- Sweden is the third-largest donor in terms of official development assistance (ODA) in proportion to the size of its economy. Sweden spent US$4.9 billion in 2016 (in current prices) on net ODA (0.94% of its gross national income), decreasing by 31% compared to 2015. This is largely driven by decreases in-country refugee costs reported as ODA, which went from US$2.9 billion in 2015 to US$990 million in 2016.
- Sweden uses its development budget to cover parts of the costs of hosting refugees: this puts pressure on funding available for development programs. For 2017, in-country refugee costs make up 18% of the ODA budget; this proportion is expected to decrease from 2018 onwards.
- Sweden is a strong supporter of multilateral organizations. On top of its core contributions to multilaterals (US$2.7 billion in 2015), it channeled more than U$900 million as earmarked funding to multilateral organizations.
- Sweden’s focus on gender equality and women’s empowerment is strong and expected to rise. The government put into effect a ‘feminist foreign policy’, which features sexual and reproductive health and rights as one of six objectives and announced increases to organizations working in the sector in 2017.
- In response to the refugee crisis in Europe, Sweden launched a new strategy for humanitarian assistance for 2017 to 2020, which will further shift funding to conflict-affected areas. The strategy covers Syria, Yemen, the Sahel Region, South Sudan, Nigeria, and the Democratic Republic of the Congo.
- The number of asylum-seekers arriving to Sweden is likely to continue to decrease in 2017. This means that a large part of the funds that had been earmarked to cover the costs of hosting refugees are being reallocated to international development, as Sweden is dedicated to its commitment of 1% of GNI to ODA.
- Sweden’s economic vitality drives ODA increases: its growth domestic product is expected to grow by 2.4% in 2017 and by 2.1% in 2018.
the big six
How much ODA does Sweden provide?
Sweden is the 7th-largest donor country; costs of hosting refugees put significant pressure on ODA
Sweden was the seventh-largest donor country in 2016. It spent US$4.9 billion on net ODA (in 2016 prices; US$5.9 billion in 2014 prices). This corresponds to 0.94% of Sweden’s gross national income (GNI), making it the third-largest donor-country in proportion to the size of its economy. Sweden is committed to spend at least 1% of its GNI on ODA, and has exceeded the UN 0.7% target since 1975.
Net ODA dropped by 31% between 2015 and 2016: this is largely driven by a sharp decrease of in-country refugee costs reported to the OECD, but also by advanced payments to UN organizations and contributions to the Green Climate Fund disbursed in 2015.
In-country refugee costs went down from US$2.9 billion in 2015 to US$990 million in 2016. In 2015, Sweden took in a particularly high number of asylum seekers in proportion to its population size, compared to other European countries. It uses its ODA budget area (‘Budget Area 7’; see question four: ‘How is the Swedish ODA budget structured?’) to cover costs of hosting refugees within the country. In 2016, funding previously allocated to other development sectors was thus cut to support those costs. As they were lower than expected, the government reallocated the funds, amounting to SEK6.4 billion (around US$722 million) to development programs. Most of the funds were reallocated to the programs from which it had been taken, for instance to fulfill Sweden’s commitment to the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) or to the Global Environment Facility. Additional funds went to humanitarian assistance. Thematically, the government instructed its development agency Sida to direct the funds towards gender equality, sexual and reproductive health and rights, water, sanitation, and climate change.
Overall, due to the reshuffling of the funds that were initially put aside to cover in-country refugee costs, funding for development programs abroad increased by SEK2 billion (US$225 million) over the 2016 budget period. For 2017, in-country refugee costs remain high: they make up 18% of the ODA budget, which amounts to SEK46.1 billion in total (US$6.7 billion). As refugee costs are expected to steadily decrease, funding for development programs abroad is likely to increase again from 2018 onwards.
What are Sweden's strategic priorities for development?
