See also Norway's Aid-at-a-glance

Norway is setting an example for the DAC

With an ODA/GNI ratio of 0.92% Norway ranked first among DAC members in 2003 and is approaching the 1% target set by the Norwegian government for 2005. It was the first creditor nation in 2000 to offer 100% debt forgiveness to LDCs involved in the initiative in favour of Heavily Indebted Poor Countries (HIPC), with debt forgiveness treated over and above ODA budgets. Norway has also become one of the major donors financing humanitarian action and stands out as a positive example on how to respond to humanitarian needs.

Since the 1999 Peer Review the government has strengthened its focus on the fight against poverty, with the Millennium Development Goals (MDGs) serving as the central point of reference. It has taken a leadership role with respect to donors’ efforts to harmonise practices and align with the national poverty reduction strategies of developing partner countries. Norway is progressively moving towards the adoption of aid modalities that reflect increased donor co ordination, aid effectiveness and national ownership in the context of strategies developed by partner countries. The government has also endorsed the principles and good practice of Good Humanitarian Donorship.

New developments and overall strategy

Fighting poverty is the main axis

On the policy front, major documents emphasizing the fight against poverty were issued since the last peer review. Foremost amongst them are Fighting Poverty: The Norwegian Government’s Action Plan for Combating Poverty in the South Towards 2015 (2002); and the recent White Paper Fighting Poverty Together, a Comprehensive Development Policy (2004). Three supporting policy documents papers were also produced, on HIV/Aids (2000), on education (2003) and on peace-building (2004); as well as two action plans (2004), one on debt relief and the other on agriculture. Those documents provide useful guidance regarding Norway’s principles, policy orientations and objectives.

Norway is moving towards a rights-based approach to development in connection with the fight against poverty. It will assist partner countries to incorporate their obligations to deliver on human rights (economic, social and cultural as well as civil and political) within their national poverty reduction strategies. While it will continue to provide support to civil society organisations that act as watchdogs of government, the government will only support service providers that align their activities with national policy frameworks like the Poverty reduction strategy papers (PRSPs).

The reorganised Norwegian aid administration: work in progress

In 2004, the planning, execution and administration of Norwegian development cooperation activities were integrated into the MFA and decision-making was further decentralised to the country level. In addition to being responsible for implementing development programmes, embassies now assume a central role to improve the co ordination and coherence of bilateral and multilateral efforts. NORAD’s responsibilities were modified to cover evaluation, quality assurance, knowledge management; and the administration of grant schemes in favour of civil society organisations and the private sector. As a technical directorate under the MFA it also provides advisory services to the ministry and the embassies upon request.

It is still too early to draw conclusions on the impact of the reorganisation. The reform was prompted by the recognition that linkages between policy, strategy and implementation needed to be improved and the division of labour between the MFA, NORAD and the embassies clarified. The Government also wanted to reduce the duplication and fragmentation of aid interventions; develop its ability to interact with all relevant actors at country level; and strengthen the focus on results. Furthermore, it was felt that a more holistic approach to poverty reduction and development was needed as well as an aid administration better adapted to new aid modalities and the trend towards more co-ordination and decentralisation.

Public support for development aid is intact

There is a strong national consensus in Norway regarding development co operation, both with respect to funding levels and the priority given to the MDGs, and little disagreement in Parliament regarding the global role Norway is playing. Debates on development-related issues are widely reported in the media. Recurrent issues pertain to refugees and asylum seekers, debt cancellation, HIV/Aids, aid untying and the corporate social responsibility of Norwegian companies. Recently, the publication of the government’s comprehensive development policy has stimulated consultations on development results, harmonisation, priority-setting and the role of NGOs.

