Development Co-operation Profiles

Luxembourg

Introduction

Luxembourg’s development co-operation focuses on access to basic social services, humanitarian assistance and inclusive finance. Luxembourg is consistently among the most generous Development Assistance Committee (DAC) members relative to its gross national income (GNI), including in allocating official development assistance (ODA) to least developed countries (LDCs). In 2022, Luxembourg was the DAC member that allocated the highest share of bilateral ODA to fragile contexts. Luxembourg’s total ODA (USD 580.1 million, preliminary data) decreased in 2023, representing 0.99% of GNI.

Find the methodological notes behind the profile here.

Policy

Luxembourg’s development co-operation strategy, The Road to 2030, prioritises four themes: 1) access to quality basic social services; 2) socio-economic integration of women and youth; 3) inclusive and sustainable growth; and 4) inclusive governance. The development co-operation programme is focused on six partner countries, five of which are in sub-Saharan Africa. Indicative country programmes are jointly signed with partner countries at the political level.

The Road to 2030 affirms Luxembourg’s strong support for multilateral institutions. The United Nations (UN) system and the European Union (EU) are key partners, and Luxembourg also aims to strengthen its engagement with multilateral development banks. Luxembourg actively uses its role as an international financial centre to promote sustainable financing. Luxembourg has introduced a sustainability check for all new regulations to improve policy coherence for sustainable development. In 2022, Luxembourg adopted a humanitarian action strategy to better respond to multidimensional crises. The strategy commits Luxembourg to allocate 15% of its overall annual ODA to humanitarian actions.

Poverty and inequality reduction focus

Luxembourg’s General Development Cooperation Strategy: The Road to 2030 states that Luxembourg’s main objective is to contribute to eradicating extreme poverty through support for sustainable development on an economic, social and environmental level, in particular focusing on the most vulnerable and disadvantaged groups/people, especially women youth. In particular, it strongly emphasises gender equality and the gender-climate nexus. To combat extreme poverty, Luxembourg focuses on the following inclusive thematic priorities: improving access to quality basic social services, enhancing the socio-economic integration of women and youth, promoting inclusive and sustainable growth, and strengthening inclusive governance. Luxembourg also targets partner countries with large poverty gaps, low human development scores and limited financial resources, particularly LDCs.

Findings from OECD-DAC reviews

The 2020 OECD-DAC mid-term review praised Luxembourg’s progress, which has already taken steps to address 12 of the 13 recommendations from the 2017 peer review. Key actions included whole-of-government country strategies, dialogue and mechanisms for greater policy coherence, and investing in information management. As Luxembourg is a leader in sustainable and inclusive finance, the mid-term review encouraged Luxembourg to better integrate developing countries into sustainable finance efforts. Investments in its cross-cutting priority – environment – and reflecting on the approach to fragility and risk management were identified as opportunities for further progress. Learn more about Luxembourg’s 2020 mid-term review [DCD/DAC/AR(2024)3/13] and 2017 peer review. Luxembourg’s next peer review will take place in 2024.

ODA allocation overview

Luxembourg provided USD 580.1 million (preliminary data) of ODA in 2023 (USD 520.5 million in constant terms), representing 0.99% of GNI.1 This was a decrease of 1.8% in real terms in volume and a decrease in the share of GNI from 2022. Consistently providing around 1% of GNI as ODA, Luxembourg has exceeded the 0.7% UN target since 2000. Luxembourg is in line with its domestic (1%) and EU commitments to collectively achieve a 0.7% ODA/GNI ratio by 2030. Luxembourg provided all of its ODA as grants in 2022.2

In 2023, Luxembourg ranked second among DAC member countries when ODA is taken as a share of GNI. With 0.46% ODA/GNI committed to the LDCs in 2022, Luxembourg surpasses the 0.2% UN target and is the leading DAC donor in this regard. Moreover, its efforts for international climate finance are supplementary to its ODA budget. Luxembourg was the DAC member that allocated the highest share of gross bilateral ODA to fragile contexts (46.1% in 2022) as well as one of the highest shares of bilateral ODA to Africa (48.3%). It mobilised a significant share of its ODA for technical co-operation (21.8%) and reported 100% of ODA to countries covered by the DAC Recommendation on Untying ODA as untied in 2022.

