Development Co-operation Profiles

Iceland

Introduction

Committed to fighting poverty, Iceland invests in marginalised and rural communities in low-income and fragile contexts through district-level approaches and multilateral and civil society partners. Iceland strongly emphasises respect for human rights, gender equality and the environment. It has committed almost half of its bilateral allocable aid to projects and programmes promoting the inclusion and empowerment of persons with disabilities. Iceland’s total official development assistance (ODA) (USD 115.5 million, preliminary data) increased in 2023, representing 0.36% of gross national income (GNI).

Find the methodological notes behind the profile here.

Policy

Iceland’s development co-operation is guided by a commitment to poverty eradication, respect for human rights and improving living standards. The Policy for International Development Co-operation 2024-2028 sets out human rights, gender equality, and environmental and climate affairs as the specific and cross-cutting objectives that serve as pillars of all of Iceland’s development co-operation efforts, in alignment with its expertise. Its three priority partner countries for bilateral co-operation are Malawi, Sierra Leone and Uganda. Iceland is valued as a partner for its unique district-level approach to development co-operation.

Iceland supports its priority areas of gender equality and women’s empowerment, the blue economy, the environment and energy, human rights, and the humanitarian-development-peace nexus through its core and earmarked contributions to multilateral organisations. Increasing synergies between bilateral and multilateral development co-operation and humanitarian assistance is a priority for Iceland. In 2022, Iceland updated its strategies on multilateral co-operation, bilateral co-operation, humanitarian assistance, gender equality in development co-operation, CSO co-operation, and communication and knowledge management.

Poverty and inequality reduction focus

Iceland’s human rights approach to development co-operation, outlined in its policy for international development cooperation 2024-2028, focuses on poverty reduction, gender equality and locally led development through improving human capital and social infrastructure. Iceland is in the process of updating its strateic documents on human rights and gender equality. Other group-based inequalities targeted include inequalities faced by LGBTQI+ persons, people with disabilities and children, with projects and programmes centred around disability making up almost 50% of Iceland’s bilateral allocable aid. Iceland focuses on partnering with subnational authorities in the second tier of government in specific targeted regions to support the decentralised provision of basic services, such as water and sanitation, health, and education. Additionally, through its GRÓ programme, specialist Icelandic knowledge and experience are shared with subnational government actors in partner countries to develop specialist sectors like fisheries and geothermal energy to support livelihoods in underserved regions. Iceland’s Directorate for Development Cooperation targets a few of the least developed countries (LDCs) in sub-Saharan Africa and tailors development co-operation based on income levels.

Findings from OECD-DAC reviews

The 2023 OECD-DAC peer review found that Iceland optimises its development co-operation by focusing on a few key bilateral partner countries (Malawi, Sierra Leone and Uganda) to improve rural communities’ livelihoods and socio-economic living conditions. Iceland leverages its expertise in gender, geothermal energy, fisheries and land restoration through its training programmes and multilateral support. It works closely with a small number of multilateral organisations to advance gender equality, human rights, climate and the environment, and humanitarian assistance and to complement its bilateral portfolio. The review found that Iceland made progress on 12 of the 13 recommendations in its 2017 review. Iceland is working to scale up its ODA programme, with an interim target of 0.35% ODA/GNI subscribed in the government’s 2023-27 fiscal plan; there is, however, no plan or road map to reach 0.7%. Learn more about Iceland’s 2023 DAC peer review.

ODA allocation overview

Iceland provided USD 115.5 million (preliminary data) of ODA in 2023 (USD 110.5 million in constant terms), representing 0.36% of GNI.1 This was an increase of 17.1% in real terms in volume and an increase in the share of GNI from 2022. ODA volume has increased overall in the past ten years, despite a slight decrease in 2019. Iceland is currently just above its intermediary target of 0.35% GNI as ODA in 2023, as set in a parliamentary resolution, and halfway to meeting its 0.7% ODA/GNI international commitment. Iceland provided all of its ODA as grants in 2022.2

In 2023, Iceland ranked 16^th among Development Assistance Committee (DAC) member countries when ODA is taken as a share of GNI. Iceland stands out as the DAC donor with the highest share of gross ODA to the United Nations (UN) system (core and non-core combined) at 56.8%. It also had the highest share among DAC members of bilateral allocable aid to persons with disabilities. The increase of in-donor refugee costs in 2022 means that shares of bilateral ODA allocated to other areas may have decreased from 2021 to 2022, even if absolute volumes have not.