Strong focus on gender equality, including SRHR; shift in allocations towards humanitarian aid
In December 2016, the Swedish Government presented its ‘Aid Policy Framework’, which outlines the overall objectives and priorities of Swedish development cooperation. The document presents eight focus areas: 1) human rights, democracy, and the rule of law, 2) gender equality, 3) the environment and climate change, and the sustainable use of natural resources, 4) peace and security, 5) inclusive economic development, 6) migration and development, 7) health equity, and 8) education and research. The document also includes Sweden’s priority areas for humanitarian assistance and makes special mention of the nexus between development cooperation and humanitarian assistance.
The ‘Results Strategy for Global Action on Socially Sustainable Development 2014-2017‘ governs the funding allocations and activities of development agency Sida. The strategy is likely to be extended for a year; a new strategy is expected to be operational from 2019 onwards.
The Swedish Government places a strong focus on environmental and climate change issues
The Swedish Government places a strong focus on environmental and climate change issues, particularly under the leadership of Minister Isabella Lövin, Minister for International Development Cooperation and Climate. Limiting climate impact, environmental resilience and disaster risk reduction are core elements of the 2016 Aid Policy Framework.
Conflict prevention, under the overarching theme of ‘peace and security’, is a new focus area. Within conflict prevention, Sweden focuses particularly on women, peace and security, including training and integration of women in peace negotiation processes. For example, it has a national action plan for the implementation of the UN Security Council Resolution 1325, a resolution that calls for increased participation of women in peace and security efforts within the UN. In addition to gender, conflict sensitivity and resilience are systematically integrated into humanitarian assistance.
Recent trends show a growing focus of funding for humanitarian aid and for countries in the Middle-East and Northern Africa (MENA) region in response to the European migrant crisis. Humanitarian assistance is allocated on a needs basis. In 2017, Sweden will focus its support on the ongoing crises in Syria, Yemen, the Sahel region, South Sudan, Iraq, the Democratic Republic of the Congo and Nigeria. In January 2017, the government approved a new strategy for Sida’s humanitarian assistance for 2017 to 2020, reiterating the focus of humanitarian assistance to save lives and alleviate suffering of affected populations through the provision of emergency materials and protection actions. Sweden’s humanitarian assistance also aims to strengthen the capacity and effectiveness of the humanitarian system.
Against the backdrop of the overall ‘feminist foreign policy’ for 2015 to 2018, Sweden’s general foreign policy aims to enhance both gender equality and the full enjoyment of human rights by all women and girls. Sweden’s development agency, Sida, focuses heavily on gender equality and women’s empowerment. Swedish development cooperation places a strong emphasis on sexual and reproductive health and rights (SRHR) – one of the six sub-objectives of the feminist foreign policy.
Sweden’s key development priorities:
- Gender equality: US$255 million allocated to SRHR in sub-Saharan Africa from 2015 to 2019; a gender perspective is incorporated in all projects.
- Conflict prevention: Funding has shifted towards conflict-affected areas. Budget allocations to the Middle East and North Africa (MENA) region increased by 47% between 2015 and 2016, and reached over US$152 million in 2017. Humanitarian assistance is set to reach SEK5.8 billion in 2017 (US$845 million).
Virtually all ODA is provided as grants; bilateral assistance focuses on government and civil society, and humanitarian aid.
Sweden channels the majority of its ODA as bilateral cooperation (68% in 2015). According to the OECD, half of this financing went towards covering the costs of hosting refugees in 2015. In the context of the refugee crisis in Europe, Sweden took in a particularly high number of asylum seekers up until the end of 2015, especially considering the size of its population. Consequently, costs for hosting refugees have gone up significantly in recent years. As reported to the OECD, these costs have more than doubled between 2014 and 2015, from US$1.1 billion to US$2.9 billion.
