The development cooperation of the Grand Duchy of Luxembourg is characterised by its strong commitment to poverty reduction and humanitarian aid, and to effective work with its partner countries. In 2009, the Luxembourg government reached the quantitative goal it had set itself in the 2000s for the first time: to reach an official development assistance (ODA) level of one percent of the gross national income (GNI).
ODA is implemented by the instruments of bilateral and multilateral cooperation, and in cooperation with development NGOs. It is financed by the Ministry of Foreign and European Affairs, the Ministry of Finance, and the Ministry for the Environment, Climate and Sustainable Development.
The Ministry of Foreign and European Affairs’ Directorate for Development Cooperation and Humanitarian Affairs is responsible for the implementation of Luxembourg’s development cooperation strategy, which includes private sector development and engagement through a variety of initiatives.
Bilateral development cooperation is mainly implemented through the development agency LuxDevelopment, which manages a business challenge fund; strengthens value chains and facilitates access to markets; provides technical assistance to a sustainable forestry investment fund; and implements an ICT development programme in Burkina Faso.
Inclusive Business in Private Sector Promotion
Luxembourg’s development cooperation has maintained a 20-year commitment to actively support the development of inclusive finance, recognising that these tools constitute important mechanisms for poverty reduction.
More recently, the dynamism of the private sector has been playing an increasingly important role in development affairs. Private enterprise, investment and innovation are major drivers of productivity, which in turn drives inclusive economic growth and job creation.
As an example, the Business Partnership Facility (BPF) is a financing facility that aims to encourage the Luxembourgish and European private sector to work with partners in developing countries in order to establish sustainable commercial projects. The Facility was launched in April 2016 and is a tool used by Luxembourg’s development cooperation to contribute to sustainable development and inclusive growth in developing countries.
Luxembourg’s development cooperation also has commitments at the multilateral level. The Enhanced Integrated Framework (EIF) is a multi-donor programme linked directly to the World Trade Organization (WTO) that helps least developed countries play a more active role in the global trading system. Furthermore, Luxembourg is also active in the area of innovative finance.
Private sector development, engagement and inclusive business take prominent roles in Luxembourg’s new development cooperation strategy ‘Road to 2030,’ reflecting the country’s positive experiences in working with the private sector.
In order to enhance the effectiveness of its policy, Luxembourg focuses most of its efforts on a limited number of partner countries, which are mostly least developed countries (LDCs). These are Burkina Faso, Cabo Verde, Mali, Niger, Senegal, Nicaragua, and Laos.
The remainder of the resources is spread over other countries, including Kosovo, Mongolia, Vietnam, El Salvador, Myanmar, and the Palestinian territories, and also covers regional cooperation.
emergency.lu is a mobile, satellite-based, telecommunications platform, created to re-establish communication (internet, phone) after a disaster, to support the coordination efforts of humanitarian organisations in the field and to contribute to saving lives during humanitarian emergencies.
BKF/021: „ Appui au Développement des Technologies de l’Information et de la Communication (TIC) au Burkina Faso
This project aims at supporting the development and enhancing the quality, reliability and accessibility of the (electronic) communications infrastructure of the Burkinabe public administration throughout the entire country. SES, technical partner in the project, provides satellite connectivity solutions to the national internet infrastructure which is being expanded.
The ABC Fund will be launched as an impact Fund under a company structure to drive inclusive smallholder and rural SME finance.
The overall objective of the project is to make better use of the financial flows available to private companies for social responsibility, thus maximizing their impact on the country’s development.
The aim of the SATMED platform is to set up telemedicine services and applications (e-learning, patient data storage, online consultations, etc.) and to install SATMED satellite antennas in inaccessible or remote areas, in order to allow access to these services.
The Enhanced Integrated Framework (EIF) is a multi-donor programme linked directly to the World Trade Organization (WTO) that helps least-developed countries to play a more active role in the global trading system.
Promoting sustainable partnerships and the transfer of knowledge and technologies between companies in Luxembourg and the EU and companies, civil society and state agencies in developing countries.
Through capacity building, loans to MFIs and guarantees, the program aims at contributing to an innovative response to the financing of agriculture in West Africa with a strong focus on value chains.
ADA is an NGO specialized in inclusive finance. It implements a broad programme, working with regulators, microfinance associations, networks, MFIs, investors and in research.
The programme aims at improving the regulatory environment and the ability of microfinance institutions to grow responsively. It provides capacity building to microfinance institutions, increases transparency of the sector and facilitates the emergence of relevant inclusive financial products, especially for young entrepreneurs.
LMDF is an investment fund supported by the Luxembourgish state and international banks that invest into microfinance institutions in Africa, Latin Amercia, South East Asia. The Fund facilitates access to responsible finance by building sustainable links between investors, microfinance institutions and ultimate beneficiaries.
FCCF is an investment fund supported by the Luxembourgish state and banks. It invests in sustainable usage of secondary forests in Central America, which benefit local populations, ensure a reliable source of income, and allow the forest to be protected.
The Inclusive Finance Luxembourg Asbl (InFiNe.lu) is the Luxembourg platform that brings together public, private and civil society actors involved in inclusive finance. The value of InFiNe.lu lies in the wide range of expertise characterized by the diversity of its members.
LuxFlag is the Luxembourg fund labellling agency providing labels on microfinance, environment and ESG. To promote sustainable investing in the financial industry, LuxFLAG awards an independent and transparent label to eligible investment vehicles in Microfinance, Environment, ESG (Environment, Social, Governance), Climate Finance and Green Bonds. The objective is to reassure investors that the labelled investment vehicle invests in a responsible manner.
Microinsurance Network provides a global multi-stakeholder platform through which members generate and share knowledge and information about the development and delivery of effective insurance services for low-income people.