 

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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Luxembourg 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	0.99	1.00	0.99
Total ODA to least developed countries as a share of GNI (%)	0.15-0.20	0.45	0.46
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) (%)		94.2	90.8
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.

Luxembourg provided a higher share of its ODA bilaterally in 2022. Gross bilateral ODA was 70.5% of total ODA disbursements. Twenty-seven per cent of gross bilateral ODA was channelled through multilateral organisations (earmarked contributions). Luxembourg allocated 29.5% of total ODA as core contributions to multilateral organisations.

 

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ODA for Ukraine

In 2023, Luxembourg provided USD 17.5 million (preliminary data) of net bilateral ODA to Ukraine to respond to the impacts of Russia's war of aggression, a 108.2% increase from 2022 in real terms. USD 9.1 million of the amount was allocated to humanitarian assistance in 2023, a 12.6% increase 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, Luxembourg provided USD 255.9 million of gross ODA to the multilateral system, an increase of 3.9% in real terms from 2021. Of this, USD 156.9 million was core multilateral ODA, while USD 99.1 million was 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 17.8% of Luxembourg's non-core contributions and 82.2% was programmatic funding (to pooled funds and specific-purpose programmes and funds).

 

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Seventy-eight per cent of Luxembourg's total contributions to multilateral organisations in 2022 were allocated to the UN system and EU Institutions.

 

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The UN system received 53.4% of Luxembourg's multilateral contributions, of which USD 74.7 million (54.7%) represented earmarked contributions. Out of a total volume of USD 136.6 million to the UN system, the top three UN recipients of Luxembourg's support (core and earmarked contributions) were UNICEF (USD 17.8 million), UNFPA (USD 17.3 million) and the WFP (USD 16.8 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, Luxembourg's bilateral spending increased compared to the previous year. It provided USD 374.4 million of gross bilateral ODA (which includes earmarked contributions to multilateral organisations). This represented an increase of 8.5% in real terms from 2021.

In 2022, country programmable aid was 52% of Luxembourg's gross bilateral ODA, compared to a DAC country average of 42%. Luxembourg does not report in-donor refugee costs as ODA.

 

Note: NGO: non-governmental organisation.

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In 2022, Luxembourg channelled its bilateral ODA mainly through the public sector. Technical co-operation made up 21.8% of gross ODA in 2022.

 

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Civil society organisations

In 2022, civil society organisations (CSOs) received USD 113 million of gross bilateral ODA, of which 1.7% was directed to developing country-based CSOs. Overall, 2.9% of gross bilateral ODA was allocated to CSOs as core contributions and 27.3% 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 increased as a share of bilateral ODA, from 28.9% to 30.2%. 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, Luxembourg's bilateral ODA was primarily focused on Africa. USD 180.9 million was allocated to Africa and USD 55.5 million to Asia, accounting respectively for 48.3% and 14.8% of gross bilateral ODA. USD 20.0 million was allocated to ODA-eligible countries in Europe (of which 37.8% for Ukraine). Asia and Africa were also the main regional recipient of Luxembourg's earmarked contributions to multilateral organisations. Allocations correspond to its policy priorities.

Bilateral ODA by recipient country

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In 2022, 50.1% of gross bilateral ODA went to Luxembourg's top 10 recipients. Its top 10 recipients are predominantly its priority partner countries in Africa and Asia. The share of gross bilateral ODA not allocated by country was 31.1%, mainly due to regional and multi-sector projects as well as contributions to specific-purpose programmes.