Since 2015, the government has been using the ODA budget and other budget sources to cover the costs of hosting refugees in Sweden, and reported this as ODA to the OECD. For 2016 and 2017, the government had capped the share of ODA budget available to cover refugee costs at 30%. Within this, some of the costs for hosting refugees were taken from the ODA budget that was originally allocated to other development sectors, and other were also absorbed by the ODA increases resulting from Sweden’s GNI growth. New arrivals in Sweden have however sharply decreased. This is a result of Sweden’s tighter policy on immigration, including the border controls it reinstated in 2016 – which have been extended until May 2017. With regards to ODA budget, this decrease has led to the reallocation of the funds that had initially been put aside for refugee costs in 2016. For 2017, the government has set ODA funding diverted to cover in-country refugee costs at SEK8.1 billion (US$1.2 billion, 18% of the total ODA budget). This amount has been budgeted based on estimates by the Swedish Government, which foresee approximately 34,500 asylum applications per year from 2017 onwards.
The second-largest share of bilateral ODA is allocated to interventions in government and civil society (13% of bilateral ODA, or US$761 million in 2015). Two thirds of the funding in this area goes to projects supporting democratic participation or human rights. In this sector, Sweden relies on its civil society organizations (CSOs), as well as on international organizations and local CSOs in partner countries for the implementation of its bilateral cooperation. This is especially true for support going to countries that are not governed by democratic principles.
The third-largest share of Swedish bilateral ODA is allocated to humanitarian aid, a traditional focus of funding in Sweden (8% of bilateral ODA, US$454 million). This share is likely to grow further as Sweden is committed to tackling the root causes of migration, particularly in conflict-affected areas. For 2017, total funding for humanitarian assistance amount to SEK5.8 billion (US$845 million in 2014 prices); this includes SEK3.2 billion (US$466 million) in bilateral cooperation, and SEK2.6 billion (US$379 million) as unearmarked support to humanitarian agencies, mainly to UN organizations.
Who are the main actors in Sweden's development cooperation?
MFA decides on strategy, Sida executes
Currently, Prime Minister Stefan Löfvén leads a center-left minority coalition formed between the Social Democrats (S) and the Green Party (MP). As a minority coalition, the government is under great pressure from the opposition – particularly during budget negotiations – and will continue to be until the next general elections in 2018.
Since 2014, Margot Wallström (S) has served as Minister for Foreign Affairs (MFA). She previously worked as a member of the European Commission (1999-2009) and as the first-ever UN Special Representative of the Secretary-General on Sexual Violence in Conflict (2010-2012).
The Minister for International Development Cooperation and Climate and Deputy Prime Minister Isabella Lövin (MP) heads the International Development Cooperation portfolio. She is a former Member of the European Parliament (2009-2014), and in May 2016, was elected as a joint-leader of the Green Party. Under her leadership, environmental issues play a particularly important role in Sweden’s development policy.
Under the overall policy and decision-making authority of the Prime Minister, the Ministry for Foreign Affairs (MFA) oversees development policy and financing, and decides on core funding allocations to multilateral organizations. Within the MFA, the ‘Department for International Development Cooperation’ is responsible for overall governance and evaluation of Swedish development cooperation. The department coordinates the development of the ODA budget. It drafts the appropriation letters for the institutions funded under the ODA framework, including Sweden’s development agency Sida, which operates under the MFA. It also coordinates all thematic and strategy development for Sida.
Other relevant departments for policy-making within the MFA are the ‘UN Policy Department’, responsible for all foreign and development cooperation relating to multilateral support through UN organizations and thematic funds, and the ‘Global Agenda Department’, in charge of overall coordination within the framework for the 2030 Agenda for Sustainable Development and the Government Office’s work on the Policy for Global Development. It also coordinates and develops the feminist foreign policy, including gender equality issues in development cooperation.
SWEDEN'S DEVELOPMENT COOPERATION SYSTEM
Sida manages and executes development policy implementation in cooperation with civil society organizations (CSOs), consultants, and other government agencies. In 2017, Sida manages around 44% of Sweden’s ODA budget (SEK20.1 billion, or US$2.9 billion). Sida is managed by a governing board. Under its directives, the Director-General is responsible for Sida’s operational activities. Following the appointment of Charlotte Petri Gornitza as the president of the Development Assistance Committee (DAC) of the OECD in July 2016, Sida appointed Lennart Båge to stand in as Acting Director-General. As of February 2017, Sweden is working towards recruiting a long-term appointment. Sida has 782 employees, many of whom work at Swedish embassies, 65% of which are women.
