Norway is the 9th-largest donor country, spending US$4.4 billion on net official development assistance (ODA) in 2016 (in current prices). This corresponds to 1.1% of its gross national income (GNI), making Norway the largest donor in proportion to its economic size. Norway has exceeded the 0.7% target since 1976, and has spent at least 1% of its GNI on ODA since 2013. There is a cross-party consensus to maintain this share.
Since 2015, Norway has used significant parts of its ODA budget to cover the costs of hosting refugees within the country. However, as the number of incoming refugees is sharply decreasing, pressure has been taken off the ODA budget and funds have been reallocated to development programs abroad.
- Prime Minister Erna Solberg has defined education, and particularly girls’ education, as a top thematic priority. According to the 2017 budget, ODA spending on education is projected to increase to NOK3.4 billion (US$540 million) in 2017, double the amount spent in 2013 (NOK1.7 billion or US$270 million).
- The approved 2017 budget highlights education, humanitarian assistance, private sector development and job creation, global health, and climate, environment, and sustainable energy as priorities of Norway’s development policy in 2017.
- Climate change and tropical forest protection is a key issue for Norway. The Norwegian International Climate and Forest Initiative receives about NOK3 billion per year, or US$350 million, until 2020), and aims to reduce greenhouse-gas emissions resulting from deforestation and forest degradation in developing countries.
- Parliamentary elections will take place on September 11, 2017. While ODA is likely to remain at high levels, the outcome of the elections may lead to shifts in priority setting, and may provide opportunities to shape the future direction of Norway’s development policy.
- The Ministry of Foreign Affairs is currently drafting a new ‘white paper’ to lay out the priorities of Norwegian ODA policy. Is it expected to be published in March or April 2017. The Sustainable Development Goals (SDGs) are a ‘North Star’ for the government’s narrative on development, and will be at the heart of the new policy document. To engage effectively with the Norwegian government and other stakeholders, it is thus important to frame new initiatives and suggestions within the SDG context and emphasize the links between the individual goals.
- Norway is focusing increasingly on involving the private sector in development cooperation and emphasizing public-private partnerships. Norway has significantly increased funding to Norfund, a state-owned investment fund. This may lead to more funding provided in the form of loans and equity investments in coming years, however, Norfund’s investments have not yet been counted as ODA.
the big six
How much ODA does Norway provide?
Norway is committed to continue spending 1% of its GNI on ODA
Norway is the ninth-largest donor country. It spent US$4.4 billion in 2016 (in 2016 prices; US$6 billion in 2014 prices).This represents 1.1% of its gross national income (GNI), making Norway the largest donor in relation to the size of its economy. Norway is committed to maintain its ODA at ‘high levels’, continuing its policy of spending 1% of its GNI on ODA. ODA is expected to remain stable in 2017.
In 2015 and 2016, Norway used part of its ODA budget to cover the costs of hosting refugees within the country, by reshuffling funding that had been previously allocated to development programs abroad and finding additional funding to allocate towards refugee costs. In 2015, this represented 14% of Norway’s total ODA (US$598 million, more than double the amount spent in 2014 – US$279 million). In 2016, ODA budget allocated for refugees in Norway initially reached NOK7.4 billion (US$1.2 billion).
However, Norway’s restrictive refugee policy – including tighter border controls in Europe – implemented from early 2016 has led to a sharp decrease in the number of new asylum seekers. While the government had foreseen a decrease in asylum applications in 2016 to 10,750 (down from more than 31,000 in 2015), only 3,460 asylum seekers actually applied. This is the lowest figure since 1997. This has taken pressure off the ODA budget, and Norway ‘saved’ NOK652 million (US$103 million) in the 2016 ODA budget as a result of this. This funding was reallocated to other development programs at the end of that budget year. The largest share of the reshuffled amount (NOK500 million; US$663 million) was allocated to emergency humanitarian assistance to the Middle East, particularly for Syria. For 2017, the budget foresees NOK3.7 billion (US$594 million) for in-country refugee costs.
