Netherlands

At a glance

ODA funding trends 

The Netherlands is the ninth-largest donor country on the Organisation for Economic Cooperation and Development’s (OECD’s) Development Assistance Committee (DAC), spending US$5.3 billion on official development assistance (ODA) in 2021 (current prices, US$5 billion in 2020 constant prices). This corresponds to 0.5% of its gross national income (GNI). 

  • The Netherlands provides official development assistance (ODA) primarily through bilateral channels - 70% (US$3.7 billion) in 2020, well above the OECD DAC average of 58%. This bilateral funding included US$995 million in earmarked funding to multilateral organizations (i.e., funding channeled through multilaterals for specific regions, countries, or themes), which is reported to the OECD as bilateral ODA. 
  • The majority (71%) of the Netherlands’ bilateral ODA is not allocated by region since funding for CSOs, earmarked funding for multilaterals, and the cost of hosting refugees cannot be allocated to a specific country or region. When excluding this funding, the Netherlands traditionally prioritizes ‘sub-Saharan Africa’ (SSA; meaning the countries of Eastern, Western, Central, and Southern Africa, as designated by the African Union). The region received 62% of bilateral ODA allocated by region in 2020.  
  • Dutch core funding to multilaterals largely goes to the EU and the UN. In 2020, the Netherlands channeled 31% of its ODA as core funding to multilaterals (OECD DAC average: 42%), amounting to US$1.7 billion. The largest recipients of the Netherlands’ core contributions to multilateral organizations were EU institutions with US$632 million (38% of multilateral ODA) and UN agencies with US$468 million (28%).  

Strategic priorities 

  • Dutch development policy objectives and priorities are laid out in the strategy: ‘Doing What the Netherlands is Good At’. The strategy focuses on the intersection between trade and development priorities. Tackling the root causes of poverty, ‘countering terrorism,’ combating irregular migration, and addressing climate change, as well as reaching the UN Sustainable Development Goals (SDGs) are the primary objectives of Dutch development policy.  
  • The strategy’s self-proclaimed keyword is ‘focus,’ which covers both a geographic focus on 25 priority countries and a thematic focus on traditional policy areas of expertise, including water, agriculture, and sexual and reproductive health and rights (SRHR). The Netherlands encourages the coordination and strengthening of trade and development by encouraging Dutch businesses to invest in low- and middle-income countries (LMICs), especially in sustainability and innovation.  

Outlook  

  • The development strategy lays out a subsequent increase in ODA. Overall spending on ODA is set out to increase by €300 million (US$342 million) from 2022-2024, and structurally per year by €500 million ($570 million) from 2025 onward. The additional ODA budget is mainly dedicated to investments in supporting refugees, humanitarian support, SRHR, and climate. Additionally, the Netherlands ODA/GNI target ratio will likely increase if the Dutch economy sufficiently recovers from the COVID-19 pandemic.

Policy Priorities

The Netherlands’ new development strategy emphasizes the role of trade and the Dutch private sector; traditional Dutch focus areas of development cooperation remain 

The objectives and priorities of the Dutch development policy are laid out in the policy document: ‘Doing What the Netherlands is Good At’ (‘BHOS policy’). Released in June 2022 under Foreign Trade and Development Cooperation Minister Liesje Schreinemacher, the document focuses on the intersection between trade and development priorities. The strategy’s self-proclaimed keyword is ‘focus,’ which covers both a geographic focus of 25 priority countries, and a thematic focus of traditional policy areas of expertise, including water, agriculture, and sexual and reproductive health and rights (SRHR). Digitalization and sustainability appear as cross-cutting themes throughout the strategy.  

Within trade and development, the strategy’s focus is summarized as follows:  

1. Trade: Dutch trade policy with low- and middle-income countries will concentrate on a smaller number of markets, focusing on strengthening Dutch earning capacity and, together with trade partners, strengthening sustainability, digitalization, economic resilience, and the protection of entrepreneurs against unfair competition. Within the EU, the Netherlands aims to maintain its position as a driver for international corporate social responsibility (ICRSR) legislation;  

2. Development cooperation: Tackling the root causes of ‘poverty, terrorism, irregular migration, and climate change,’ as well as reaching the UN’s Sustainable Development Goals (SDGs) remain the focus of Dutch development cooperation. Additional investments are dedicated to the COVID-19 pandemic, strengthening global health systems, and climate change. Traditionally, strong areas of thematic expertise for the Netherlands (e.g. water, agriculture, and sexual and reproductive health and rights (SRHR)) maintain high importance.  