 

Notes: Data on official development assistance (ODA) volumes (figure above) are in constant 2022 prices. Data for 2023 are preliminary. See the methodological notes for further details.

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Iceland is committed to several international targets and Development Assistance Committee standards and recommendations. Learn more about DAC recommendations.

Performance against commitments and DAC recommendations

Description	Target	2021	2022	2023, preliminary
ODA as a share of GNI (%)	0.7	0.28	0.34	0.36
Total ODA to least developed countries as a share of GNI (%)	0.15-0.20	0.11	0.14
Share of untied ODA covered by the DAC Recommendation	100	100	100
Share of untied ODA (All sectors and countries beyond the scope of the Untying Recommendation) (%)		80.2	89.4
Grant element of total ODA (%)	>86	100	100

Note: ODA: official development assistance; GNI: gross national income; DAC: Development Assistance Committee. This table only includes information about ODA data-related DAC recommendations.

Iceland provided most of its ODA bilaterally in 2022. Gross bilateral ODA was 76.7% of total ODA disbursements. Forty-seven per cent of gross bilateral ODA was channelled through multilateral organisations (earmarked contributions). Iceland allocated 23.3% of the total ODA as core contributions to multilateral organisations.

 

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ODA for Ukraine

In 2023, Iceland provided USD 10.8 million (preliminary data) of net bilateral ODA to Ukraine to respond to the impacts of Russia's war of aggression, a 9.1% decrease from 2022 in real terms. USD 4.5 million of the amount was allocated to humanitarian assistance in 2023, a 47.7% decrease from 2022.

 

Note: The amount reported in 2023 is an estimate, based on preliminary figures reported to the OECD and published in April 2024.

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ODA to and through the multilateral system

In 2022, Iceland provided USD 55.7 million of gross ODA to the multilateral system, an increase of 39.8% in real terms from 2021. Of this, USD 22 million was core multilateral ODA, while USD 33.8 million were non-core contributions earmarked for a specific country, region, theme or purpose. Project-type funding earmarked for a specific theme and/or country accounted for 7.4% of Iceland's non-core contributions and 92.6% was programmatic funding (to pooled funds and specific-purpose programmes and funds).

 

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Eighty-nine per cent of Iceland's total contributions to multilateral organisations in 2022 were allocated to the UN System and the World Bank.

 

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The UN system received 56.8% of Iceland's multilateral contributions, of which USD 20.5 million (64.7%) represented earmarked contributions. Out of a total volume of USD 31.7 million to the UN system, the top three UN recipients of Iceland's support (core and earmarked contributions) were UNICEF (USD 5.9 million), UNFPA (USD 4.3 million) and the WFP (USD 4.3 million).

 

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See the section Geographic, sectoral and thematic focus of ODA for the breakdown of bilateral allocations, including ODA earmarked through the multilateral development system. Learn more about multilateral development finance.

Bilateral ODA

In 2022, Iceland's bilateral spending increased compared to the previous year. It provided USD 72.4 million of gross bilateral ODA (which includes earmarked contributions to multilateral organisations). This represented an increase of 23% in real terms from 2021.

In 2022, country programmable aid was 37.8% of Iceland's gross bilateral ODA, compared to the DAC country average of 42%. In-donor refugee costs were USD 6.4 million in 2022, an increase of 44.1% in real terms over 2021, and represented 8.8% of Iceland's total gross bilateral ODA.

 

Note: NGO: non-governmental organisation.

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In 2022, Iceland channelled its bilateral ODA mainly through multilateral organisation and the public sector as earmarked funding. Technical co-operation made up 13% of gross ODA in 2022.

 

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Civil society organisations

In 2022, civil society organisations (CSOs) received USD 6.9 million of gross bilateral ODA, of which 8.8% was directed to developing country-based CSOs. Overall, Seven per cent of gross bilateral ODA was allocated to CSOs as core contributions and 2.3% was channelled through CSOs to implement projects initiated by the donor (earmarked funding). From 2021 to 2022, the combined core and earmarked contributions for CSOs had a minor increase as a share of bilateral ODA, from 9.5% to 9.6%. Learn more about the DAC Recommendation on Enabling Civil Society in Development Co-operation and Humanitarian Aid.