What are Norway’s strategic priorities for development?
Education, humanitarian assistance, and global health are among top priorities
The Ministry for Foreign Affairs (MFA) sets priorities for development policy in ‘white papers’, which summarize government strategies. The most relevant overarching paper for Norway’s ODA remains the 2009 white paper called ‘Climate, Conflict and Capital’. The MFA is currently working on a new policy paper that will lay out the current priorities within development. The policy will be aligned with the Sustainable Development Goals (SDGs). Two consultations with civil society have already taken place. The paper is expected to be published sometime in March or April 2017. Other important white papers focus on climate change and the environment (2011), global health (2012), fair distribution and growth (2013), global education (2014), the role of human rights in foreign and development policy (2014), private-sector engagement in development cooperation (2015), human rights in development policy (2015), and equality and foreign development policy (2016).
Cross-cutting priority issues within Norwegian ODA are a focus on vulnerable states, human rights, democracy, women's rights and gender equality, and fighting corruption. Regarding individual sectors, the government defines five priorities for Norwegian development cooperation: 1) education, 2) humanitarian assistance, 3) global health, 4) private sector development, and 5) climate, environment, and sustainable energy, which focuses on climate-change adaptation and mitigation.
Since Erna Solberg became prime minister in 2013, education and in particular girls’ education has been a key focus. Between 2013 and 2017, the government of Prime Minister Solberg has doubled its ODA spending on the sector, going from NOK1.7 billion (US$270 million) to NOK3.4 billion (US$540 million).
The impact of the refugee crisis in Norway has meant significant increases in budget allocated to humanitarian assistance. In 2017 this amount reached a record NOK4.4 billion (US$698 million).
Norway’s key development priorities:
- Education: Norway fulfilled its commitment to double spending between 2013 and 2017, from NOK1.7 billion (US$270 million) to NOK3.4 billion (US$540 million); focus is on girls’ education
- Humanitarian assistance: A record NOK4.4 billion (US$698 million) has been budgeted for humanitarian assistance for 2017; up 50% since 2013
- Global health: The focus is on women’s and children’s health as well as on fighting AIDS, tuberculosis and malaria
- Private sector development and job creation: In 2017 Norway committed NOK1.17 billion (US$19 million) to business development and to Norfund
- Climate, environment, and sustainable energy: Proposed budget for 2017 of NOK2 billion (US$317 million), with a focus on the Green Climate Fund and the Global Environment
Environmental protection and humanitarian assistance are the largest sectors of bilateral funding
Norway considers funding through multilateral organizations as an effective way to pursue its theme-focused agenda termed ‘global schemes’. Core contributions to multilateral organizations accounted for 23% of ODA in 2015, or US$1.3 billion. On top of this, earmarked funding to multilaterals is significant: it accounted for 30% of bilateral ODA in 2015, bringing the total amount of ODA delivered through multilateral organizations to US$2.5 million, or 46% of total ODA. Norway is traditionally a strong supporter of United Nations (UN) agencies, and is set to channel NOK3.3 billion (US$524 million) to them in 2017, according to the ODA budget.
The strategic orientations of Norway’s ODA are reflected in its bilateral funding. In 2015, the largest share was used to cover the costs of hosting refugees in the country (14%; or US$594 million). In line with Norway’s strategic priorities, the second- and third-largest sectors of bilateral ODA were environmental protection (12%; US$525 million) and humanitarian assistance (12%; US$519 million). The share for the environment is driven by programs to reduce greenhouse-gas emissions resulting from deforestation, particularly in Brazil (US$193 million in 2015). Funding to government and civil society (US$461 million; 11%), and to education (US$402 million; 11%) follow.
Global health is a top priority of Norway’s development policy, with the majority of this spending made up of multilateral core contributions. In total, Norway spent 14% of its ODA on health in 2015 (US$756 million). This includes both bilateral cooperation for health (US$302 million, or 7% of bilateral ODA), and core contributions to multilateral organizations (60% of total health ODA, or US$454 million). Key recipients are Gavi, the Vaccine Alliance (Gavi) and the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund).