 

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In 2022, Luxembourg allocated 0.46% of its GNI to the least developed countries. Luxembourg allocated the highest share of gross bilateral ODA (52.6%) to least developed countries in 2022, noting that 31.1% was unallocated by income group. Additionally, Luxembourg allocated 38.1% of gross bilateral ODA to land-locked developing countries in 2022, equal to USD 142.5 million. Luxembourg allocated 4.5% of gross bilateral ODA to small island developing states (SIDS) in 2022, equal to USD 16.7 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 172.7 million in 2022, representing 46.1% of Luxembourg's gross bilateral ODA. Twenty-five per cent of this ODA was provided in the form of humanitarian assistance, increasing from 22.6% in 2021, while 4.7% was allocated to peace, decreasing from 5.8% 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 Luxembourg's bilateral ODA was social infrastructure and services. Investments in this area accounted for 37.1% of bilateral ODA commitments (USD 138.9 million) with a strong focus on support to health and population (USD 50.3 million), which accounted for 13.4% of gross bilateral ODA, and decreased by 21.9% from 2019 in real terms. Humanitarian assistance amounted to USD 82.4 million (22% of bilateral ODA). ODA for economic infrastructure totalled USD 36.4 million, focusing on financial and business services (USD 34.0 million). Earmarked contributions to multilateral organisations also focused on social sectors and humanitarian assistance in 2022.

 

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ODA for COVID-19

In 2022, Luxembourg disbursed USD 3.4 million in ODA for the COVID-19 response, down from USD 8.9 million in 2021.

Gender equality

In the period 2021-22, Luxembourg committed 35.3% of its screened bilateral allocable aid to gender equality and women's empowerment, as either a principal or significant objective (down from 80.5% in 2019-20), compared with the 2021-22 DAC average of 43.3%. This is equal to USD 124.2 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 7.4% in 2021-22, compared with the DAC average of 3.9%.

• Luxembourg includes gender equality objectives in 0.3% of its ODA for humanitarian aid, below the 2021-22 DAC average of 17%.

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

• Luxembourg committed USD 3.9 million of ODA to end violence against women and girls and USD 0.9 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, Luxembourg committed 27.5% of its total bilateral allocable aid (USD 91.3 million) in support of the environment and the Rio Conventions (the DAC average was 35.1%), up from 15% in 2019-20. Unpacking the environmental data further:

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

• Twelve per cent of total bilateral allocable aid (USD 40 million) focused on climate change overall, up from 4% in 2019-20 (the DAC average was 30.5%). Luxembourg had a greater focus on adaptation (11.7%) than on mitigation (5.8%) in 2021-22.

• Four per cent of screened bilateral allocable aid (USD 11.5 million) focused on biodiversity overall, down from 8.1% 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	91.3	27.5
Rio markers:
Biodiversity	11.5	3.5
Desertification	12	3.6
Climate change mitigation only	1.2	0.4
Climate change adaptation only	20.9	6.3
Both climate change mitigation and adaptation	17.9	5.4

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

Other cross-cutting sectors and themes

In 2022, Luxembourg also:

• Committed USD 2.1 million of bilateral ODA to the mobilisation of domestic resources in developing countries, amounting to 0.6% of its bilateral allocable aid. Regarding the payment of local tax and customs duties for ODA-funded goods and services, Luxembourg typically seeks tax and customs duty exemptions on its ODA-funded goods and services in partner countries and territories, although exceptions exist and it makes information available on the OECD Digital Transparency Hub on the Tax Treatment of ODA.

• Committed USD 66.7 million (19.3% of its bilateral allocable aid) to promote aid for trade and improve developing countries' trade performance and integration into the world economy.

• Committed USD 1.8 million (0.5% of its bilateral allocable aid) to address the immediate or underlying determinants of malnutrition in developing countries across a variety of sectors, such as health.

Mobilised private finance

Luxembourg uses leveraging mechanisms to mobilise private finance for sustainable development. In 2022, Luxembourg's Ministry of Foreign and European Affairs mobilised USD 21.7 million from the private sector through simple co-financing. This constituted a 50.2% increase compared to 2021.

 

Note: CIV: collective investment vehicle; SPV: special purpose vehicle.

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A share of 6.4% targeted middle-income countries, while 15.2% went to LDCs and other low-income countries (LICs) in 2021-22, noting that 78.4% was unallocated by income.

 

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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Mobilised private finance by Luxembourg in 2021-22 was unallocated or unspecified by sector (50.4%).

