Luxembourg

Luxembourg’s development co-operation focuses on social sectors, humanitarian assistance and inclusive finance, mainly in least developed countries (LDCs). Luxembourg consistently features as one of the most generous Development Assistance Committee (DAC) members relative to gross national income (GNI). Total official development assistance (ODA) (USD 538.9 million, preliminary data) increased in 2021, representing 0.99% of GNI. ODA increases exceeded COVID-19 vaccine donations.

Find the methodological notes behind the profile here.

Luxembourg’s development co-operation strategy, The Road to 2030, prioritises four themes: 1) access to quality basic social services; 2) socio-economic integration of women and youth; 3) inclusive and sustainable growth; and 4) inclusive governance. The development co-operation programme is focused on seven partner countries, five of which are in sub-Saharan Africa. Indicative country programmes are jointly signed with partner countries at political level.

The Road to 2030 affirms Luxembourg’s strong support for multilateral institutions. The United Nations (UN) system and the European Union (EU) are key partners and Luxembourg also aims to strengthen its engagement with multilateral development banks. Luxembourg actively uses its role as a major international financial centre to promote sustainable financing. To improve policy coherence for sustainable development, Luxembourg has introduced a sustainability check for all new regulation.

The 2020 OECD-DAC mid-term review praised Luxembourg’s progress. Key actions included whole-of-government country strategies, dialogue and mechanisms for greater policy coherence, and investing in information management. As Luxembourg is a leader in sustainable and inclusive finance, the mid-term review encouraged Luxembourg to better integrate developing countries into sustainable finance efforts. Investments in its cross-cutting priority – environment – and reflecting on the approach to fragility and risk management were identified as opportunities for further progress. Learn more about Luxembourg’s 2020 mid-term review.

Luxembourg provided USD 538.9 million (preliminary data) of ODA in 2021,1 representing 0.99% of GNI. This was an increase of 9.7% in real terms in volume but a decrease in share of GNI from 2020. Consistently providing 1.0% of GNI as ODA, Luxembourg has exceeded the 0.7% UN target since 2000. Luxembourg is in line with its domestic (1.0%) and EU commitments to achieve a 0.7% ODA/GNI ratio by 2030. Luxembourg provides all of its ODA as grants.2

In 2021, Luxembourg was the most generous DAC member relative to the size of its economy. With 0.48% ODA/GNI committed to the LDCs in 2020, Luxembourg also surpasses the 0.2% UN target and is the leading DAC donor in this regard. Moreover, its efforts for international climate finance are supplementary to its ODA budget. Luxembourg allocates high shares of its bilateral ODA to Africa (47.6% in 2020) as well as to fragile contexts (50.3%). It channels a significant share of ODA through civil society organisations (CSOs) (25.7%).

Luxembourg is committed to several international targets and Development Assistance Committee standards and recommendations. Learn more about DAC recommendations.

Luxembourg provided a higher share of its ODA bilaterally in 2020. Gross bilateral ODA was 68.3% of total ODA. Twenty per cent of gross bilateral ODA was channelled through multilateral organisations (earmarked contributions). Luxembourg allocated 31.7% of total ODA as core contributions to multilateral organisations.

In 2020, Luxembourg provided USD 800 000 of gross bilateral ODA for the COVID-19 response, representing 0.3% of its total gross bilateral ODA. Less than 1% of total gross bilateral ODA was provided as health expenditure within the COVID-19 response.

In 2020, Luxembourg provided USD 208.6 million of gross ODA to the multilateral system, a fall of 9.2% in real terms from 2019. Of this, USD 146.3 million was core multilateral ODA, while non-core contributions were earmarked for a specific country, region, theme or purpose. Project-type funding that is earmarked for a specific theme and/or country accounted for 27.9% of Luxembourg’s non-core contributions and 72.1% was programmatic funding (to pooled funds and specific-purpose programmes and funds).

Seventy-six per cent of Luxembourg’s total contributions to multilateral organisations in 2020 was allocated to the UN system and European Union institutions.