Norway has made a range of international commitments in the sectors it prioritizes; the largest ones target humanitarian assistance, global health, and climate protection. They include, among others, a NOK10 billion allocation for Syria and its neighboring countries for 2016 to 2020 (US$1.5 billion), NOK2 billion (US$304 million) for the Global Fund for 2017 to 2019, and NOK1.6 billion (US$258 million) to the Green Climate Fund for 2015 to 2018.
As part of its forestry initiative (Norway’s International Climate and Forest Initiative; NICFI), Norway pledged US$350 million annually until 2020 to reduce greenhouse-gas emissions caused by deforestation. In addition, Norway’s doubled its annual contribution to the Global Partnership for Education, from NOK290 million in 2015 to NOK590 million in 2017 (close to US$100 million).
Who are the main actors in Norwegian development cooperation?
MFA steers strategy, embassies execute bilateral programs
The minority government, formed by Prime Minister Erna Solberg’s Conservative Party (H) and the Progress Party (FrP), has been in power since October 2013. Both coalition parties are traditionally skeptical of development assistance. The government is supported by the Liberal Party (V) and the Christian Democratic Party (KrF), which cooperate with the government on an ad-hoc basis and are both supportive of development assistance. The next parliamentary elections are set to take place on September 11, 2017, when a new government will be elected.
The Ministry for Foreign Affairs (MFA), led by Minister Børge Brende (H), is responsible for setting the strategic direction of Norway’s development cooperation. Within the MFA’s administrative leadership, State Secretaries Tone Skogen (H), Laila Bokhari (H), and Marit Berger Røsland (H) support the Minister in handling the thematic development priorities. The directors of development policy in the Department for Economic Relations and Development, in the Section for Global Initiatives, in the Department of Regional Affairs are key civil servants dedicated to development cooperation.
NORWAY'S DEVELOPMENT COOPERATION SYSTEM
The MFA and Norway’s embassies administer the majority of development assistance. The MFA has more than 500 staff members working on development cooperation, half of whom are based in Norway’s embassies overseas. Within the MFA, the Department for Regional Affairs manages bilateral development cooperation. The Department for Economic Relations and Development is in charge of development policies, climate and the environment, and multilateral development banks. The Department for UN and Humanitarian Affairs is responsible for multilateral cooperation with UN agencies, humanitarian affairs, and global initiatives.
Other relevant ministries include the Ministry of Climate and Environment, which manages the budget for the Norwegian International Climate and Forest Initiative (NICFI), and the Ministry of Justice, which manages budget lines for costs related to hosting refugees in Norway, partly reported as ODA.
Norway’s two major development agencies, Norad and Norfund, play key roles in policy development, priority setting, and implementation. Both agencies operate under the supervision of the MFA.
- Norad is responsible for providing advice and quality assurance to the MFA and Norwegian embassies, conducting independent evaluations, communicating long-term development cooperation and results, and managing funds based on the strategic directions outlined in the appropriation letter from the MFA. Norad has a staff count of 230 and is led by Director Jon Lomøy. It has no country offices, but provides technical advice to embassies on the planning and implementation of bilateral programs. As of January 2017, Norad is responsible for the implementation of global health and education policies.
- Norfund is a state-owned investment fund. Established in 1997, it supports private-sector activities in developing countries and focuses on renewable energy, agribusiness, and financial institutions. In 2015, Norfund was managing investments worth over NOK15 billion (US$2.4 billion) with a staff count of 68 employees; 10% ( NOK1.5 billion; US$0.24 billion) of this amount came from the ODA budget, a 25% increase compared to 2013.
Parliament: Within the Norwegian parliament, the Committee of Foreign Affairs and Defense is in charge of development policy. Its main role is to scrutinize government and prepare recommendations on draft legislation. For instance, it comments and votes on the government’s ‘white papers’, which outline strategies regarding development and the MFA’s budget. Usually, Parliament only passes minor amendments to government drafts. In May 2016, a parliamentary group focusing on Africa was established to keep parliamentarians updated about developments on the African continent through meetings, seminars, and delegation visits.