Sweden’s state-owned investment fund, Swedfund, supports private-sector activities aimed at promoting sustainable economic development in sectors such as energy, infrastructure, and industry. It is supervised by the Ministry for Enterprise and Innovation and provides risk capital and investment for projects that alleviate poverty in low-income countries.
Civil society organizations (CSOs) play a major role in Sweden’s development assistance. In 2015, a fifth of the country’s bilateral ODA was channeled through them. Sida has increased its engagement with Swedish CSOs as a way to identify new methods to deliver its bilateral programs and increase aid effectiveness. For example, Sida channels finance to organizations through ‘challenge funds’, which are focused on a desired development outcome.
How is the Swedish ODA budget structured?
Sida manages 44% of Sweden’s ODA budget
The government is committed to allocating 1% of Sweden’s GNI to ODA. This share is outlined in each year’s budget, and the total of all funding sources contributing to it is referred to as the ‘ODA frame’. The 2017 Budget projects the ODA Frame at US$6.7 billion (in 2014 prices), or 0.99% of GNI. Sweden uses its ODA budget to cover the costs of hosting refugees for their first year in the country. For 2017, costs for hosting refugees are expected to account for 18% of the Swedish ODA budget (US$1.2 billion).
The government’s Budget Bill for 2017 foresees that ‘Budget Area 7’ (International Cooperation) covers 76% of the total ODA ‘frame’ (US$5.1 billion). The remainder consists mainly of refugee costs, assessed contributions to the EU, and management costs of the Ministry of Foreign Affairs (MFA).
Sida manages 58% of financing for Budget Area 7 (US$2.9 billion for 2017). This includes allocations for bilateral programs in specific regions, thematic cooperation, and other areas, such as funding to CSOs and humanitarian assistance. In addition, Budget Area 7 includes the MFA’s funding lines for core contributions to UN agencies and other multilateral funds, as well as for multilateral development banks, debt relief, and ‘strategically oriented grants’ (see table).
Overview: Sweden's 2017 ODA budget
Total Budget Area 7 (international assistance) 5,101 34,990 Sida 2,934 20,130 Bilateral cooperation 1,478 10,140 Thematic cooperation 531 3,645 Humanitarian assistance 463 3,175 Funding for Swedish CSOs 259 1,775 Research cooperation 112 765 Capacity development 72 493 Information and communication 20 138 MFA 1,843 12,645 Multilateral organizations (UN agencies) and funds 1,186 8,139 Multilateral development banks; debt relief 480 3,293 Strategically oriented grants 177 1,214 Other agencies 136 931 Administrative costs (including Sida's admin costs) 187 1,284 Other ODA costs 1,625 11,145 Refugee costs in-country 1,181 8,100 EU contributions 308 2,113 Other (e.g., funding for some UN agencies) 70 481 MFA administrative costs 66 451 Total ODA ('ODA frame') 6,725 46,135
What are important decision-making opportunities in Sweden’s annual budget process?
The government allocates funding to specific areas from June - August
The Swedish budget process runs over a two-year period. It starts in the year that precedes its implementation, and continues during the current fiscal year; the ongoing budget can be amended in spring and in autumn.
- Sida develops its draft budget: By March 1st of the year before, Sida submits its draft to the MFA. Sida’s full budget is organized by strategies: regions, countries, as well as broad thematic priorities (such as ‘sustainable social development’). Sida’s leadership and regional departments are the main decision-makers with regard to budget requests.
- Ministry of Finance develops the spring fiscal policy bill**: From March to April, on the basis of each ministry’s expenditure estimates, the Ministry of Finance develops the Spring Fiscal Policy Bill (the budget bill). It includes ministerial expenditure ceilings for the next three years.