3. Strengthening the link between trade and development cooperation: Dutch businesses are set to become much more involved in achieving SDGs in 14 emerging economies. The effort attempts to increase investment in sustainability and digitalization, as well as strengthen the connection between Dutch organizations and local partners. Public-private partnerships (PPPs) focused on export and innovation policy are of particular importance.  

While the priorities around development cooperation are largely in line with traditional Dutch development priorities, the strategy indicates a shift toward trade and a strengthening of the private sector’s role in international trade and development cooperation. Overall spending on ODA is set out to increase by US$342 million (€300 million) from 2022-2024, and structurally per year by $570 million (€500 million) from 2025 onward. Additionally, the ODA budget being linked with the GNI is expected to increase further if the Dutch economy continues to recover from the COVID-19 pandemic. 

The additional ODA budget is mainly dedicated to investments in supporting refugees, humanitarian support, SRHR, and climate. Regarding climate finance, the cabinet is committed to allocating 50% of public climate finance to adaptation. This is in line with an increasing focus on climate, which began under the previous government. For instance, the Netherlands was the host of the Climate Action Summit (CAS) from January 25-26, 2021. In another step forward for climate action, the Dutch development bank, FMO (Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.), published a position statement on June 1, 2021, committing to phase out direct investments in fossil fuels over the course of a five-year transition period. The policy prohibits the bank from making any new direct investments in upstream or mid-stream stand-alone fossil fuel-related activities with an exemption for natural gas and distributed power projects necessary for energy security at affordable prices. 

More strategies are expected to be published through the end of 2022 and early 2023, namely the government expects to release an ‘Africa strategy,’ Feminist Foreign Policy strategy, Dutch Global Health strategy, International Climate Strategy, Commodities Strategy, and a multilateral and human rights policy memorandum. 

ODA Breakdown

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The Netherlands mainly provides ODA through bilateral channels 

52% (US$2.8 billion) of total ODA was channeled bilaterally in 2020, above the DAC average of 44%. Another 18% was channeled through multilaterals in the form of earmarked funding for specific thematic priorities or regions (US$955 million, reported to the OECD as bilateral ODA). Total bilateral funding sums up to 70% of total ODA. The remaining 31% was channeled as core funding to multilaterals (DAC average: 42%), amounting to US$1.7 billion. The current split between multilateral and bilateral ODA is likely to remain stable in the upcoming years. 

The largest recipients of multilateral funding in 2020 were the EU institutions, receiving 38% or US$632 million. They were closely followed by the United Nations agencies, funds, and commissions, and the World Bank Group, receiving 28% and 16%, respectively. Regional development banks received 7% of Dutch core funding to multilaterals in 2020.  

The Netherlands’ sectoral distribution of ODA is in line with its policy priorities 

The Netherlands spent the largest share of its bilateral ODA in 2020 on government and civil society (19% of bilateral ODA, or US$695 million). Spending on hosting refugees in the Netherlands received the second-largest share (15%, or US$562 million). ‘Humanitarian aid’ and ‘health and populations,’ both closely related to Dutch thematic priorities, are the fourth and fifth-largest sectors of bilateral ODA, with funding levels at US$343 million and US$333 million, respectively, in 2020. ‘Donor administration costs’ received the third-largest share of sectoral funding with US$355 million in 2020. While bilateral ODA to ‘humanitarian aid’ decreased between 2016 and 2019, it saw a large spike in 2020. 

Low-income countries are the main recipients of the Netherlands’ ODA 

A large share of Dutch bilateral ODA is not allocated by income group (78% in 2020) or region (71%). This funding mainly includes funding for CSOs, earmarked funding for multilaterals, and costs of hosting refugees in the Netherlands. When excluding this funding, the Netherlands places a priority on ‘sub-Saharan Africa’ (SSA; meaning the countries of Eastern, Western, Central, and Southern Africa, according to the African Union’s designations); the region received 62% of bilateral ODA in 2020. This share drops to 18% when including all funding (DAC average: 21%). Ethiopia and Afghanistan are the largest recipients of bilateral ODA from the Netherlands, overall.  

The Netherlands selects its focus regions and countries based on three elements: 1) the urgency and need for development cooperation, 2) the added value of Dutch efforts, and 3) the potential for alignment with Dutch thematic priorities. Priority countries tend to be the countries of origin for a high proportion of migrants and refugees arriving in the Netherlands.   