Civil Society: Norwegian civil society organizations (CSOs) and faith-based organizations play an important role in development policy. Domestically, Norwegian CSOs play an important role in educating the public about development issues, and act as watchdogs by critically assessing Norway’s development policy and carrying out lobbying activities targeted at parliament and other governmental institutions. These organizations also implement development projects. In countries with regimes marked by oppression and discrimination, the Norwegian government prefers to work with CSOs. In total, 50 CSOs coordinate their advocacy and research work within the umbrella association, Forum for Utvikling og Miljø (Forum for Development and Environment; ForUM).
How is the Norwegian ODA budget structured?
Most assistance is managed by the MFA, which provides large amounts of funding through ‘global schemes’ budget envelopes
According to the 2017 budget, ODA is set to stand at NOK34.6 billion (US$5.5 billion) in 2017. ODA comes from two main sources: the Ministry of Foreign Affairs (MFA) and the Ministry of Climate and Environment.
The MFA provides 92% (NOK32 billion or US$5 billion) of the ODA budget. The MFA’s budget for development assistance is divided into four major envelopes: 1) administrative costs, 2) bilateral spending, 3) ‘global schemes’, and 4) multilateral spending. The ‘bilateral spending’ envelope is composed of budget lines for regions (Africa, Asia, Middle East and North Africa, and Latin America). The ‘multilateral spending’ envelope is divided into budget lines for funding for UN agencies and multilateral financial institutions.
The 'global schemes’ envelope receives by far the largest funding by the MFA, amounting to 60% of all Norway’s ODA expenditures in 2017: it combines bilateral and multilateral funding for thematic priorities, and also include the costs for hosting refugees within Norway and ODA channeled through civil society organizations (CSOs). ‘Global health and education’, a thematic budget line since 2015, includes, among others, funding for the Global Fund to Fight Aids, Tuberculosis and Malaria (Global Fund), Gavi, the Vaccine Alliance (Gavi), and the International Finance Facility for Immunization (IFFIm).
In addition, the Ministry of Climate and Environment provides NOK2.8 billion (US$445 million) in ODA, mainly for Norway’s International Climate and Forest Initiative (NICFI). The initiative aims to slow, halt, and eventually reduce greenhouse-gas emissions from deforestation and forest degradation in developing countries.
Overview: the 2017 ODA budget
Ministry of Foreign Affairs 31,677 5,027 Administration costs 1,889 300 Bilateral spending 3,588 569 Africa 2,32 368 Asia 612 97 Middle East and North Africa 556 88 Latin America 100 16 Global Schemes 20,832 3,306 Global Health and education 4,919 781 Emergency aid, humanitarian aid and human rights 4,734 751 Costs for refugees in Norway 3,743 594 Civil society and democracy 2,239 355 Business development 1,669 265 Climate, environment, and renewable energy 1,268 201 Peace, reconciliation, and democracy 1,136 180 Research, capacity building, and evaluation 604 96 Women's rights and gender equality 317 50 Transitional assistance 203 32 Multilateral spending 5,368 852 UN agencies 3,301 524 Multilateral financial institutions 1,797 285 Debt relief 270 43 Ministry of Climate and Environment 2,807 445 Ministry of Finance 42 7 Office of the Auditor General 39 6 Total ODA Budget 34,564 5,485
What are important decision-making opportunities in Norway’s annual budget process?
Indicative ministerial budget ceiling is set in March; budget details are determined from April to August
The Ministry of Finance starts its work on the state budget approximately one year before it is presented to Parliament. The decision-making process follows the budget calendar, which stays the same from year to year.
- Ministries prepare initial internal budget draft: From November to February, Norad and Norwegian embassies give their budget suggestions to ministries, which in turn start their preparations for developing their budget for the following year. Key stakeholders during this period are leaders at the Norwegian embassies, Norad, and Ministry for Foreign Affairs’ leadership.