 

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Geographic, sectoral and thematic focus of ODA

In 2022, Iceland's bilateral ODA was primarily focused on Africa. USD 26.8 million was allocated to Africa and USD 12.8 million to ODA-eligible countries in Europe (of which 89.1% for Ukraine), accounting respectively for 37% and 17.7% of gross bilateral ODA. USD 3.3 million was allocated to the Middle East. Europe was the main regional recipient of Iceland's earmarked contributions to multilateral organisations.

Bilateral ODA by recipient country

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In 2022, 56.8% of gross bilateral ODA went to Iceland's top 10 recipients. With exception of the top recipient Ukraine, the following top recipients are in Africa and correspond to its 3 priority partner countries. The share of gross bilateral ODA not allocated by country was 36.8%, of which 23.9% consisted of expenditures for processing and hosting refugees in provider countries.

 

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In 2022, Iceland allocated 0.14% of its GNI to the least developed countries. Iceland allocated the highest share of gross bilateral ODA (39.9%) to the LDCs in 2022, noting that 36.8% was unallocated by income group. Additionally, Iceland allocated 30.6% of gross bilateral ODA to land-locked developing countries in 2022, equal to USD 22.2 million.

 

Note: LDC: least developed country; LIC: low-income country; LMIC: lower middle-income country; UMIC: upper middle-income country; MADCTs: more advanced developing countries and territories.

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Fragile contexts

Support to fragile contexts was USD 22.3 million in 2022, representing 30.8% of Iceland's gross bilateral ODA. Twenty-one per cent of this ODA was provided in the form of humanitarian assistance, decreasing from 31.1% in 2021, while 6.6% was allocated to peace, increasing from 5% in 2021. Learn more about support to fragile contexts on the States of Fragility platform.

 

Note: HDP: humanitarian-development-peace. The chart represents only gross bilateral official development assistance that is allocated by country.

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Sectors

In 2022, the largest focus of Iceland's bilateral ODA was social infrastructure and services. Investments in this area accounted for 38.6% of bilateral ODA commitments (USD 27.9 million) with a strong focus on support to health and population (USD 8.5 million), which accounted for 11.7% of gross bilateral ODA, and an increase of 90.2% from 2019 in real terms, water supply and sanitation (USD 6 million) and government and civil society (USD 5.3 million). ODA for other sectors totalled USD 19 million, focusing on refugees in donor countries (USD 6.4 million). Humanitarian assistance amounted to USD 15 million (20.7% of bilateral ODA). Earmarked contributions to multilateral organisations focused also on social sectors and economic sectors in 2022.

 

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ODA for COVID-19

In 2022, Iceland did not disburse any ODA for the COVID-19 response, down from USD 9.7 million in 2021.

Gender equality

In the period 2021-22, Iceland committed 72.2% of its screened bilateral allocable aid to gender equality and women's empowerment, as either a principal or significant objective (down from 88.4% in 2019-20), compared with the 2021-22 DAC average of 43.3%. This is equal to USD 38.6 million of bilateral ODA in support of gender equality. Unpacking the gender equality data further:

• The share of screened bilateral allocable aid committed to gender equality and women's empowerment as a principal objective was 16.2% in 2021-22, compared with the DAC average of 3.9%.

• Iceland includes gender equality objectives in 60.8% of its ODA for humanitarian aid, above the 2021-22 DAC average of 17%.

• Iceland screens virtually all their bilateral allocable aid activities against the DAC gender equality policy marker (100% in 2021-22).

• Iceland committed USD 0.2 million of ODA to end violence against women and girls and USD 3 million to support women's rights organisations and movements and government institutions in 2021-22.

Learn more about Gender Equality and the Empowerment of Women and Girls: DAC Guidance for Development Partners and the DAC Recommendation on Ending Sexual Exploitation in Development Co-operation.

 

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Environment

In 2021-22, Iceland committed 41.7% of its total bilateral allocable aid (USD 22.5 million) in support of the environment and the Rio Conventions (the DAC average was 35.1%), down from 54.7% in 2019-20. Unpacking the environmental data further:

• Fourteenth per cent of screened bilateral allocable aid focused on environmental issues as a principal objective, compared with the DAC average of 11%.

