Donor Profile: Netherlands

Last updated: January 6, 2023

Summary


 


ODA Spending


ODA in Context



The Netherlands was the ninth-largest donor country in 2021, spending US$5.3 billion on ODA (current prices, US$5 billion in 2020 constant prices).


This corresponds to 0.5% of its GNI, putting it in sixth place in a ranking of countries’ ODA expenditures relative to the size of their economies.




Between 2020 and 2021 the Netherlands’ ODA decreased by 7%. According to the government, the decline was mainly connected to economic difficulties and was calculated in line with the estimated decrease in the GDP.


 

 


ODA Breakdown


The Netherlands channels more ODA bilaterally than other DAC donors. The current split between bilateral and multilateral funding in the Netherlands is likely to remain stable in the coming years. The Netherlands’ strong bilateral funding focus is reflective of the government’s focus on promoting trade relationships and strengthening the link between development and trade.


Bilateral Spending



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.  

 

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%.


LICs are the main recipients of the Netherlands’ ODA.


Excluding funding unallocated by income group, the Netherlands places a priority on ‘Sub-Saharan Africa;’ the region received 62% of bilateral ODA in 2020. 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 MENA region. The 2022 development strategy lays out the Netherlands’ 22 focus countries regarding development cooperation.


 

The Netherlands provided all its ODA as grants in 2020. Although it does not extend loans as part of its development cooperation, engaging the private sector and promoting private sector growth in LICs is one of the government’s key priorities.


Multilateral Spending and Commitments


Approximately 3.5% of the Netherlands’ 2023 ODA budget goes towards multilateral cooperation. In 2022, this percentage was only 2.6%. The Netherlands provides unearmarked contributions to several multilateral organizations, including the UNDP, UNICEF, and UNIDO, as well as international finance institutions including the African Development Bank (AfDB) the World Bank, and the European Bank for Reconstruction and Development (EBRD). While this means that a large majority of Dutch ODA is still bilateral, this recent increase in multilateral funding suggests that the government is heeding the advice of the Ministry of Foreign Affairs’ evaluation service. The evaluation service argues that a rise in multilateral funding could increase the impact and scale of Dutch ODA.

 
 

The Netherlands’ recent commitments to multilateral organizations are summarized below.



Politics & Priorities


Political Context


The Netherlands is a representative democracy with a parliamentary system. Elections take place every four years except in the event of a dissolution. 


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 after 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.


While the coalition government’s priorities around development cooperation are largely in line with traditional Dutch development priorities, the new strategy shifts focus on strengthening the role of private sector in international trade and development cooperation. ODA is set to increase in absolute terms and ODA relative to GNI is similarly expected to increase if the Dutch economy sufficiently recovers from the COVID-19 pandemic.


More clarity on budget increase implementation will come in 2023.


Main Actors



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 MFA to influence policy and funding decisions. Many CSOs implement their own programs in 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.


Development Priorities


The Netherlands’ new development strategy emphasizes the role of trade and the Dutch private sector while continuing a focus on the Netherlands’ traditional development cooperation goals. The new cabinet’s top priorities are health care, climate, education, housing, and responding to the COVID-19 crisis.


 

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 €300 million (US$342 million) from 2022-2024, and structurally per year by €500 million ($570 million) from 2025 onward. Additionally, the ODA budget linked to 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.


 

The objectives and priorities of the Dutch development policy are laid out in the policy document: ‘Doing What the Netherlands is Good At.’ 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 SRHR. Digitalization and sustainability appear as cross-cutting themes throughout the strategy.


 

The Netherlands encourages the coordination and strengthening of trade and development by encouraging Dutch businesses to invest in low- and middle-income countries, especially in sustainability and innovation.


 

The strategy focuses on three key areas:

  1. Trade: Dutch trade policy with LMICs 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 legislation;
  2. Development cooperation: Tackling the root causes of ‘poverty, terrorism, irregular migration, and climate change,’ as well as reaching the 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 like water, agriculture, and SRHR maintain high importance;
  3. Strengthening the link between trade and development cooperation: Dutch businesses are set to become much more involved in achieving the SDGs in 14 emerging economies. This effort attempts to increase investment in sustainability and digitalization, as well as strengthen the connection between Dutch organizations and local partners. PPPs focused on export and innovation policy are of particular importance.

 
  

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 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.

 
 

In line with the overall development strategy, the Dutch government recently published its first Dutch International Climate Strategy (October 7th, 2022) and Global Health Strategy (October 21st, 2022). More strategies are expected to be published in Q4 2022 or Q1 2023, including an ‘Africa Strategy,’ ‘Commodities Strategy,’ and a multilateral and human rights policy memorandum. The ‘Feminist Foreign Policy’ is expected to be published in the form of a practical handbook in 2023.