- First budget conference- Cabinet decides on indicative ministerial budget ceilings: By March, Norwegian embassies and Norway’s development agency Norad have prepared their preliminary internal budgets for development programs. MFA and Norad leadership ultimately make decisions on budget allocations. However, civil servants within the MFA and Norwegian embassies are important influencers at this time regarding funding to specific countries. In addition, embassies start to identify bilateral projects for the coming year. Ministerial budget proposals are presented to the Cabinet at its first budget conference in March, on the basis of which the Cabinet sets indicative budget ceilings for each ministry.
- The MFA further refines internal budgets: Once the Cabinet has set ceilings, the MFA further develops its budget from April to July. Requests for increases need to be strategically targeted towards the MFA’s Departments for Regional Affairs and Development, UN and Humanitarian Affairs, and Economic Relations and Development.
- Second budget conference- Cabinet makes final decision on overall draft budget: Usually in late August, the Cabinet holds its second budget conference to agree on final ministerial budget caps. At this stage, the Cabinet approves the overall ODA volume and funding for major initiatives; it usually does not debate further details of the ODA budget.
- Parliament debates draft budget: From October to November, Parliament debates the government’s budget draft. The Standing Committee on Finance and Economic Affairs can amend the proposed ceilings and detailed allocations for main expenditure areas up until November. Under the current government, amendments to the ODA budget are negotiated between the members of the coalition parties (Conservative Party and Progress Party) and the two supporting parties (Liberal Party and Christian Democrats). The Standing Committee on Foreign Affairs and Defense may propose amendments. However, in practice, the Committee on Finance leads on reallocations between budget lines.
- Parliament approves budget: By mid-December, the Parliament signs off on the budget for the upcoming year.
How is Norway’s ODA spent?
Multilateral organizations are regarded as an effective way to support development cooperation
Norway considers multilateral organizations an effective way to pursue its theme-focused development agenda. This is reflected in Norway’s long-standing support to UN agencies.
Core funding for multilaterals together accounted for 46% of total ODA in 2015 (DAC average 50%). Core multilateral ODA accounted for a relatively low share of total ODA (23%) in 2015. The remaining 23% was provided as earmarked funding to multilateral organizations, which is reported as bilateral ODA. Since 2011, much of the additional funding for ODA has been channeled through earmarked funding to multilaterals, in support of Norway’s thematic initiatives. Between 2011 and 2015, earmarked funding increased by 31%, to reach US$1.3 billion in 2015. Alongside multilaterals, civil society organizations (CSOs) implement a large share of Norway’s bilateral assistance: in 2015, 24% of bilateral ODA was channeled through CSOs (well above the 17% average among members of the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD)). The remaining share of bilateral ODA was mostly implemented in country programs by Norwegian embassies and the Norwegian Agency for Development Cooperation (Norad).
In 2015, Norway channeled all bilateral ODA as grants. It does so to reduce the debt burden of low-income countries. In parallel, the government under Prime Minister Solberg is increasingly focusing on private-sector development, through Norfund. Norfund is a state-owned investment fund that supports private-sector activities in developing countries. In 2016, its investments increased by US$33 million, to reach US$186 million. These investments are not reported as ODA to the OECD, but are an increasing channel through which Norway contributes to sustainable growth in developing countries.
Who are Norway’s ODA recipients?
Norway’s bilateral assistance has a major focus on low-income countries
Norway focuses its bilateral ODA strongly on low-income countries. Because of the high share of bilateral ODA that is not reported as being allocated to a specific country (51% between 2013 and 2015, due to high costs of hosting refugees, earmarked funding to multilaterals, and support to CSOs), low-income countries officially accounted for only one-quarter of bilateral ODA over that period. However, when only considering bilateral ODA allocated to specific countries, low-income countries received just over half (51%) of bilateral ODA. Norway allocates the largest share of its bilateral ODA to sub-Saharan Africa.
