Reducing poverty has been a key aim of Norwegian development policy from the outset. In recent years, new global challenges have become increasingly urgent. These comprise both violent conflict and, in particular, climate change, which has the most severe implications for developing countries and undermines the conditions for long-term poverty reduction.1 This has changed and expanded the development agenda over time, where poverty reduction is increasingly linked to the ability to address not only local and national, but also global challenges. After a prolonged period of decline in global poverty, climate change is already undermining the livelihoods in many poor and middle-income countries. Furthermore, the pandemic has caused the number of people living in extreme poverty to increase for the first time in decades.
At the same time, the international aid system is under increasing pressure. The system is underfunded and not set up to deal with the challenges we are currently facing. Only a handful of rich countries are providing aid at a level that meets the international community’s targets, set by the United Nations at 0,7 % of Gross National Income, and defined as Official Development Assistance (ODA) by the OECD Development Assistance Committee. At the same time, a larger proportion of such ODA, including Norwegian, are being used to deal with global challenges such as climate change, pandemics, conflict and flows of refugees instead of the original goal of contributing to development in poor countries.
The aim set out in the Government’s political platform is to “spend 1 % of Norway’s GNI on international efforts to achieve the SDGs for socially, economically and environmentally sustainable development”. The wording can be interpreted to mean that international efforts do not necessarily have to be linked to ODA.
The expert group was established by the Ministry of Foreign Affairs (MFA) with a mandate to provide advice on the funding of efforts to support the global goals to achieve socially, economically, and environmentally sustainable development, and on how Norway can contribute to international discussions on global public goods.2
The expert group’s mandate is threefold. It is tasked with providing advice on
- How the target set out in the Government’s political platform to spend 1 % of Norway’s GNI on international efforts to achieve the SDGs for socially, economically, and environmentally sustainable development should be followed up.
- How Norway can best contribute to the international debate on how to secure the funding needed to promote economic development and welfare in developing countries, as well as to deliver global public goods, and advice regarding internationally acceptable reporting system, as well as partners and arenas on which it should focus.
- Possible exceptions from ODA rules in the Norwegian aid budget. The expert group is tasked with proposing in which cases and to what extent, in rare cases and to a limited extent, funds can be used from the aid budget within the one per cent threshold of Norway’s GNI on international efforts to achieve the SDGs for socially, economically and environmentally sustainable development. The exceptions are not limited to ODA-approved countries but must be deemed to have a poverty-reducing effect.
To deliver on the mandate given and respond to the three specific tasks, the Expert Group has deemed it necessary to conduct a broad analysis of key development trends. Our analysis and recommendations are based on a twofold analysis: Firstly, an analysis of what the specific challenges or problems are, and whether they are of a national, regional, or global nature. Climate change and efforts to prevent and manage it are key factors in this respect. Secondly, an analysis of the more technical and formal aspects of Norwegian and international aid, and whether the system that encompasses what is defined as aid is suitable for tackling new challenges. The Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD), which defines rules for what is approved as official aid (ODA), is particularly important in this respect. The same applies to other multilateral organisations such as the UN and the development banks.
We do not analyse the specific contents of Norwegian aid in detail, but concentrate, as specified in the mandate, on overall objectives and management systems as well as the international context in which Norwegian aid operates. Specifically, this means that we do not seek to measure or assess how Norwegian aid contributes to reaching different Sustainable Development Goals (SDGs). Nor do we assess whether, for example, support to education is more or less effective than support to health. We base our approach on the broad understanding of development that has characterised Norwegian aid and development policy for a long time, where human rights and gender equality are integral objectives and considerations.
InChapter 2, we analyse global development trends and show that it is highly unlikely that the world will achieve the SDGs. We show how poverty is increasingly concentrated in what are often referred to as fragile states, how humanitarian crises and long-term development is increasingly interwoven, and how climate change threatens to undermine the development gains achieved over the past decades. However, we also show that there are positive developments and significant potential for generating economic growth and simultaneously tackling climate change. The conclusion is nonetheless clear: action is needed now if we are to avoid the catastrophic consequences of climate change, and this action must be taken in a way that does not lose sight of the aim of reducing poverty.
InChapter 3, we analyse key developments in the international aid system, with particular focus on the role of key multilateral organisations, how different forms of aid are distributed, the proliferation of development objectives, and how climate change has over time become a key component of development financing. The conclusion is clear: The international aid system is underfunded, fragmented and not fit to the task of addressing the complex problems we are facing. Of particular importance to our mandate is the analysis of the very definition of official development assistance (ODA) within the framework of the OECD DAC. We show how the goal of a high volume of ODA has led to an expansion of what can count as ODA. The result is that there are too many different and poorly defined development objectives, which potentially undermines the quality and effectiveness of development work.
To address this problem, we outline a new framework for development policy in Chapter 4 based on the overarching principle of ‘investments in sustainable development’. The framework introduces a set of principles that redefine aid as investments with the aim of providing the greatest possible social returns. The intention is to clarify common interests and equal partnerships between donors and recipients of aid, and to establish clear criteria that can ensure effectiveness and results. The framework also identifies the importance of drawing on knowledge and research-based assessments of what kind of measures are most effective in achieving development policy goals.