The UN system received 50.5% of Luxembourg’s gross ODA to the multilateral system, mainly through core contributions. Out of a total volume of USD 105.3 million to the UN system, the top three UN recipients of Luxembourg’s support (core and earmarked contributions) were: UNICEF (USD 14.2 million), the WFP (USD 12.8 million) and WHO (USD 12.7 million).

See the section on Geographic and sectoral focus of ODA for the breakdown of bilateral allocations, including ODA earmarked through the multilateral development system. Learn more about multilateral development finance.

In 2020, Luxembourg’s bilateral spending declined compared to the previous year. It provided USD 314.8 million of gross bilateral ODA (which includes earmarked contributions to multilateral organisations). This represented a decrease of 19.1% in real terms from 2019.

In 2020, country programmable aid was 56.1% of Luxembourg’s gross bilateral ODA, compared to a DAC country average of 49.7%.

In 2020, Luxembourg channelled bilateral ODA mainly through the public sector and CSOs. Technical co-operation made up 8.8% of gross ODA in 2020.

In 2020, CSOs received USD 98.6 million of gross bilateral ODA. Six per cent of gross bilateral ODA was allocated to CSOs as core contributions and 25.7% was channelled through CSOs to implement projects initiated by the donor (earmarked funding). From 2019 to 2020, the combined core and earmarked contributions for CSOs increased as a share of bilateral ODA, from 26.4% to 31.3%. Learn more about ODA allocations to and through CSOs, civil society engagement in development co-operation, and the DAC Recommendation on Enabling Civil Society in Development Co-operation and Humanitarian Aid.

In 2020, Luxembourg’s bilateral ODA was primarily focused on Africa and Asia. USD 149.7 million was allocated to Africa and USD 51.4 million to Asia, accounting respectively for 47.6% and 16.3% of gross bilateral ODA. USD 14.7 million was allocated to the Middle-East. Africa and was also the main regional recipient of Luxembourg’s earmarked contributions to multilateral organisations, in line with the policy priorities of its overall strategy.

In 2020, 49.4% of gross bilateral ODA went to Luxembourg’s top 10 recipients. Luxembourg’s seven priority partner countries are among its top recipients. The share of gross bilateral ODA that was not allocated by country was 31.8%, mainly due to regional and multi-sector projects and contributions to specific-purpose programmes.

In 2020, the LDCs received 51.8% of Luxembourg’s gross bilateral ODA (USD 163.0 million). This is far above the DAC country average of 24.4%. Thirty-two per cent was unallocated by income group. Luxembourg allocated 5.2% of gross bilateral ODA to small island developing states in 2020, equal to USD 16.3 million.

Support to fragile contexts reached USD 158.4 million in 2020, representing 50.3% of Luxembourg’s gross bilateral ODA. Twenty-two per cent of this ODA was provided in the form of humanitarian assistance, increasing from 14.0% in 2019, while 6.2% was allocated to peace, a decrease from 7.3% in 2019. Almost no ODA went to conflict prevention, a subset of contributions to peace, representing a decrease from 1.1% in 2019.

Learn more about support to fragile contexts on the States of Fragility platform.

In 2020, social infrastructure and services was the largest focus of Luxembourg’s bilateral ODA allocations. Investments in this area accounted for 38.9% of bilateral ODA commitments (USD 122.4 million), with a focus on education (USD 39.1 million), health (USD 32.9 million), and support to government and civil society (USD 25.6 million). Bilateral humanitarian assistance amounted to USD 61.1 million (19.4% of bilateral ODA). Earmarked contributions to multilateral organisations focused primarily on social infrastructure and services as well as humanitarian assistance in 2020.

In 2020, Luxembourg committed USD 1.4 million of bilateral ODA to the mobilisation of domestic resources in developing countries, amounting to 0.5% of its bilateral allocable aid. Luxembourg also committed USD 58.6 million (20.2% of its bilateral allocable aid) to promote aid for trade and improve developing countries’ trade performance and integration into the world economy in 2020.