• Thirty-five per cent of total bilateral allocable aid (USD 18.9 million) focused on climate change overall, down from 37.3% in 2019-20 (the DAC average was 30.5%). Iceland had a greater focus on adaptation (25.8%) than on mitigation (22.2%) in 2021-22.

• Nine per cent of screened bilateral allocable aid (USD 4.6 million) focused on biodiversity overall, down from 10.1% in 2019-20 (the DAC average was 7.2%).

Learn more about the DAC Declaration on Aligning Development Co-operation with the Goals of the Paris Agreement on Climate Change [DAC/CHAIR(2021)1/FINAL].

 

Note: In this figure, the category climate includes climate change mitigation and climate change adaptation efforts.

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Performance against environment and Rio Markers, 2021-2022

Marker	Constant 2022 USD million	% of bilateral allocable
Environment	21.8	40.6
Rio markers:
Biodiversity	4.6	8.6
Desertification	2.1	3.9
Climate change mitigation only	5	9.2
Climate change adaptation only	6.9	12.9
Both climate change mitigation and adaptation	7	13

Note: Individual Rio Markers should not be added up as this can result in double counting.

The OECD initiative Sustainable Oceans for All shows that Iceland committed USD 1.1 million in support of the conservation and sustainable use of the ocean in 2022, roughly the same as in 2021. The 2022 value is equivalent to 1.9% of Iceland's bilateral allocable aid.

Other cross-cutting sectors and themes

In 2022, Iceland:

• Does not typically seek exemptions regarding the payment of local tax and customs duties for ODA-funded goods and services. It does not make information available on the OECD Digital Transparency Hub on the Tax Treatment of ODA.

• Committed USD 10.2 million (17.2% of its bilateral allocable aid) to promote aid for trade and improve developing countries' trade performance and integration into the world economy.

• Committed USD 17.8 million (30.1% of its bilateral allocable aid) to address the immediate or underlying determinants of malnutrition in developing countries across a variety of sectors, such as emergency response, education and health.

• Committed USD 28.2 million (47.6% of its bilateral allocable aid) to development co-operation projects and programmes that promote the inclusion and empowerment of persons with disabilities.

Effectiveness of development co-operation

The Global Partnership for Effective Development Co-operation monitoring exercise tracks the implementation of the effectiveness commitments. Following the reform of the exercise over 2020-22, the 4th global monitoring round (2023-26) is underway. Information on partner countries' participation in the exercise as well as their progress is available at the Global Dashboard. Iceland's results from the 2016 and 2018 monitoring rounds can be found here.

To help improve the transparency of development co-operation, The OECD provides regular feedback to members on the overall quality of their statistical reporting and works with each member to ensure the data meet high-quality standards before they are published. Regarding DAC/CRS reporting to the OECD, Iceland's reporting in 2022 was on time, complete, and accurate.

Total official support for sustainable development

Total official support for sustainable development (TOSSD) is an international statistical standard that monitors all official and officially supported resources for financing the Sustainable Development Goals (SDGs) in developing countries, as well as for addressing global challenges. It provides a broad measure of development finance with the objective of increasing transparency and accountability of all external support that developing countries receive. In 2022, activities reported by Iceland as TOSSD totalled USD 97.5 million, up from USD 72.5 million in 2021, and Iceland’s TOSSD activities mostly targeted SDG 5 Achieve gender equality and empower all women and girls and SDG 16 Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels. Activity-level data on TOSSD by recipient are available at: https://tossd.online.

Institutional set-up

In 2016, Iceland integrated its bilateral development agency within the Ministry of Foreign Affairs (MFA) to strengthen its institutional framework and operational capacity for development co-operation. In October 2022, the MFA underwent an institutional reorganisation, with two separate directorates in charge of international affairs and policy and development co-operation. While the Directorate of International Affairs and Policy manages the humanitarian assistance portfolio, the Directorate for Development Cooperation oversees bilateral co-operation and CSOs, development policy, co-ordination and multilateral organisations, the environment, energy and the private sector, and ocean affairs. The MFA is working to ensure coherence and co-ordination across the two directorates, particularly to provide a joined up response in fragile contexts. Sustainable Iceland – a new co-operation platform led by the Prime Minister’s Office – brings together all ministries and the association of municipalities to measure progress towards implementing the SDGs’ targets domestically.