According to the MFA’s white paper on private sector development in Norwegian development cooperation from 2015, the government is committed to concentrating ODA on fewer countries, and in 2015 reduced the number of its recipient countries from 116 to 85. A heightened focus will be placed on 12 countries that are divided into two groups: 1) fragile countries where support focuses on stabilization and peacekeeping (Afghanistan, Haiti, Mali, Palestine, Somalia, and South Sudan), and 2) countries in the process of development where programs focus on the private sector, and on resource and revenue management (Ethiopia, Malawi, Mozambique, Myanmar, Nepal, and Tanzania).
Since 2015, programs in countries not included in the 85-country list (mostly upper-middle income countries) are being phased out. Norway’s on-going forestry investment as part of the Norwegian International Climate and Forest Initiative (NICFI) drives high levels of ODA to certain countries. For instance, nearly all of Norway’s funding to Brazil – the largest recipient of Norway’s ODA between 2013 and 2015 – is channeled through the NICFI.
How is bilateral funding programmed?
Embassies lead programming of bilateral cooperation
Annual appropriation letters form the basis for ODA programming. The letters outline priorities for the following year. The Ministry of Foreign Affairs (MFA) develops the letters (with input from embassies, Norad, and experts), and sends them to the embassies once the budget is approved. During the budget drafting period, funding priorities for the coming year can still be influenced, although Norway usually focuses on the same long-standing priority sectors. Key influencers include leadership and program officers in Norwegian embassies, and regional sections within the MFA’s Department for Regional Affairs and Development.
Programming of bilateral ODA is led by the Norwegian embassies. Embassies have ample financial and programming authority within the priorities set by the annual appropriation letters. They develop annual work plans and agreements for bilateral programs, which are then reviewed by Norad. Embassies usually make commitments to partner countries over a three-year period. However, exact annual funding levels are only determined in the appropriation letters, and such multi-year commitments are only made for programs directly administered by the embassies.
How will Norwegian ODA develop?
Norway has spent at least 1% of its GNI on ODA since 2013, and the 2017 budget is set to reach slightly higher levels. While future ODA levels are dependent on the outcome of the 2017 elections, the ODA/GNI share is expected to remain at around 1%. There is a cross-party consensus to keep ODA at this level.
The 1% commitment means that it is likely that Norway’s ODA will increase in absolute terms if the economy continues to grow. However, reduced oil prices in 2016 have put pressure on public expenditures as Norway’s oil revenues have decreased. This will likely limit the number of new development-related initiatives launched by the government and might require a prioritization of initiatives it supports.
What will Norway’s ODA focus on?
- Norway’s current top priorities, including education, humanitarian assistance, private sector development and job creation, global health, and climate, environment, and sustainable energy, will remain in focus throughout 2017.
- Beyond 2017, strategic priorities may shift, depending on the outcome of the elections in September 2017. Over the past two decades global health has traditionally been a focus area for Norwegian ODA, and therefore may remain so despite a change in government. The focus on education is potentially more subject to change given that it is a concrete focus of the current leadership.
What are key opportunities for shaping Norway’s development policy?
- The election campaigns in the run-up to the parliamentary elections in September 2017 present opportunities to engage with leadership in the Ministry of Foreign Affairs (MFA), parliament, and civil society, and work towards modifying or strengthening Norway’s thematic priorities and future levels of funding. There is some question as to whether the 1% commitment should be set for a period of years rather than annually reconfirmed as part of the budget process. This debate was triggered by a proposal in a development paper published in September 2016 by the Christian Democratic Party.
- Prime Minister Erna Solberg has made education a cornerstone of development policy during her tenure, with a particular focus on girls’ education. This provides opportunities to leverage more funding for areas with close links to education.
- The MFA is working on developing a new white paper to set the direction of Norway’s development policy. It is expected to be published by April 2017. In this process, the government is undertaking public consultations. The Sustainable Development Goals (SDGs) will be a key pillar of the new framework. Linking initiatives with the SDGs is thus crucial when engaging with the Norwegian government and other stakeholders.