In 2019 and 2020, the share of interventions that Luxembourg reported as assessed against the OECD-DAC gender equality marker was insufficient to present statistics for these years. In 2018, Luxembourg had committed 31.3% of its screened bilateral allocable aid to gender equality and women’s empowerment overall, as either a principal or significant objective.3 Learn more about ODA focused on gender equality, the DAC Network on Gender Equality and the DAC Recommendation on Ending Sexual Exploitation in Development Co-operation.

In 2019 and 2020, the share of interventions that Luxembourg reported as assessed against the OECD-DAC environment and Rio Markers was insufficient to present statistics for these years. In 2018, Luxembourg had committed 24.5% in support of the environment and the Rio Conventions. Learn more about climate-related development finance and the DAC Declaration on Aligning Development Co-operation with the Goals of the Paris Agreement on Climate Change.

Luxembourg provides resource flows to developing countries beyond ODA and makes use of leveraging instruments to mobilise private finance for development.

Luxembourg uses its ODA to mobilise private finance for development. In 2020, Luxembourg’s Ministry of Foreign and European Affairs (MFEA) mobilised USD 1.8 million from the private sector through simple co-financing.

A share of 30% targeted middle-income countries and 70% the LDCs in 2020.

Private finance mobilised by Luxembourg in 2020 related to activities in the business and other services sector. None of this private finance targeted climate change mitigation and/or adaptation.

Learn more about the amounts mobilised from the private sector for development.

Luxembourg’s development co-operation is comprised of the MFEA, the implementing agency Lux-Development (LuxDev) and the Ministry of Finance. The Directorate for Development Cooperation and Humanitarian Affairs at the MFEA is responsible for designing and implementing Luxembourg’s development co-operation policy, while the development co-operation agency, LuxDev, executes around one-third of Luxembourg’s bilateral ODA on behalf of the state, and also implements programmes for DAC partners. The Ministry of Finance is responsible for multilateral initiatives with international financial institutions.

An important mechanism for exchanging with stakeholders is the Inter-Ministerial Committee for Development Co-operation, which regularly associates civil society representatives, and a regular multi-stakeholder conference, the “Assises de la Coopération”. CSOs active in development co-operation, humanitarian assistance and global citizenship education co-ordinate through the umbrella body Cercle de Coopération des ONGD.

Internal systems and processes help ensure the effective delivery of Luxembourg’s development co-operation. Features of Luxembourg’s systems for quality and oversight presents some of its select features.

Explore the Monitoring Dashboard of the Global Partnership for Effective Development Co-operation.

2020 OECD-DAC mid-term review of Luxembourg: https://www.oecd.org/dac/peer-reviews/Peer-reviews_DAC-mid-term-Luxembourg-2020.pdf

2017 OECD-DAC peer review of Luxembourg: www.oecd.org/dac/oecd-development-co-operation-peer-reviews-luxembourg-2017-9789264284364-en.htm

Government of the Grand Duchy of Luxembourg, Directorate for Development Cooperation and Humanitarian Affairs: https://cooperation.gouvernement.lu/en/cooperation-au-developpement.html

Luxembourg Development Agency (LuxDev): https://luxdev.lu/en/home

CSO umbrella organisation Le Cercle de Coopération des ONGD: https://cercle.lu

Luxembourg’s practices on the Development Co-operation TIPs: Tools Insights Practices learning platform: https://www.oecd.org/development-cooperation-learning?tag-key+partner=luxembourg

Member of the OECD Development Assistance Committee since 1992.

The methodological notes provide further details on the definitions and statistical methodologies applied, including the grant-equivalent methodology, core and earmarked contributions to multilateral organisations, country programmable aid, channels of delivery, bilateral ODA unspecified/unallocated, bilateral allocable aid, the gender equality policy marker, and the environment markers.

Notes

← 1. DAC members adopted the grant-equivalent methodology starting from their reporting of 2018 data as a more accurate way to count the donor effort in development loans. See the methodological notes for further details.

← 2. Other providers also provide non-grants, which include sovereign loans, multilateral loans, equity investment and loans to the private sector.

← 3. The use of the recommended minimum criteria for the marker by some members in recent years can result in lower levels of aid reported as being focused on gender equality.

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