Tuesday, October 22, 2019

Danish aid budget proposal 2020

Denmark increases aid for Africa and climate, but ODA remains at 0.7% of GNI

The new Social Democratic government taps into the aid pie to fund climate efforts. Danish NGOs want additional funds and will lobby government allies in parliament to increase the aid budget which remains at 0.7 per cent of Gross National Income (GNI).

“The additionality issue is the big discussion we are going to have here in Denmark,” says Secretary General Birgitte Qvist-Sørensen at Danchurchaid.

A Social Democratic government took office in June backed by a Red–Green Alliancein the Parliament, which includes the Socialist People's Partyand the Social Liberal Party.

Qvist-Sørensen says that the political parties backing to government have signalled that they are in favour of increasing the aid budget.

In its first budget the government pledges to change Denmark’s aid policies. Development Minister Rasmus Prehn has labelled himself the “solidarity minister” and calls for a “fair” development policy. “This is the first step towards a distinct transformation of development priorities,” says Prehn in a comment to his aid budget debut.   

Prehn has three main priorities in his budget. Increased climate efforts, a new Africa policy and strengthened efforts in regions close to Europe to prevent migration. This is not a drastic shift compared to the former government’s rhetoric. Neither is there an increase in the aid level which remains at 0.7 per cent of GNI, in accordance with the Social Democratic Party’s programme and the former liberal-conservative government’s policy.   

Due to growth in Denmark’s economy, this means that the government has roughly half a billion Danish crowns in fresh funds available. These are directed to climate efforts.

In total, the government increases green aid by DKK 600 million and a substantial part of this growth is Denmark’s contribution to the Green Climate Fund’s first replenishment. Denmark will double its support to the fund to DKK 800 million over the next three years.

Denmark will provide DKK 210 million to the Least Developed Countries Fund which finances adaption projects. Denmark also initiates a new green initiative for fragile states targeting links between climate change, conflict and irregular migration from the Sahel region and the Horn of Africa. Such “dedicated” green efforts in the budget amount to DKK 1.3 billion.

The government pledges to make green aid “a crucial focal point” in Danish development cooperation. Denmark will, according to the budget proposal, “take leadership in the green shift both at home and abroad.”

To achieve this Denmark has a long way to go. Sweden’s annual commitment to the Green Climate Fund is eight times higher than the Danish pledge and bigger than all green aid in Denmark’s aid budget put together. In another comparison, the Norwegian rainforest initiative alone amounts to DKK 2.24 billion per year.

In addition to dedicated climate-related initiatives, the government says it has cross-cutting green efforts amounting to more than DKK 1 billion.

The fact is that Denmark does not have enough financial muscle to be a “green leader” internationally, or even in a Nordic context. The reason is that since 2001 Denmark has consistently rolled back its international development and environmental efforts.

Two decades ago, Denmark had an aid budget amounting to 1 per cent of GNI and, on top of this, a financial frame for environmental efforts worth 0.5 per cent of GNI. At that time, Denmark really was the global leader in both areas in the follow up of the UN Rio Summit on environment and development in 1992.

Secretary General Tim Whyte at Mellemfolkeligt Samvirke(ActionAid Denmark) describes the policy back then as “visionary,” adding that Denmark was at that time half as wealthy as it is today. Since then, “the climate crisis has grown in urgency and prominence,” he says.

For MS and other Danish NGOs, the issue of additionality has been a key issue. They support the climate focus in the budget, but argue that climate initiatives should be financed with additional funds. Whyte says the NGOs have raised the issue with the new development minister and are in dialogue with the parties supporting the government. They have indicated support for the principle of additionality agreed on during the climate summit in Copenhagen ten years ago.  

Danchurchaid is also ready to put pressure on the parties supporting the government. Qvist-Sørensen says climate change hits poor countries especially hard and it is not fair that increased climate aid causes cuts in efforts to fight poverty.

“If increased climate aid hits the poor through cuts in funding of hospitals and schools, then we cannot really talk about a green transformation,” she says.