Recommendations

• The Norwegian government should continue to reflect on how the implementation of its rights-based approach to development affects Norway’s policy dialogue with its priority partner countries, including on locally-owned strategies.
• In the interest of mutual learning Norway’s experience with respect to the reorganisation of the aid administration could be shared so that other donors may benefit from lessons learned.
• The Norwegian authorities should continue to strengthen their focus on results as part of donors’ collective efforts, especially in light of the increased weight to be given to sectoral and budget support. This could contribute to ensuring public support for Norwegian development co-operation.
• Given the White Paper’s strong emphasis on private sector development Norway could come up with innovative strategies that mobilise the full potential of the private sector, particularly in priority countries.
• Norway should explore ways of ensuring that its focus on gender equality is not dissipated as a result of mainstreaming. Other donors could be interested in learning from Norway’s long term experiences.

Aid volumes and distribution

While Norway is excelling in terms of ODA/GNI ratio…

Norway ranks first among the 22 DAC member countries in terms of ODA/GNI. In 2003, total net ODA was USD 2.04 billion. After falling during the 1990s, in part due to methodological changes in assessing GNI, and again in 2000, Norwegian ODA increased from 0.76% of GNI in 2000 to 0.92% in 2003. The current government has expressed its intention to maintain the 1% target throughout the 2005-2009 parliamentary period and even beyond. Norwegian ODA well exceeds the 2003 DAC average of 0.41% but is below its previous level of 1.17% during the early 1990s.

...aid is still dispersed both geographically and sectorally

Bilateral aid constituted 72% of Norwegian ODA in 2003, spreading over 120 countries. Of those seven are “main partner countries” (all of them LDCs) as opposed to eleven up until 2001, and seventeen are “other partner countries” (five of them LDCs). Sub-Saharan Africa received 48%, South and Central Asia 17%, Europe 12%, the Middle East 13% and Latin America 6%. Contributions to LDCs represented 55% compared to the DAC average of 30%. Two of the seven main partner countries (Mozambique and Tanzania) were among the top five recipients in terms of volume in 2002-03.

The share of main partners’ bilateral ODA has decreased continuously during the last ten years. In 2002-2003, the top five recipients (three of which were LDCs) received 27% of total Norwegian bilateral ODA, compared to 30% in 1997-98. The top 20 recipients received 67%, compared to 68% also in 1997-98. During the last ten years the share of bilateral ODA going to other recipients has been high (60% in 2002), with the number of countries increasing. This percentage includes multi-bi support, emergency and distress relief (including the first year cost of refugees in Norway), peace-building, democratisation, transitional assistance as well as activities in countries in South East Europe, the Caucasus and Central Asia. The large number overall of recipient countries is explained by the geographic spread of NGO projects, foreign students and humanitarian action.

There is no formal strategy regarding the choice between the different aid channels (bilateral, multilateral, NGOs). The deciding factors are countries’ own efforts in reaching the MDGs “and other important development goals and rights”. Emphasis is placed on the quality of aid delivered and on achieving results; and whether the activity is supporting national poverty reduction strategies and strengthening national or local institutions and organisations. The selection of sectors also depends on the harmonisation processes that are put in place in a number of partner countries.

Norway prioritises support to areas where it can effectively contribute to poverty reduction. These are: education, health, HIV/aids, the follow-up to the WEHAB-initiatives (water, energy, health, agriculture and biological diversity) and the rights of vulnerable groups. In addition, Norway will also be guided to a certain extent by its ability to provide specialist competence in the form of national experts. This is believed to be found in areas such as governance, private sector development and trade, sustainable development and natural resources management, capacity strengthening and peace-building. In 2001-02, ODA volumes to social infrastructure and services were 55% of bilateral ODA, and 50% during 2003-04 compared to a DAC average of 35%. Despite strong positioning on trade and private sector development, little expenditure is reported under these categories.

Support to multilateral agencies is strong

Norway is a strong supporter of the multilateral system and plays an active role in the governing bodies of the multilateral agencies to which it belongs. In 2003, 28% of total ODA went to the multilaterals. Norway expects the UN agencies to respond to the reform agenda in light of the new, co-ordinated ways of doing development co operation. Together with other donors, the government is exercising pressure on the multilateral agencies to change their procedures in order to participate in joint programming and to pool funds in the context of the PRSPs. In 2003, Norway was the largest contributor to the UN consolidated appeals for humanitarian action measured by contributions as a proportion of Gross Domestic Product.

