Part III: The Danish Contribution

Chapter 6. Danish Uganda Aid Strategy

Table 6.1: Danish ODA as % of Danish GNI

1996	1997	1998	1999	2000	2001	2002	2003	2004	2005	Average
1.04	0.97	0.99	1.01	1.06	1.03	0.96	0.84	0.85	0.81	0.96
			0.39	0.40	0.41	0.41	0.42	0.47

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Source: OECD International Development Statistics online.

Note: During the 2005 election, the government made a commitment that Danish aid would not fall below 0.80% of GNI.

The data for 2005 are preliminary pending detailed final data to be published in December 2006. The data are standardised on a calendar year basis for all donors, and so may differ from fiscal year data available in countries’ budget documents.

The Danish Aid Context¹⁵

6.1 Danish aid strategy for Uganda is subject to three main sets of influences: the Ugandan country context, the context of what other donors do and advocate, and the context of Danish influences. The country and donor contexts have been addressed in Part I; we next consider characteristics and evolution of Danish aid.

6.2 Denmark provides consistently high levels of aid relative to GDP (see Table 6.1). These levels are sustained by political consensus, which is nurtured by the so-called “Danish resource base”. This refers to the involvement of Danish consultants, academic institutions, NGOs and business interests in the aid programme.¹⁶

6.3 “Resource base” concerns have had effects on the formal and informal tying of Danish aid. This became less restrictive over the period, but was nevertheless an influence. Although explicit tying of aid was curtailed early in the evaluation period, a system of informal tying remained.¹⁷ This was reflected as follows in the 1996 annual consultations:

Touching on procurements, the Danish delegation reiterated that the Danish aid is provided as untied grant. The delegation stated that there is no direct link between development aid and commercial interests. It is the delegation’s view that Denmark has competitive, high quality companies, which can compete in international tenders on fair and equal terms, and that the high quality of services offered by Danish companies should be given due consideration during the evaluation of bids in connection with international tenders. The concentration of the Danish aid on few sectors should involve Danish companies much more in the future, than what has been the experience in the past. (Uganda–Denmark Development Cooperation Programme, 1996:13)

6.4 The concern to maintain the support of the Danish public has had implications for the (separate) visibility of Danish aid, linked to the need for Danida to be able to demonstrate credibly its proper use and effectiveness. Again this concern is evident in the dialogue around Danish aid to Uganda:

The Head of the Danish delegation raised the dilemma of the visibility of Danish funds if integrated into government’s budgetary and financial systems. In order to maintain public support for Danish development assistance it will be necessary even within a Sector-Wide Approach (SWAp) to demonstrate results on the ground of Danish support. (Agreed Minutes, April/May, Uganda–Denmark Development Cooperation Programme, 2000:7)

6.5 As regards the objectives of Danish aid, this has always implicitly, and recently more explicitly, focused on poverty reduction, allied to strong concerns for democratic governance and high accountability standards. The 1994 statement of Danish aid strategy (MFA Danida, 1994a) made poverty reduction a more explicit concern that it had been hitherto¹⁸ and also heralded a focus on explicit country strategies and on sector programmes rather than isolated projects.

6.6 Danish aid is seen by OECD DAC peers as generous and high quality aid. It is also regarded as unusually focused on a limited number of programme countries and of sectors within those countries. See Chapter 2 of the Perception Study – Volume 2 of this report – for a summary of international perceptions of Danish aid.

6.7 As regards aid modalities: Denmark was an early advocate and practitioner of partnership with recipient governments, and of the use of government systems so as to build capacity and promote ownership. It was an early mover away from isolated projects towards programmes designed at sector level. However, it has been cautious about disbursing through government financial systems, and has had reservations about budget support (because of concerns both about accountability and about the need for distinct visibility of Danish aid).

6.8 The diplomatic and aid functions of the Danish Ministry of Foreign Affairs (MFA) are thoroughly integrated. Until 1991, Danida denoted a distinct agency; since then it has just been a brand name for Danish development assistance, delivered through the MFA.

6.9 The change in composition of the Danish coalition government after the 2001 election, challenged the national consensus around aid, and led to an important strategic review (MFA Danida, 2002g). One result of the review was an announcement of a reduction in aid levels to Uganda, to signal discontent with Uganda’s continued involvement in the DRC.

Denmark’s Uganda Country Strategy

6.10 Appendix E traces the evolution of the Danish aid strategy for Uganda in some detail. Danish aid to Uganda is not strictly governed by formal strategy documents. Country strategies only became an important feature for Danida in the mid-1990s and only two such documents have been adopted during the period, in 1996 and 2004. A strategy was prepared in 2000, but never put forward for approval. These strategies played a process role and helped to crystallise thinking and plans, but they were not a rigid guide to resource allocation, and in practice Danida’s Uganda strategy is also found in general Danida strategies and statements, in the record of agreed minutes of annual consultations and other dialogue, and, increasingly (as harmonisation and alignment proceed) in GOU plans and strategy documents and in joint government–donor strategies at sector and national level. In practice, the country programme is a rolling one, with considerable flexibility and scope for annual adjustments.

6.12 Over time, there is a noticeably stronger linkage to Ugandan government policies and strategies (which are now much more articulated and more credible than in the 1980s) and to what other donors are doing, and more explicit attention to the appropriate modalities to adopt (with increasing trends towards donor harmonisation and alignment). Also, especially in the latest (2004) strategy, there are more specific targets and performance indicators (“results orientation”).

6.13 The Uganda strategy also consistently echoes Danida’s global concerns. Early themes which have persisted have included interest and involvement in “governance” issues; concern to support national strategies and institutions (for ownership and to develop capacity); concern for visibility of Danish aid; and concern for high standards of accountability. Efforts to ensure that the programme is adequately focused also recur, alongside a concern to ensure that Danish aid can “make a difference”. Subsequent chapters review how these concerns have played out in the overall shape of the programme and in the evolution of its main components.

15) Background Paper 4 (in Volume 3) and the three OECD DAC Peer Reviews are important sources for this section.

16) The OECD DAC peer review in 1995 commented:
There are some particular features which distinguish the Danish aid system from others and contribute to its positive image with the public. One of these elements is the strong involvement of all components of Danish society in the conception of aid policy, also in its implementation. Non-governmental organisations (NGOs), consultancy firms, researchers, trade unions and the private business community form the so-called “Danish Resource Base” for the aid programme. (OECD Development Assistance Committee, 1995)

17) “The other side of this integration is the continued involvement of the Danish business community, through a system of “informal tying” in place since 1989, aiming at a 50% return on bilateral ODA in favour of Danish procurement.” (OECD Development Assistance Committee, 1999a). We understand that figures on the return of Danish aid to Denmark are still monitored, although no longer published.

18) See Udsholt, 1997a for an analysis.