Norwegian Development Aid in the Age of the Corona
Elling Tjønneland is a senior researcher at the Chr. Michelsen Institute. He is the main author of the recent report commissioned by Norad’s evaluation departing mapping and analysing the initial Norwegian development aid response to Covid-19.
This evaluation view is based on findings from the recent Norad report mapping and analysing the early Norwegian aid response to the Covid-19 pandemic. The mapping was based on data from all new projects initiated, changes in ongoing projects and budgetary reallocations. The mapping covered the first six months of 2020.
Recalibrating the aid budget
Covid-19 led to several changes in the NOK 39 billion development aid budget. First, several new grants and initiatives were launched in the first half of the year. They totaled about NOK 700 million allocated to 17 different projects. Three projects implemented by the Coalition for Epidemic Preparedness Innovations (CEPI), the UN Covid-19 Response and Recovery Multi-Partner Trust Fund and the Norwegian Research Council received nearly 70% of these early allocations. NOK 160 million was disbursed as response to global humanitarian appeals. In addition to new grants there were early disbursements of core funding and other commitments to several multilateral institutions and global funds, and provision for greater flexibility in adjusting ongoing programmes and projects.
Secondly, the Government provided for additional Covid-19 increases in five budget chapters and items in the June Revised National Budget. This totaled about NOK 890 million. The three main ones were a NOK 540 million increase to a range of global health projects (including initiatives to ensure distribution of vaccines to developing countries, special initiatives for Norway’s focus and priority countries and more); NOK 102 million in additional funding for the World Bank’s IDA facility; and a NOK 108 million contribution to the IMF’s Catastrophe Containment and Relief Trust.
The third component were cuts in the aid budget directly related to Covid-19 and the need to fund the increased spending on Covid-19. Nine budget chapters/items witnessed cuts totaling NOK 827 million. The main reductions were related to Norad’s Knowledge Bank (managing the bilateral flagship programmes on oil, tax, fish and more) and the exchange programme through Norec (in total the cuts amounted to about 260 million); education (165 million), renewable energy (165); and oceans and marine pollution (145 million).
Priorities and funding patterns
New projects and allocation of funds reveal certain patterns. First there is a strong emphasis on global health, in particular related to vaccine and vaccine research. This is mainly channeled through multilateral institutions and global funds, but also through the Norwegian public sector (principally the Research Council).
A second feature is the strong emphasis on multilateral institutions in relation to social and economic issues and the long-term impact of the pandemic. This has led to additional funding to the Word Bank and the IMF. Furthermore, Norway was both an initiator and main funder of a new multi-partner trust fund - UN Covid-19 Response and Recovery Fund - which was established to address long-term issues and to facilitate closer co-operation between UN agencies at the country level.
Thirdly, the humanitarian allocations have all been in response to global appeals from the UN and the International Red Cross with most funding being channeled to five UN agencies.
Finally, in the initial response there was little or no additional funding through Norwegian NGOs. Nor were there any major new bilateral initiatives in Norway’s main partners countries (the 16 focus countries in Norwegian aid).
Challenges
There are several challenges in this early response. The first is the major funding allocations to research on vaccine and related issues. There is also a move towards more efforts to ensure a distribution of a vaccine to developing countries. The research part of this is a high-risk option. The funding to CEPI – and potentially also parts of the grant to the Research Council - does not qualify as development aid. Under the current guidelines from the OECD Development Assistance Committee funding for such “public goods” not primarily directed at the South should be funded from other budget sources.
A second is the Norwegian efforts to help launch and fund the new multi-partner UN Covid-19 Response and Recovery Fund. It has so far attracted few donors. The Fund’s ability to run with its ambitious aims and objectives at the country level remains uncertain. It will require substantial efforts to make this an effective instrument.
Thirdly, the sheer scale of the global pandemic and its devastating impact on poverty and livelihoods reinforces the need to build better linkages and facilitate coherence between humanitarian relief and long-term development aid. The huge costs involved in providing health-related relief and in distributing a future vaccine and the shifts of resources from long-term aid to emergencies also increases the risk of deepening poverty and increasing vulnerability – unless addressed early.
Fourthly, there is a need to address the pandemic in bilateral support to Norway’s focus countries. The initial Norwegian response has focused on global initiatives and disbursement through multilateral channels and global funds. The next and difficult step is to adapt – often drastically - country strategies and provide support that addresses the economic, social and political consequences of the pandemic. This will have to be done in a way that ensures coherence and synergies between the many funding channels and implementing agencies in the Norwegian support.
Finally, providing aid and emergency relief also places additional burden on preparation and management. Some of the new initiatives supported did not sufficiently move beyond the relevance assessment or failed to identify steps that must be taken to minimize risk and ensure that the interventions are designed to achieve desired results.
Getting from relevance to results
The impact of the pandemic will push millions into extreme poverty. In several Norwegian priority countries development may be set back by years and perhaps even decades. Major steps will have to be made to ensure that development aid becomes effective in coping with this. For low-income countries, the importance of aid will expand with most of these countries facing reduced economic growth and falling revenue sources from investment, trade and taxes.
Making aid effective also happens in a context of stagnating or even a reduction in global aid – as well as a reallocation of aid resources from long-term development to immediate health issues. The costs of distributing a vaccine to all low and middle-income countries amounts to a staggering USD 70 billion – according to one estimate by the Gates Foundation. This is about half of total global aid.
This requires bold initiatives by Norwegian development assistance – both at the global level and at the country level. The response will have to be context and country specific. This also requires capacity and flexibility at the Norwegian embassies to help ensure that interventions are coherent, relevant, adds value and help deliver long-term results.