Following its 2022 ‘Doing What the Netherlands is Good At’ policy, the Dutch government keeps its emphasis on the regions including the ‘West African Sahel,’ the ‘Horn of Africa,’ and the Middle East and North Africa (MENA). The 2022 development strategy lays out the Netherlands’ 22 focus countries regarding development cooperation. The Netherlands defined 12 Least Developed Countries (LDCs) for provides a range of support on the Sustainable Development Goals (SDG). Those countries largely coincide with the Netherlands’ focus regions and include Mali, Niger, Burkina Faso, Yemen, Palestine territories, Uganda, Ethiopia, South Sudan, Sudan, Burundi, Mozambique, and Benin. At the same time, the Netherlands continues activities targeted toward specific objectives in 10 low- and middle-income countries. Examples include the reception of refugees in Lebanon and Jordan and reconstruction in Iraq. The full list of countries receiving targeted support covers Bangladesh, Egypt, Kenya, Jordan, Lebanon, Iraq, Afghanistan, Somalia, Chad, and Tunisia. In 2020, the Netherlands began ‘phasing out’ of several countries. These include Indonesia and Ghana, with which they intend to intensify their trade relations going forward.  

100% of the Netherlands’ ODA is channeled through grants 

The Netherlands provides all its ODA as grants (100% in 2020). Although it does not extend loans as part of its development cooperation, engaging the private sector and promoting private sector growth in low-income countries is one of the government’s key priorities.  

Most bilateral ODA is channeled through the public sector (34%, or US$1.3 billion). NGOs and CSOs also play an important role in implementation, channeling 24% of Dutch bilateral ODA in 2020 (US$908 million), above the DAC average of 19%. 

Main Actors

Prime Minister Mark Rutte’s party, the liberal party (VVD), won the March 2021 elections in the Netherlands, followed closely by the center liberal party (Democrats 66, or D66) led by Sigrid Kaag, the former Foreign Trade and Development Cooperation Minister. Following a record 299 days of coalition talks and a full 360 days since the ‘Rutte III’ government resigned amid a national scandal, the new cabinet was sworn in on January 11, 2022. Rutte’s fourth government is composed of his own liberal-conservative VVD party and the more social-liberal and pro-European D66, the Christian-Democrat CDA, and the more social-Christian ChristenUnie parties. The new cabinet’s top priorities are health care, climate, education, housing, and responding to the COVID-19 crisis. 

Parliament scrutinizes development policy and budget allocations and can amend the government’s draft budget bill annually; debates in November/December can lead to significant changes to the ODA budget.   

 

The Netherlands Organisation Chart

Dutch CSOs play an active role in Dutch development cooperation; the development CSO umbrella organization, Partos, represents over 100 organizations that engage with the Parliament and the Ministry of Foreign Affairs (MFA) to influence policy and funding decisions. Many CSOs implement their own programs in low-income countries (LICs) and are funded by the Dutch government and through private donations. Since the end of 2015, program funding for CSOs has been cut sharply, and the MFA has placed a larger focus on strategic partnerships and advocacy. Funding for CSOs is channeled through the funding scheme ‘Dialogue and Dissent: Strategic partnerships for lobby and advocacy’ (2020-2024) with the overarching goals of strengthening a civil society that expresses the voices and needs of citizens and establishing an inclusive and sustainable society based on a human rights approach. 

The government has divided grants for civil society in the new policy framework into seven specific themes: 1) climate mitigation and adaptation; 2) increasing sustainability of value chains; 3) food security, sustainable water management, and water, sanitation, and hygiene (WASH); 4) women's rights and gender equality; 5) freedom of expression and freedom of religion and belief; 6) equal rights for LGBTQ+ populations; and 7) security and the rule of law.   

Budget Structure

The Dutch ODA budget for 2022 stands at €4.8 billion (US$5.5 billion) with a slightly increased ODA/GNI ratio of 0.53%. According to the development strategy published in June 2022, the Netherlands is set to increase its spending for development cooperation by around US$324 million annually from 2022-2024 and an additional US$540 million each year from 2025 onward. The additional budget is largely dedicated to in-country refugee costs, climate, food security, pandemic recovery, and addressing the root causes of migration. While the additional funding is not enough to reach the internationally agreed-upon 0.7% ODA/GNI target, it is projected to keep the ODA/GNI ratio stable, at around 0.6% ODA/GNI by 2025. The governing parties intend to reach 0.7% ODA/GNI in the next legislative period, hopefully by 2030. Not all the coalition parties are supportive of the target; The liberal party (VVD), which has traditionally opposed ODA increases and has pushed back on the target, instead advocates for the role of trade and private sector transactions as well as some multilateral programming for development. 

The Minister for Foreign Trade and Development Cooperation, a cabinet-level minister within the Ministry of Foreign Affairs (MFA), manages the largest share of Dutch ODA (66% in 2022). On top of the funding managed by the minister, other departments within the MFA disburse another 20% of the development budget. The Ministry of Finance provides 5% of the total ODA budget, primarily for funding to development banks. The remaining 9% is channeled through the Ministry of Justice and Security and the Ministry of Education, Culture and Science.   