The GRÓ Centre for Sustainable Development – established in 2019 as a UNESCO category two multi-disciplinary training centre – offers training programmes in Iceland to developing country professionals, focused on Icelandic expertise in gender, geothermal energy, fisheries and land restoration.

In 2022, the MFA had a total of 44 staff working oin development co-operation, 20 of which are based at headquarters and 8 in Iceland’s permanent missions in Geneva, New York, Paris and Rome, and the embassies to Malawi and Uganda. In 2023, Iceland will recruit a chargé d’affaires in Sierra Leone. Iceland can also rely on the expertise of 16 locally recruited staff in its embassies in Malawi and Uganda.

 

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The Icelandic Committee for Development Cooperation includes a range of stakeholders, from businesses to labour unions, civil society and members of parliament. Civil society and non-governmental organisations have five representatives that participate in the Icelandic Committee for Development Cooperation and regular consultations are held between the ministry and non-governmental organisations and CSO representatives.

Quality and oversight

Internal systems and processes help ensure the effective delivery of Iceland’s development co-operation. Select features are shown in the table below.

Features of Iceland’s systems for quality and oversight

Quality assurance	A cross-ministry review group assesses all programmes, projects and partnerships against the development policy and goals, expected results, and cross-cutting priorities. Iceland has a specific marker to identify transformative projects in gender programmes and trains local officials on programme management, monitoring and evaluations.
Risk management	Country strategy papers assess a range of contextual risks and institutional capacity. The Ministry of Foreign Affairs (MFA) acknowledges the risks of development co-operation, particularly in its sector budget support to local districts. Iceland participates in joint monitoring visits with national- and district-level officials and conducts regular financial and procurement reviews.
Innovation and adaptation	The MFA invests in a portfolio of innovation programmes, for example, exploring the use of geothermal heat for drying tea in Kenya.
Results management	The Directorate for Development Cooperation is responsible for results-based management. While Iceland does not have a comprehensive results-based management system in place, it uses evaluations and new country strategies with its bilateral partners to assess the impact of its activities.
Evaluation	The MFA has a dedicated unit and budget for evaluating the development portfolio, and evaluations inform accountability, decision making and learning. Iceland’s Evaluation Policy 2020-2023 identifies evaluation principles and criteria, and an annual evaluation plan ensures a systematic and strategic approach to evaluations. Learn more about Iceland’s evaluation system. Visit the DAC Evaluation Resource Centre for evaluations of Iceland’s development co-operation.
Knowledge management and learning	There is systematic knowledge exchange between diplomats and development officials.
Communication and transparency	Iceland has a dedicated Communication and Knowledge Management Strategy. Since 2021, the Openaid.is database provides detailed information on Iceland’s official development assistance allocations towards the Sustainable Development Goals and their sub-targets.

Additional resources

2023 OECD-DAC peer review of Iceland: https://www.oecd.org/dac/oecd-development-co-operation-peer-reviews-iceland-2023-a1552817-en.htm

2020 OECD-DAC mid-term review of Iceland:  DCD/DAC/AR(2024)3/27

Ministry for Foreign Affairs: https://www.government.is/topics/foreign-affairs/international-development-cooperation

Iceland's practices on the Development Co-operation TIPs: Tools Insights Practices learning platform: https://www.oecd.org/development-cooperation-learning?tag-key+partner=iceland#search

Member of the OECD Development Assistance Committee (DAC) since 2013.

The methodological notes provide further details on the definitions and statistical methodologies applied, including the grant-equivalent methodology, core and earmarked contributions to multilateral organisations, country programmable aid, channels of delivery, bilateral ODA unspecified/unallocated, bilateral allocable aid, the gender equality policy marker, and the environment markers.

Notes

← 1.  DAC members adopted the grant-equivalent methodology starting from their reporting of 2018 data as a more accurate way to count the donor effort in development loans. See the methodological notes for further details.

← 2.  Other providers also provide non-grants, which include sovereign loans, multilateral loans, equity investment and loans to the private sector.