The changing role and responsibilities of NGOs

A special feature of Norwegian ODA is the very large share allocated through NGOs: an estimated 22% of total Norwegian aid in 2002. Norway relies heavily on Norwegian NGOs for delivering humanitarian action.

The reorganization of the Norwegian aid administration and the trend towards donor harmonisation and alignment with national PRSPs have sharpened the debate on the dependency dilemma and the changing role of NGOs. A number of organisations have expressed concern regarding the extent to which they can exert influence in multilateral agencies. Some NGOs perceive their ability to realise their specific advantages as being constrained by ambitious structures such as the Zambian Harmonisation in Practice (HIP) framework. In the context of poverty reduction, the role of NGOs will increasingly consist in enhancing the ability of marginalised groups to fight poverty. A number of them are aware that they may have to adapt their approaches to fit the complex socio-economic and political circumstances to which the poorer sections of developing countries belong. Some Norwegian NGOs see this as a ‘window of opportunity’ and have begun to reflect on how they can acquire the capacity, knowledge and commitment needed to best assist those groups.

Recommendations

• The Norwegian Government is commended for its commitment to reach the 1% ODA/GNI target. It is encouraged to assess the possibility of multi-year funding commitments for the seven main partner countries so as to increase the predictability of flows for those countries.
• Norway is encouraged to increase the proportion of its long term assistance going to partner countries and to assess the comparative advantage of the different channels and modalities for delivering aid against the poverty reduction goals.
• An explicit strategy could be elaborated to cover the relationship between the Norwegian Government and NGOs. The strategy should encourage and reflect the diversity of roles NGOs fulfil in long term co-operation as service providers and advocacy entities. The criteria for allocating resources to and through NGOs could be clarified and properly conveyed to them. More efforts could be made to assess their contribution towards poverty reduction.

Policy coherence for development

On balance the ground for more effective policy coherence for development (PCD) is evolving positively. PCD is an explicit objective of the White Paper but could be anchored more firmly as a government-wide objective, with the central contribution of policy coherence to improving the effectiveness of Norwegian ODA clearly spelled out. A dialogue on policy coherence has recently been initiated among four ministries which will be expanded to others using the indicative checklist for PCD in conformity with the DAC Guidelines on Poverty Reduction. A network of key personnel across the administration has been established to address PCD issues.

The Norwegian Government is active in international fora to make multilateral debt relief schemes more effective and has developed debt relief measures for post conflict countries that make immediate relief possible. Norway also actively supports anti-corruption activities and promotes corporate ethical behaviour with new guidelines shunning companies because of behaviour that breaches human rights, involves corruption or environmental damage. It is reporting to the United Nations General Assembly in the context of the Millennium Declaration and intends to continue this practice. Norway is also commended for its July 2002 decision to grant duty and quota free access to all products from LDCs to Norwegian markets and could extend this to other developing countries.

Recommendations

• The Norwegian Government should report regularly on its actions aimed at improving policy coherence and explore the possibility of integrating the Millennium Development Goals into relevant policy areas such as trade, agriculture, environment, security, migration and economics. It could also set up a ‘whole-of-government mechanism’ to strengthen PCD with those areas.
• Given its new responsibilities NORAD could be mandated in the future to conduct evaluations related to policy coherence for development.
• Norway should review the very high levels of agricultural protection to all but Least Developed Countries (LDCs) and its safeguard clauses associated with its general system of preferences to create more solid and durable export opportunities for developing countries.

Aid management and implementation

An increased political and strategic role for Norwegian embassies?

The reorganisation of the aid administration is perceived as an opportunity for the MFA to simplify its structure and improve its delegation procedures and the division of labour in the ministry and between the embassies and headquarters. As the new system falls into place, embassies should increasingly contribute to strategic planning and the monitoring of donor efforts at harmonization and alignment, as is already happening in Zambia. New topics could also be covered at embassy level (e.g. budget support, peace building, regional integration) and sensitive issues (e.g. human rights, gender equality, humanitarian action). With increased responsibility the embassies could be made more accountable to both partner governments and Norwegian authorities.