 

By Issue


The Netherlands views gender equality as a prerequisite to all other development goals. The Netherlands is a global champion for gender equality, particularly in SRHR. ‘Equal rights and opportunities for women and girls’ and SRHR are two of the Netherlands’ development priorities. The Netherlands is also expected to publish its first Feminist Foreign Policy in 2023.


 

| Read more about the Netherlands’ ODA related to Gender Equality


 

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.

 
 

The Netherlands was the host of the Climate Action Summit from January 25-26, 2021. In another step forward for climate action, the Dutch development bank 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.


 

| Read more about the Netherlands’ ODA related to Climate Change


Education has become less of an area of interest for the Netherlands. In the newest development strategy, the Dutch government wrote that it will “leave themes like primary education to other donors” to prioritize larger and longer programs on a smaller number of priority areas.


 

| Read more about the Netherlands’ ODA for Education 


 

The Netherlands considers itself to be a international leader in the area of agriculture, and is prioritizing green energy and digitization transition (the digitalization of trade to lower international trade costs) in its development cooperation. The Dutch government also sees agriculture as intertwined with food security, water management, and climate protection.


  

| Read more about the Netherlands’ ODA for Agriculture

 
 

By Region


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 MENA region. The 2022 development strategy lays out the Netherlands’ 22 focus countries regarding development cooperation.

 
 

The Netherlands will also provide a range of support to 12 specific LDCs on the SDGs. 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.


 

Political Outlook


Since 2016, the Netherlands has crafted development policy coherence action plans to minimize negative effects and maximize positive effects of Dutch development policies. The Dutch government will evaluate these action plans and report on their progress yearly.


 

On November 25, 2022, Dutch Minister for Foreign Trade and Development Cooperation Liesje Schreinemacher submitted a third revision of their strategy for development policy coherence and on achieving the SDGs.The action plan focuses on three themes that are important for both the Netherlands and the low- and middle-income countries it supports: 1) reducing the Dutch climate, land, and water footprint, 2) targeting black money and tax avoidance, and 3) lowering vaccine and health inequality.


 

The new action plan will be evaluated by the Ministry of Foreign Affairs evaluation service in early 2023. The plan’s sub-goals, efforts, and indicators will be reported on May 17, 2023, known as ‘Accountability Day’.


Budget


Budget Breakdown


The Dutch ODA budget for 2023 stands at €6.2 billion (US$6.7 billion) with a slightly decreased ODA/GNI ratio of 0.62% (compared to 0.64% in 2022). According to the development budget published in September 2022, the Netherlands is set to increase its spending for development cooperation by around €300 million (US$324 million) annually from 2022-2024 and an additional €500 million (US$540 million) each year from 2025 onward.


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 0.62% ODA/GNI from 2023-2024 and 0.65% from 2025-2027. 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. 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.

 
 

ODA distribution across the ministries is described in the ‘Homogene Groep Internationale Samenwerking’ budget. 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. 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 fall budget, an updated version of the 2022 draft budget in September 20, 2022. The budget does not specify all ODA allocations but lays out significant changes in the budget for the Minister of Foreign Trade and Development Cooperation, which is largely dedicated to ODA.

 
 

This year's 2023 ODA budget confirmed many of the budget lines included in the June 2022 development strategy, ‘Doing What the Netherlands is Good At.’ In line with the Rutte IV cabinet’s coalition agreement, the budget of the Minister for Foreign Trade and Development Cooperation increased by approximately €300 million (US$342 million) from 2022-2024, and structurally per year by €500 million ($570 million) from 2025 onward. For 2023, the largest part of the development budget is dedicated to investments in humanitarian support (15%), followed by strengthening the private sector and labor force in LMICs (14%), SRHR (14%), food security (11%), climate (8%), and refugee support (8%). As ODA in the Netherlands is tied to the GNI, the ODA/GNI target ratio may increase if the Dutch economy continues to recover from the COVID-19 pandemic.   
 


Budget Process 


  • Ministries develop initial budget proposal: From February to March, ministries, including MFA, develop initial budget proposals for the coming year and decide on spending increases or decreases for 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 are also important stakeholders, as they are responsible for designing and coordinating the implementation of Dutch development policy.
  • Ministries update 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 fall; this is known as the ‘spring budget’ (‘Voorjaarsnota’). While 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 during this period include 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 Parliament (‘Miljoenennota’).
  • Parliament debates and approves budget: The ODA budget is debated and amended by the Committee on Foreign Trade and Development Cooperation in the House of Representatives at the end of November. Parliamentary debates in November and December can lead to significant changes to the draft budget. The budget must be approved before the end of the year.

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Clara Brettfeld

cbrettfeld@seekdevelopment.org

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