- Government presents the spring budget bill to Parliament: In mid-April, the government submits the budget bill to Parliament. A first decision on the overall ODA volume is made. Once determined, major changes to the ODA volume are rare; the ODA budget is tied to the GNI level.
- The Parliament debates the budget: The Parliament begins to debate the Budget in April and approves the budget bill in June. This is an important phase as members of Parliament debate and decide on overall ODA volume.
- Minister for Development decides on specific budget lines: Over the summer, in July and August, the MFA’s Minister for International Development Cooperation and Climate allocates further funding to expenditure areas within the main ODA budget. Broad budget lines (e.g., Sida’s own budget) and allocations to specific budget items (e.g., Sida’s thematic budget line on ‘sustainable social development’) are decided at this time.
- Government presents its budget bill to Parliament: The government presents its budget bill to Parliament in mid-September (at the latest on the 20th), except during election years when this may be postponed until November 15th.
- Parliament debates and amends budget bill: Debates take place from early October to early December: the Committee on Finance discusses the government’s draft expenditure ceilings for all budget areas; the Committee on Foreign Affairs may propose amendments to specific allocations within the ODA Budget Area 7. Usually, under a minority government such as the current one, the government has to negotiate closely with the opposition on the budget.
- Parliament votes on the budget bill: In mid-December, the Parliament makes the final decision on the budget bill. The government then sends its annual letter of appropriation to Sida, which specifies overall funding to Sida and the allocation of funds by regions or thematic issues.
The budget bill may also be used to divert or reallocate funds originally allotted for the current year. This happened in 2016, for example, when the government decided to use ODA funds to cover the costs of hosting refugees within Sweden. The ongoing budget can also be amended in September, when the government presents its budget bill to Parliament for the next year.
How is Sweden’s ODA spent?
Sweden is a strong supporter of multilateral organizations
Core contributions to multilateral organizations account for about a third of Swedish ODA (32% in 2015). They are disbursed in accordance with Sweden’s 2007 strategy for multilateral development cooperation, and in accordance with strategic documents for specific organizations. Following a 2014 report of the Swedish National Audit Office, Minister for International Development Cooperation and Climate, Isabella Lövin, pledged to strengthen results monitoring and to centralize decision-making for multilaterals, moving the responsibility from Minister of Foreign Affairs’ (MFA) technical staff to its political staff. As a result, all disbursements to multilaterals within the MFA are now approved by Minister Lövin’s office.
Sweden is a strong supporter of the United Nations: UN agencies represent a third of the country’s core contributions to multilaterals (34% in 2015). Strengthened support is further envisioned as Sweden holds a seat as a non-permanent member of the UN Security Council for 2017 to 2018. EU institutions (18%) and the World Bank (15%) are also among the largest recipients. In addition to core contributions, Sweden provides a high share of ODA in the form of earmarked funding to multilateral organizations (10% in 2015, or US$923 million). In total, when adding up core contributions and earmarked funding, Sweden allots almost half of its total ODA to multilaterals (42% in 2015, a decreasing share due to the significant rise of refugee costs, counted as bilateral ODA).
According to the OECD, all of Sweden’s ODA consists of grants. Sweden channels about a fifth of its bilateral ODA through civil society organizations (CSOs), which is more than the average amongst members of the Development Assistance Committee of the OECD (DAC; 17%). The government recognizes CSOs’ key role in reducing poverty, strengthening democratic development, and supporting human rights. Since 2013, Sida has engaged in a more substantial dialogue with Swedish CSOs as a way to identify new methods to deliver its bilateral programs and increase aid effectiveness. One such method involves setting up ‘challenge funds’ in cooperation with foreign development agencies or other institutions, which allocate funds to companies and organizations through a competitive process.
Who are Sweden’s ODA recipients?
