related work, will shape the new development policy strategy from 2025 remain to be

seen.

Human

resources and

knowledge

Climate

finance,

transparency

Good Progress.

A general increase in staff within the MFA since 2021 is also reflected

in the number of MFA staff working on development. In 2024, 750 staff work on

development of which 57% are in headquarters and 43% in embassies. This

accompanies a

government decision to increase the MFA’s running costs by 12%

2027 as set out in the Finance Act for 2024. To strengthen the skills and knowledge

of new staff, Denmark established an MFA Academy building on the existing

competency development team. Over the past 2.5 years the MFA has conducted a

course for new staff in headquarters on programming and management of

development assistance. This is in addition to continued training on development

issues for all relevant staff, including local staff. The next peer review is an opportunity

to assess the impact these efforts on the skills and ability of staff in headquarters and

abroad to fulfil their functions.

3. To protect its credibility on climate action, Denmark should

Some Progress.

From 2021 and reflecting political commitments, a cross-ministry

ensure that its system for reporting international climate finance Greening Project has sought to

embed climate considerations across the MFA’s work,

is transparent.

building capacities and establishing quality assurance mechanisms. A dedicated

greening task force aims at improving the transparency and accuracy of Danish

climate finance reporting through support to staff in applying the Rio Markers to all

project approval documents. However, ensuring its operation has been challenging.

The MFA is also drawing on external consultants to review the quality of climate

finance reporting and an annual report on Denmark’s green development finance

has

been

published

online by the MFA since 2021. Denmark

provides

its

“fair share” of

the 100 billion commitments and IFU has made efforts to fully implement the revised

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Climate action

Humanitarian,

development

and peace

nexus

Building on Denmark’s strong political support for climate action,

its Ministry of Foreign Affairs should provide strategic guidance

to:

•

allow embassies and partners to effectively advance and

monitor climate action through development and

humanitarian policies and programmes

•

identify and exploit synergies between

Denmark’s bilateral

and global climate interventions

5. Denmark should expand its nexus implementation by:

•

better articulating and integrating the peace component of

the nexus at global and country level including its

interventions through, among others, the Peace and

Stabilisation Fund

•

closing gaps, particularly at country level, in joint analysis,

co-ordination and joint financing strategies across the UN,

development banks, the EU and other bilaterals, including

through support to the UN Resident Coordinator system

•

investing in evaluating its nexus implementation work and

sharing lessons across the Danish system, with DAC and

multilateral organisations

reporting methods for Private Sector Instruments. Denmark has also

set new financial

targets

for 2024-27, committing

to allocate 35% of ODA to “green initiatives”,

30% to

climate efforts and of this amount, approximately 60% for adaptation efforts. Tracking

these targets will require further investments. On reporting overall,

Denmark’s

reporting to the Creditor Reporting System could also be

improved,

with some

coherence issues based on 2023 reporting and room to improve the quality of the

initial data submission.

Good Progress.

Denmark is integrating climate into its development work with a 2022

how-to note

and an increase in specialised staff in some embassies such as Nigeria

strengthening capacity to advance and monitor climate investments. The Department

for Green Diplomacy and Climate in the MFA remains a key reference point for staff

and partners. Reflecting efforts, Denmark reported improved results monitoring with

reporting against 95% of results indicators in 2023 for climate projects. Establishment

of a Climate Ambassador has also helped identify synergies across bilateral and

global efforts and ensure that diplomacy is linked with development issues.

Good Progress.

Recognising the continued challenge of integrating the peace

component of the HDP nexus, Denmark produced a new

how to

note

identifying

opportunities to strengthen nexus approaches. Following a 2022

evaluation,

CSO

Strategic Partnership agreements for 2022-25 emphasise the nexus and include the

option of a single grant covering humanitarian, development and peace work. There

remains room to enhance co-ordination between the Ministries of Defence, Foreign

Affairs and Justice, to improve complementarity between peace work and bilateral

development programmes, and to set more realistic objectives

for Denmark’s peace

work as highlighted in a 2022 evaluation of the Danish Peace and Stabilisation Fund

(PSF). A new Strategic Framework for the PSF (2023-27) is expected to address

some of these challenges. A broader thematic evaluation on the nexus is yet to be

conducted. Denmark continues to co-ordinate with the UN for instance by engaging

in the Grand Bargain Localisation Workstream, support for joint analysis,

co-ordination and financing at country level including through funding for Resident

Co-ordinators and renewed support for the UNHCR-World Bank Joint Data Centre.