In addition to climate, the Danish government presents its shift in priorities around Africa and fragile states linked to migration. It calls for a new Africa policy with focus on countries where Denmark can make a difference and “promote Danish political goals.” The Danes will also push for a stronger focus on Africa by the EU and the UN.

The budget reprioritises DKK 650 million toward efforts in Africa with a focus on the Sahel and the Horn of Africa.

While the government hails the Africa focus in its budget, it cuts the budget for state-to-state cooperation with African countries by DKK 276 million. New funds for Africa come from thematic budget lines and earmarked funding mainly through UN agencies and the World Bank.

Another Africa priority is private sector job creation. The government aims to improve working conditions by supporting the International Labour Organisation (DKK 35 million) and fighting tax evasion (DKK 50 million). In both areas, Denmark earmarks programmes for Africa.  

Migration and fragile states are the third theme in the budget. The government states that it supports a “fair and humane” asylum system with better security along the migration routes and support to people in areas close to where they come from. The Danish government would like to establish a system where refugees can apply for asylum from abroad.

How much of the budget is new, and what is simply re-branding of existing activities is not so clear. Some efforts are counted under more than one theme like a DKK 200 million “green initiative” in fragile states.

Qvist-Sørensen says it would require a deeper analysis to find out. But based on the available information “it is difficult to conclude that there are fundamental changes in the budget,” she says.

She adds though that the government has a clear ambition about a new direction for Danish aid and it describes changes in next year’s budget as a “first step” in a major overhaul.

The Danchurchaid chief welcomes this and the government’s promise to rethink Denmark’s Africa policy.

Whyte has a similar analysis, pointing out that there is a stronger focus on certain areas like climate, Africa, inequality and tax evasions.

“But I would not say it is anything revolutionary,” he says.

He is sceptical about the overarching focus on migration, which is not necessarily a main focus for those countries themselves. He says it is a diversion from the focus on long-term partnership aimed at poverty reduction. 

“There is very little evidence that development can stop migration, but we have a lot of evidence that aid can reduce poverty,” he says.

The Danish government plans to step up multilateral funding and increase support for the refugee agency UNHCR by DKK 75 million. The former government cut funding to the UN Development Program (UNDP). In next year’s budget, the Danish contribution to UNDP increases by DKK 110 million, half of it earmarked for Africa, bringing total support to DKK 350 million (close to the level in 2014). No support for the vaccine alliance GAVI is indicated in the budget. (See Table Below)

The big winner, however, is the World Bank. Its core funding budget line increases by 50 per cent to DKK 970 million. This includes DKK 70 million for the capital extension of the bank’s arm for lending at market terms, while the bulk of the increase is for the bank’s grant and soft loan arm IDA.  

Development Minister Prehn also set aside a DKK 350 million reserved for new initiatives in Africa.

DANISH AID BUDGET PROPOSAL 2019-2020 (DKKm):

    Budget line

2019

2020

    Africa Bilateral aid

2,076

1,800

    Asia, Middle East, Latin America Bilateral 

210

210

    Personnel assistance

265

267

    Danish-Arab Partnership

200

200

    NGO assistance

945

936

    IFU

250

0

    Sustainable Infrastructure Finance

500

400

    Other partnerships

885

904

    Environment, climate aid

630

1,295

    Information

58

55

    Humanitarian assistance

2,600

2,700

    Refugee costs in Denmark

494

320

 

 

 

    Multilateral:

 

 

    UNDP

217

327

    UNICEF

125

125

    UNFPA

350

350

    WHO

35

35

    UNAIDS

40

40

    The Global Fund

150

100

    Other UN agencies, multilaterals

157

153

    UNHCR

160

235

    UNWRA

70

105

    OCHA

30

70

    WFP

210

210

    CERF

150

170

    ICRC

40

70

    UN WOMEN

63

78

    UN City

175

175

    UN Resident Coordinator -system

60

0

    Education – Multilateral

425

300

    World Bank group

634

969

    Reg development funds and other funds

556

85

    AIIB

100

0

    European Development Fund

713

713

    Total

16,575

16,948

Source: Danish Foreign Ministry