Sweden’s bilateral ODA focuses on sub-Saharan Africa and low-income countries
Sweden places a priority on sub-Saharan Africa and on low-income countries. The development agency Sida substantially reduced the number of partner countries from 67 in 2007 to 24 in 2015: this strengthened the focus on sub-Saharan Africa. The high costs of hosting refugees in Sweden as well as earmarked funding to multilaterals and funding to CSOs are counted as bilateral ODA that is not allocated by country: this distorts OECD data about recipients of Swedish ODA (see figure below). When excluding these unallocated funds, sub-Saharan Africa accounted for half of Sweden’s bilateral ODA between 2013 and 2015 (50%). The MENA region is a growing focus of bilateral cooperation, increasing from 8% in 2011 to 12% of bilateral ODA in 2015 (US$187 million to US$244 million).
Sweden focuses heavily on low-income countries: two-thirds of its bilateral ODA is allocated to these countries (when excluding unallocated funding). Looking forward, focus will be on fragile states, as this is where the most marginalized and poorest communities live. This includes countries such as Afghanistan, the Democratic Republic of the Congo, Liberia, Palestine Somalia, Sudan, and South Sudan. Focus on the nexus between humanitarian assistance and development activities is embedded in the Swedish Aid Policy Framework and is likely to increase.
How is bilateral funding programmed?
MFA decides on strategy; embassies are key players in implementation
Based on strategic guidelines set by the MFA, Sida and Swedish embassies abroad develop strategies for countries, regions, and thematic areas. These are then further refined and approved by the government. The strategies usually cover time periods of three to seven years. Country strategies outline key sectors and provide indicative budgets for the strategy period as a whole. Outdated strategies are usually extended at the end of every year if no new strategy has been formulated.
Operational programming at the country level is based on these country strategies. Annual funding levels for each country are outlined in the three-year budget document that Sida submits to the MFA. Within this annual allocation, most embassies enjoy a high degree of independence from Sida headquarters on how to use bilateral funds. The regional departments at Sida delegate financial envelopes to the embassies on an annual basis.
How will Swedish ODA develop?
- Sweden is committed to spend 1% of its GNI on ODA. Its strong economic growth is likely to drive increases in ODA: according to the 2017 budget bill, the Swedish Government plans to increase budget allocations to ODA by 14% between 2017 and 2020, from SEK46.1 billion (US$6.7 billion) to SEK52.4 billion (US$7.6 billion).
What will Sweden’s ODA focus on?
- Climate change and the environment are among the issues at the center of Swedish development policy. In the short term, Sweden will focus on supporting developing countries in the implementation of their commitments under the Paris Agreement.
- Sweden is focusing increasingly on humanitarian aid and peace-building, as part of its policy to tackle root causes of conflict and of migration. It plans to leverage its seat at the UN Security Council for 2017 to 2018 to this end. In the framework of its feminist foreign policy, Sweden places a strong focus on ‘women, peace and security’ including advocating for the inclusion of women in peace processes and negotiations. It also provides training on UN Security Council Resolution 1325, a resolution that aims to foster the participation of women in peace and security processes.
- Against the backdrop of its feminist foreign policy, Sweden will continue to focus extensively on women and girls. This is also true in the health sector: sexual and reproductive health and rights (SRHR) is a key area of Sweden’s engagement, along with maternal and child health, and health systems strengthening (HSS). Looking forward, it is likely to increase further: early 2017 the government announced increased support to the UN Family and Population Fund (UNFPA), to the ‘She Decides’ initiative – a fund established by the Netherlands to counter the anticipated impact of cuts in US funding to organizations providing abortion-related services, and strengthened involvement towards organizations working around abortion.
What are key opportunities for shaping Sweden’s development policy?
- The government plans to increase ODA by 14% from US$6.7 billion in 2017 to US$7.6 billion in 2020. Within Sweden’s international development budget, the costs of hosting refugees will significantly decrease from 2018 onwards, freeing up additional funding for development programs abroad.
- The ‘Results Strategy for Global Action on Socially Sustainable Development 2014-2017’ governs the funding allocations and activities of development agency Sida. The strategy is likely to be extended for a year; a new strategy is expected to be operational from 2019 onwards. Over the course of 2017 and 2018, the renewal process provides an opportunity to shape the allocation directions of Sida.