Adaptive

management

As a supporter of adaptive management, Denmark’s MFA should

Some Progress.

Denmark continues to apply its Doing Development Differently

continue to combine predictable funding and adaptive approach to strategic planning. In March 2024, the MFA updated the 2022

ODA

programming with a strong planning and partnership role for staff

management guidelines

with the goal of reducing reporting burden and streamlining

administrative processes. A streamlined

“top-up” function has been added for larger

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working in partner countries and processes to support grants. Adaptive management is integrated in relevant training modules for new staff

organisational learning.

at headquarters and locally employed staff. The perceptions of staff in partner

countries regarding their control over programming, planning and partnership and

incentives to take risks especially related to locally led approaches, which was the

spirit of the 2021 recommendation, could be looked at during the next review.

Poverty and

inequalities

7. To ensure that Denmark is delivering on its policy commitment

to reducing poverty and addressing inequalities, once this is

articulated, its Ministry of Foreign Affairs should ensure that

guidance for staff sets out clear requirements that apply to all

relevant government entities and should closely monitor the

extent to which its policies, partnerships and programmes

contribute to reducing poverty and inequality.

Some Progress.

The August 2022

approach note

on fighting poverty and inequalities

illustrates Denmark’s efforts to

hardwire poverty and inequalities reduction objectives

into its strategies, policy frameworks and approaches. However, there have been no

recent evaluations focused on poverty or inequalities other than gender, despite the

MFA identifying this as a potential theme in evaluation programmes of 2021, 2022,

2023 (not in 2024).

An ongoing evaluation of Denmark’s Tanzania country

programme (started in 2023) includes a consideration of the impact of Danish

development co-operation on poverty and inequality reduction. A planned

assessment of the 2022

approach note’s implementation by the Development Policy

Council will also be valuable to understand how poverty and inequality objectives

translate into practice, and whether gaps in policy implementation and within

monitoring and evaluation work persist despite the well-rounded approach note.

Some progress.

Denmark partially accepted this recommendation in the 2022

management response to the peer review. With regard to migration policies, there

remains room for improvement to ensure that

Denmark’s

policies, in particular for

asylum seekers, refugees and irregular migration, are consistent with sustainable

development objectives. Reducing irregular migration and targeting its core causes

are key priorities for Denmark’s

development co-operation,

illustrated by the recent

approval of three new migration-related development programmes with a total value

of DKK 1.1 billion (approximately USD 145 million). Denmark is encouraged to ensure

that evidence on the impacts and efficacy of using ODA to address migration

concerns guides development programming on these issues. With regard to policy

coherence more generally, starting with the 2021/2022 legislative programme, all

government bills

must be screened

for potential consequences for the SDGs and the

169 targets in the Danish context. Based on this screening, legislative proposals that

require impact assessment are then selected for further review. This SDG screening

process is focused on impacts in Denmark’s

context

and does not consider

transboundary impacts on developing countries. Regular cross-government meetings

Policy

coherence for

development,

Migration

8. To protect its reputation as a strong human rights advocate and

principled development actor, Denmark should take action to

ensure consistency between its development co-operation

objectives and its domestic policies related to refugees, asylum

and irregular migration.

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at permanent undersecretary and minister level provide scope for the MFA to bring

foreign and development policy concerns to cross-government discussions.

Introducing a consideration of transboundary impacts into Denmark’s regulatory

impact assessment process, as some other Members have done, would help to

strengthen Denmark’s approach to policy coherence.

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