VI. MAXIMUM DEVELOPMENT FOR MONEY
– EFFECTIVE AND FOCUSED ASSISTANCE

A significant contribution to the achievement of the UN Millennium Development Goals is increased effectiveness of development assistance. The cost-effectiveness of development assistance must constantly be maximised. Since it took office in 2001, the Government has significantly enhanced the effectiveness of Danish development assistance and streamlined the associated administration – e.g. by untying and decentralising the Danish assistance. The efforts made to streamline and focus the assistance will be further strengthened in the coming years – both in the delivery of bilateral Danish assistance and in the cooperation with multilateral institutions.

Denmark cannot perform this task alone. The interplay with other actors is crucial for success. An improved division of labour and better coordination is necessary. Through its specific priorities, the Government will strive to ensure that the Danish assistance is built around Denmark’s special strengths and increasingly leave other areas to like-minded donors.

The Government will work to ease and simplify the administration linked to the receipt of assistance by developing countries. Far too often, conflicting demands are imposed on the developing countries from different sides. In addition, too many parallel structures are created and too many small and scattered initiatives are implemented.

The Government sees it as absolutely vital that the assistance – also in light of the focus on good governance – is increasingly adapted to the recipient country’s own administrative systems and budgets. The recipient of assistance must to a higher degree focus on achieving results that benefit the respective country’s own inhabitants – and not on servicing the donor countries.

In addition, the Government has also worked hard in the EU to make development aid more effective. For example, following Danish pressure, an aid effectiveness package was adopted by the Commission in spring 2006 with the aim of ensuring the delivery of faster and more effective development aid. Denmark, for its part, will continue to place considerable emphasis on promoting the delivery of effective aid from the EU – the world’s largest donor.

In the coming years, the Government will implement a number of initiatives that will enhance the effectiveness of the Danish assistance. The point of departure will be that the recipient country sets the agenda and demonstrates a commitment to change. Only activities and reforms that arise from the recipient country’s own wishes will be implemented.

In order to focus and streamline the Danish assistance further, the Government will:

• Strive to ensure that the development assistance is integrated into the finance acts of recipient countries; a step that will strengthen the democratic monitoring and control of how the assistance funds are spent.
  
  
• Focus the Danish bilateral assistance in each programme country on fewer and larger initiatives through stronger cooperation and better division of labour with other donors.
  
  
• Increase cooperation with other donors in the form of joint missions and joint offices.
  
  
• Participate in the formulation of joint country strategies in the programme countries, when there is basis for doing so. This entails that Denmark will be present in fewer sectors and fewer programme components in these countries.

Programme and project support continue to account for the vast proportion of Danish assistance. However, where progress towards good governance and a commitment to implement reforms builds trust in the effective use of Danish development assistance funds, general budget support may be given as part of the Danish assistance in collaboration with other donors.

The Government will base its decision to provide general budget support on an assessment of 10 criteria, which are listed in the fact box below.

10 criteria for assessing the effectiveness of general budget support

These are not ’either/or’ criteria. It must be expected that the Danish programme countries will vary in their ability to meet these criteria. Therefore, the decision to provide general budget support will be based on an overall assessment of these criteria, where the distinct characteristics of each country will affect the weight given to the different criteria. In the overall assessment, importance will be attached to the recipient country’s strength and will to implement difficult political reforms.

In 2005, the Government introduced a self-financing requirement for NGOs that have a framework agreement with Danida, which came into effect in 2006. The self-financing proportion will be increased to 10 per cent of the grant award in 2007. The self-financing requirement is an expression of the wish to promote the financial independence of NGOs and popular ownership – and the Government will maintain the level of Danish NGO assistance at the same high level.