The ODA’s distribution across the ministries is described in the HGIS budget (‘Homogene Groep Internationale Samenwerking’). It contains the share of ODA channeled through the Foreign Trade and Development Cooperation budget. The ministry’s ODA budget is organized around thematic areas (see table). The envelopes for these thematic areas are usually split further into grants and contributions to multilaterals and other organizations working in that thematic area.  

The government published the spring budget, an updated version of the 2022 draft budget that was agreed upon in September, on May 20, 2022. The spring budget does not indicate ODA allocations but lays out changes in the budget for the Minister of Foreign Trade and Development Cooperation, which is largely dedicated to ODA. In line with the Rutte IV cabinet’s coalition agreement, the budget for the Minister for Foreign Trade and Development Coooperation increased by US$266 million from the original draft. The budget for climate ODA and the Access to COVID-19 Tools Accelerator (ACT-A) have increased by €31 million (US$35 million) and €50 million (US$57 million), respectively. The budget for ‘humanitarian aid,’ and ‘reception and security and cooperation on migration’ increased by €82 million (US$93 million) and €57 million (US$65 million), respectively. These are largely dedicated to alleviating the global consequences of the Russian invasion of Ukraine and supporting Ukrainian refugees. €46 million (US$53 million) of the top-up in humanitarian assistance is dedicated to food security. An additional €150 million (US$170 million) was dedicated to in-country refugee costs, which are counted as ODA; this funding is not part of the Minister for Foreign Trade and Development Cooperation budget.

Overview: The Netherland's 2021 draft ODA budget

millions

millions
US$ (2020)

Foreign Trade and Development Cooperation 3,152 3,592
Sustainable economic development, trade and investment 451 514
Sustainable development, food security, water, and climate 776 884
Food security 329 375

Water

188

215

Climate 258 295
Social issues 846 964
SRHR, incl. HIV/AIDS, of which: 528 601
Women's rights and gender equality (incl. contributions to UNWOMEN) 52 59
Other (mainly CSO support) 267

304

Peace, security and sustainable development 814 928
Humanitarian assistance (incl. contributions to UNOCHA, ICRC) 437 498
Reception and security in the region and cooperation on  migration 162 185
Security and rule of law development 215 245
Multilateral cooperation and other areas 265 302
Multilateral cooperation 151 173
Other poverty reduction policy 97 110
Open for distribution (due to changes in GNP and/or attributions) 17 19
Ministry of Foreign Affairs 978 1,114
Ministry of Finance (funding for development banks)262

262

299
Other ministries 410 467
Other ODA expenses 0 0
EU budget 0 0
Total ODA budget (gross) 4,802 5,472

Sources: Rijksbegroting 2022

Budget Process

Ministerial budget ceilings are set in April or May; allocation decisions are made between May and July

The Netherland´s Budget Cycle
  • Ministries develop initial budget proposal: From February to March, the ministries, including the Ministry of Foreign Affairs, develop their initial budget proposals for the coming year and decide on spending increases or decreases for the main policy areas. The Minister for Foreign Trade and Development Cooperation and the Minister of Foreign Affairs are the main decision-makers during this process. The thematic departments of the Directorate-General for International Cooperation (DGIS) are also important stakeholders, as they are responsible for designing and coordinating the implementation of Dutch development policy.
  • Ministries update their current budgets: Between March and May, ministers update the budgets of the current year to reflect any changes that have occurred since the draft budget was presented in the previous autumn. This is known as the ‘spring budget’. While the Parliament has the right to amend the budget, changes are rarely made. The ‘spring budget’ is published on June 1 at the latest every year.
  • Cabinet decides on ministerial budgets: In August, the Cabinet decides on ministerial budgets for the following budget year. Important decision-makers are the Minister for Foreign Trade and Development Cooperation, the Minister of Foreign Affairs, and the Minister of Finance.
  • Draft budget presented to Parliament: On the third Tuesday of September, the government presents its budget bill to the Parliament.
  • Parliament debates and approves budget: The ODA budget is debated and amended by the Committee on Foreign Trade and Development Cooperation of the House of Representatives at the end of November. Parliamentary debates in November/December can lead to significant changes to the draft budget. In 2018, for example, Parliament amended the budget to increase the Dutch contribution for United Nations Populations Fund (UNFPA) and the Global Financing Facility (GFF), by €10 million (US$13 million). The budget must be approved before the end of the year.