Chapter 5 builds on this investment framework to suggest a new categorization of development aid, with distinct yet interrelated objectives. The argument is straightforward: In order to strengthen measurement and improve the effectiveness of different development interventions, it is necessary to formulate clear objectives. This involves categorizing Norwegian development aid into two broad areas: Poverty reduction and development in the poorest countries, together with humanitarian assistance (Category 1), and risk reduction and responses to global challenges – notably climate change – that disproportionally affect low- and middle income countries and undermine development (Category 2).3 These categories serve to highlight the increasing thematic and operational scope of development cooperation, as described in Chapter 3. There is still a clear expectation in our framework that most of Norway’s investments within the aid budget will be concentrated in and benefit poor and fragile countries. At the same time, it signals a greater transparency with respect to all countries’ self-interest in – and responsibility for – resolving global challenges.
In Chapter 6, we show how a reorientation of Norwegian development policy must be based on standards and rules on which international consensus can be established. Although ODA is under pressure, it remains the most important international measurement for donor contributions to development. Norway should therefore work towards a “refocused” ODA, while also actively contributing to further developing the new international reporting framework Total Official Support for Sustainable Development (TOSSD). This will provide an appropriate method of reporting and monitoring development financing also beyond ODA.
However, a clearer categorisation and increased focus on effectiveness are not sufficient to respond to current challenges. In Chapter 7, we describe the need urgent need to mobilize more resources, both from public and private sources. We describe how Norway can contribute to mobilizing more private investments, including which mechanisms are most effective to this end. This includes using guarantees and insurance schemes, increasing support to Norfund and Norway’s Climate Investment Fund, as well as supporting the development banks and the proposals that have been made for boosting their loan capacity.
The proposed framework for investments in sustainable development aims to move away from traditional aid and towards investments in a common, sustainable future, with a focus on genuine partnerships and results. All countries have a vested interest in investing in a sustainable future, but countries such as Norway have a particular responsibility to contribute according to the principles of a global division of responsibility.
1.1 The Expert Group and its Work
The recipient of the report is Minister of International Development Anne Beate Tvinnereim.
The expert group responsible for producing the report has consisted of: Ole Jacob Sending (Director of Research, Norwegian Institute of International Affairs – NUPI) (chair), Arild Angelsen (Professor at the Norwegian University of Life Sciences), Dan Banik (Professor at the University of Oslo), Anne-Marie Helland (Director in PwC Norway), Karoline Myklebust Linde (Managing Director in Laerdal Global Health), Jon Lomøy (retired), Trond Mellingsæter (Managing Director in Reitan Eiendom), Hilde Beate Selbervik (Associate Professor at the University of Bergen) and Liv Tørres (International Secretary of the Norwegian Confederation of Trade Unions – LO Norway).
The secretariat for the Expert Group has comprised Assistant Director General Kari Hauge Riisøen (chair), Special Representative Vegard Holmelid and Adviser Magnhild Bøgseth, all from the Ministry of Foreign Affairs (MFA), as well as Director Håvard Mokleiv Nygård, Assistant Director Katrine Andrea Heggedal and Senior Adviser Nikolai Henrik Wold Hegertun, all from Norad.
The expert group’s analysis and recommendations are based on aid statistics from Norad, data and analyses from the OECD, the World Bank and the UN system, as well as a number of research reports from universities, research institutions and think tanks. It is also based on interviews and conversations with relevant public and private sector actors in Norway and internationally. The group has visited Washington DC, New York, Paris, Brussels and Addis Ababa and held several meetings at the civil servant level in Norway with the Ministry of Foreign Affairs and Norad, as well as with the Ministry of Health and Care Services and the Ministry of Climate and Environment. The expert group has also had meetings with Norwegian and international civil society organisations and research institutions. The private sector perspective has been obtained through conversations with Norfund, private investors, the International Financing Corporation (IFC) and the Confederation of Norwegian Enterprise’s (NHO) Forum for the promotion of business engagement, among others. The group has talked to leading large donors such as the USA, UK, France, Germany, and the European Commission, as well as with smaller donors such as the Czech Republic, Portugal, Switzerland and Poland. It has also had meetings with representatives of the Nordic countries, the chair of the OECD Development Assistance Committee (DAC), as well as with the OECD Development Co-operation Directorate (DCD), the OECD Centre for Tax Policy and Administration and the OECD Development Centre. The expert group has met with UN Deputy Secretary-General Amina Mohammed, the UN Secretary-General’s Secretariat, and various UN development organisations, including the UN Children’s Fund (UNICEF) and the UN Development Programme (UNDP) at central and country level, as well as the World Bank (WB) and the African Development Bank (AfDB). The group has also had meetings with think tanks in New York, Washington, Paris, Brussels and Addis Ababa. Several meetings have been held with representatives of developing countries in Addis Ababa and New York, with the Ethiopian authorities and with the African Union (AU).