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. Luxembourg'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, Luxembourg's reporting in 2022 was on time and complete, with some areas to improve in terms of the accuracy of the data.

Institutional set-up

Luxembourg’s development co-operation is comprised of the Ministry of Foreign and European Affairs, Defence, Development Cooperation and Foreign Trade (MFEA); the implementing agency Lux-Development (LuxDev); and the Ministry of Finance. The Directorate for Development Cooperation and Humanitarian Affairs at the MFEA is responsible for designing and implementing Luxembourg’s development co-operation policy while the development co‑operation agency, LuxDev, executes around one-third of Luxembourg’s bilateral ODA on behalf of the state and also implements programmes for DAC partners. The Ministry of Finance is responsible for multilateral initiatives with international financial institutions.

 

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An important mechanism for exchanging with stakeholders is the Inter-Ministerial Committee for Development Cooperation, which regularly associates civil society representatives, and a regular multi‑stakeholder conference, the “Assises de la Coopération”. CSOs active in development co-operation, humanitarian assistance and global citizenship education co-ordinate under the umbrella body Cercle de Coopération des ONGD.

Quality and oversight

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

Features of Luxembourg’s systems for quality and oversight

Quality assurance	As part of its quality assurance, Luxembourg has developed dedicated guidance on capacity strengthening as well as on gender equality, where it also increased staffing. LuxDev has also integrated quantitative objectives for targeting gender equality and environmental protection into its Vision 2030.
Risk management	LuxDev has updated its project risk management processes. LuxDev draws upon annual risk mapping of programmes and projects based on several criteria as part of its risk management policy. Ten risks have been identified, and projects and programmes have been classified according to the country context.
Innovation and adaptation	LuxDev supports innovation mainly through its private-sector partnerships. A Business Partnership Facility aims to initiate innovative and commercially viable projects between a Luxembourgish or European company and country partners. The LuxAid Challenge Fund targets start-ups and new business models in partner countries, and the LuxAid Demonstration Fund supports the scaling up.
Results management	Luxembourg is trying to align its results management to partner country frameworks, for instance, in Cabo Verde. LuxDev has developed a methodological framework on how to follow and measure the impact of capacity-building for fostering change, jointly with the French Development Agency and the government of Senegal’s Office of Methods and Organisation.
Evaluation	Following the 2015 Evaluation Policy, the Ministry of Foreign and European Affairs, Defence, Development Cooperation and Foreign Trade handles external independent evaluations while LuxDev delivers internal, independent evaluations. The ministry and the agency have jointly undertaken country programme mid-term reviews. Read more about Luxembourg’s evaluation system. Visit the DAC Evaluation Resource Centre website for evaluations of Luxembourg’s development co-operation.
Knowledge management and learning	Luxembourg is improving its information management system to facilitate monitoring and analysis of development co‑operation efforts across government. In 2022, it established a Research Unit on Impact Evaluation of Development Policies, to enhance the evidence base for interventions. It is also planning to set up a knowledge management function.
Communication and transparency	Luxembourg publishes general information on its development co-operation on a government website. LuxDev also provides more specific information on programmes. Luxembourg has a 2012 communication strategy and is developing communication guidelines and policies.

Additional resources

2020 OECD-DAC mid-term review of Luxembourg: DCD/DAC/AR(2024)3/13

2017 OECD-DAC peer review of Luxembourg: www.oecd.org/dac/oecd-development-co-operation-peer-reviews-luxembourg-2017-9789264284364-en.htm

Government of the Grand Duchy of Luxembourg, Directorate for Development Cooperation and Humanitarian Affairs: https://cooperation.gouvernement.lu/en/cooperation-au-developpement.html

Luxembourg Development Agency (LuxDev): https://luxdev.lu/en/home

CSO umbrella organisation Le Cercle de Coopération des ONGD: https://cercle.lu

Luxembourg's practices on the Development Co-operation TIPs: Tools Insights Practices learning platform: https://www.oecd.org/development-cooperation-learning

Member of the OECD Development Assistance Committee (DAC) since 1992.

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.