New challenges for NORAD

Following the reorganisation, NORAD continues to have a critical mass of professional expertise. However, some gaps, particularly to provide advisory services to embassies, may be difficult to fill now that a number of highly qualified staff have moved from NORAD to the MFA. The evaluation, quality assurance and knowledge management functions should be clarified as well as the linkages between them to improve understanding of how these functions relate to each other.

Having an adequate skills mix

The reorganisation has resulted in a redeployment of staff, mostly from NORAD to the MFA and the embassies, with no net staff increase or lay offs. Continuing attention should be given to ensuring the proper match between NORAD’s responsibilities and the competence profile of its staff. A number of MFA jobs increasingly require substantive and sector-specific expertise, e.g. in private sector development and gender equality, in addition to competences in the areas of policy dialogue and reporting. Within the embassies, staff must combine strong diplomatic skills with macroeconomic and policy-level expertise as well as process skills to present Norwegian policy and discuss other countries’ positions in donor co ordination and other fora. In Zambia, it seems that this has not been a problem: the integration of foreign policy and development work has functioned well to the present, though Norway might give more attention to the political dimension.

Towards building a results-oriented culture

The responsibility for monitoring results has moved to the MFA. This provides an opportunity for the ministry to sharpen its ability to track and link inputs to activities and outputs, to focus on impact and incorporate lessons learned into decision making processes. But it also presents limits in terms of taking into account NORAD’s evaluation results in future policy and programme and project implementation, and more generally for enhancing systemic learning. This is a challenge facing both the ministry and NORAD, one that depends on sharing information and good knowledge management throughout the institutions.

Norway’s new modes of operation in the context of harmonisation and alignment

As a member of the Nordic Plus group of countries  Norway has been a driving force in the promotion of donor reform to reduce transaction costs for partner countries and increase aid effectiveness. It has played, and still plays, a positive and constructive role bilaterally as well as multilaterally in the harmonisation of donor practices and alignment with national poverty reduction strategies.

Norway is planning to have an operational plan on harmonisation and alignment effective January, 2005. The plan will look into routines for information flows between the MFA and embassies in particular and collaboration and harmonisation initiatives with multilateral institutions. In Zambia, the Norwegian Government played a decisive role in the construction of a tailored plan for donor harmonisation, with a number of useful lessons emerging from the initial phase of the HIP process. The Zambian experience as well as other pilot cases will be presented to the High Level Forum planned for March, 2005.

The trend towards harmonisation and alignment with national PRSPs means that embassy staff increasingly consult with mostly higher level officials from the partner countries’ Finance and Planning ministries and from other donor representations in-country, with less and less involvement in day to day operations. While this is commendable in terms of country ownership, in practice it means that embassies are challenged to maintain close touch with local conditions.

Norway’s commitment to new modes of operation is making a difference

Norway is now engaged in sector-wide approaches and involved in direct budget support initiatives where the conditions are sufficiently sound. In Zambia it is pooling financial resources as well as technical assistance with other willing partners in the education sector without specific earmarking, although twinning arrangements are utilized. The guidelines on budget support for developing countries, approved in August 2004, provide a good indication of the conditions under which this aid modality can be used.

The government also keeps a portfolio of projects and increasingly uses silent partnership, e.g. in Zambia, or delegated partnership, e.g. in Malawi, as implementing mechanisms. Twinning arrangements between Norwegian and partner country institutions as well as framework agreements with Norwegian professional organizations which NORAD can solicit on an ad hoc basis, are also utilized. In the case of silent and delegated partnerships, each individual donor’s contribution is less visible when it is pooled with and disbursed by another donor. Reporting to the public on achievements by results or impact, particularly in the context of the MDGs, is a big challenge for the Norwegian government, as for other donors.

