Development cooperation of the Grand Duchy of Luxembourg is characterised by its strong commitment to poverty reduction, to 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) of 1 per cent of the gross national income (GNI).
ODA is implemented by the instruments of bilateral and multilateral cooperation, and cooperation with development NGOs. It is financed by the Ministry of Foreign and European Affairs, the Ministry of Finance, and the Ministry of Sustainable Development and Infrastructure. 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 engagement through a variety of initiatives. Bilateral Development cooperation is mainly implemented through the development agency LuxDevelopment, which manages of a business challenge fund, 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 twenty-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 economic growth and job creation. As an example, the Business Partnership Facility (BPF), 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, was launched in April 2016, and is a new 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 to play a more active role in the global trading system. Furthermore, Luxembourg is also the co-initiator and a main partner in the establishment of the Agri-Business Capital (ABC) Fund, a smallholder investment fund in agriculture with IFAD, AGRA and the EU. Considering the positive experiences in working with the private sector, private sector engagement and inclusive business will take a more prominent role in Luxembourg’s next development cooperation strategy, which is currently being developed.
In order to enhance the effectiveness of its policy, Luxembourg focuses most of its efforts on a limited number of partner countries, mostly LDCs. These are Burkina Faso, Cabo Verde, Mali, Niger, Senegal, Nicaragua, and Laos. The remainder of the resources is spread over other countries, for instance Kosovo, Mongolia, Vietnam, El Salvador, Myanmar, and the Palestinian territories, as well as 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.