Recommendations

• The Norwegian Government could clarify how the embassies will implement the rights-based approach to development.
• Norway should also clarify its results orientation. The challenge of enhancing systemic learning should be addressed by ensuring the continued sharing of information between the MFA and NORAD and good knowledge management throughout the institutions.
• The Norwegian government should ensure that the aid administration has the right mix of people and sufficient resources to provide effective advice and support on all issues which are high on the policy agenda, such as  private sector development; and to build on Norway’s strong support to  gender equality. The recent Action Plan on Fighting Poverty through Agriculture is an opportunity to experiment with innovative thinking and tools in both areas.
• The government should also allocate appropriate resources to allow NORAD to fulfil its new functions.
• Human resources management should evolve to reflect strategic requirements such as budget and sector support and the rights-based approach as well as the increasingly frequent and important policy dialogue with other donors and partner country governments. Incentives for staff to renew, update and develop their knowledge base, including through networking and using other people’s knowledge as inputs, should be considered.
• Norway could engage all  donors to support capacity development and locally available expertise to assist governments in monitoring harmonisation and alignment processes.

Humanitarian action

A good performance of humanitarian donorship…

Norway takes a leading role on humanitarian donorship and is a major contributor to the multilateral agencies through the UN Consolidated Inter-Agency Appeals and to the International Red Cross and Red Crescent movement. The UN, international organisations and NGOs view Norway as a provider of timely and flexible funding.

Norway’s experiences with humanitarian action and involvement in peace processes have helped reinforce the relationship between peace and development and emphasized the need for a systematic approach to transitional assistance and peace-building. A special budget line to fill the financing gap during transitions has been established as a result. A strategic framework for peace-building within development cooperation has also been launched.

…but a comprehensive policy document is called for…

There is no comprehensive policy document explaining Norway’s humanitarian policies other than the annual budget proposition to the Storting. This makes it more difficult to assess how Norway sets priorities and ensures that its support for humanitarian action adheres to the fundamental principles of humanity, impartiality, neutrality and independence in situations where conflicting objectives may be perceived.

…and co-ordination could be ensured…

Management structures and procedures involved in administering humanitarian action continue to be complex, placing high demand on efficient co-ordination. As for many donors, the administration of Norwegian humanitarian and transitional assistance poses particular challenges to  optimize intra- and inter-ministerial co-ordination to ensure effectiveness and consistency.

...to better address emerging issues

Humanitarian needs assessments are being improved at the international level to better inform decision makers on funding requirements for humanitarian action. This work in progress will enable donors to ensure funding will be provided according to need and to give a more objective basis for decision-making.

Beneficiaries’ involvement in the design, implementation, monitoring and evaluation of humanitarian response needs to be more adequately addressed globally and better reflected in donors’ policies and procedures.

Increased civil and military co operation in Iraq and Afghanistan raises major concerns for all involved regarding impartiality, effectiveness and security. This must not compromise humanitarian objectives and principles and reduce the capacity to deliver an effective humanitarian response.

One finding from the Peer Review of Norway confirms that the lack of relevant DAC data makes it difficult to monitor donor performance in humanitarian action. The absence of a common definition of humanitarian action and vague reporting formats constitute a challenge for harmonised donor practices and improved efficiency.

Recommendations

The government could consider elaborating a comprehensive policy document for humanitarian action, including actions in response to natural disasters (especially in relation to prevention and preparedness), to ensure consistency with the endorsed principles and good practice of humanitarian donorship. The policy document should also address issues related to beneficiaries’ involvement.

• Norway must ensure intra- and inter-ministerial co operation to optimise its humanitarian response and decision-making for funding humanitarian action.
• Norway could strengthen its procedures to ensure that the 1994 Guidelines on the Use of Military and Civil Defence Assets in Disaster Relief and the 2003 Guidelines on the Use of Military and Civil Defence Assets to Support United Nations Humanitarian Activities in Complex Emergencies are respected. Given the fact that there is no good practice in the complex field of civil and military co operation, Norway is well placed to take an active role in addressing these questions in international fora.
• To improve the financial tracking of global humanitarian action, Norway could engage in initiatives to improve accuracy and timeliness in donor reporting on humanitarian action.

Visit the OECD country web site for Norway.