23 January 2018
OECD Review Calls on Finland to Address Development Aid Decline
Photo by IISD | Lynn Wagner
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Finland fell further behind its target to provide 0.7% of its GNI as ODA, but increased support for funding private sector instruments.

The OECD review points out that Finland has addressed most of recommendations from the 2012 Peer Review, and aligns its development cooperation policy with eight Sustainable Development Goals (SDGs).

December 2017: The Organisation for Economic Co-operation and Development (OECD) conducted a review on the performance of Finland, including the implementation of its development cooperation policy and delivery of the 2030 Agenda for Sustainable Development in partner countries. The assessment shows that Finland’s development aid has declined sharply over 2016, and it recommends setting plans to restore its foreign aid budget, to continue making impacts through development aid programs.

Conducted by the Development Aid Commission (DAC), the review report titled, ‘OECD Development Co-operation Peer Reviews: Finland 2017,’ shows that Finland’s aid budget has decreased by 38% annually in the past five years, with additional reduction planned for 2018-2020. This has pushed the country further behind the international target to provide 0.7% of its gross national income (GNI) as official development assistance (ODA), with net ODA dropping to US$1.06 billion or 0.44% of GNI in 2016. Although its 2016 development cooperation policy intends to “raise the level of our development co-operation funds to 0.7% of gross national income in accordance with UN goals,” the government has no plan or timeline to reverse the decline and maintain its commitments with limited resources, the report notes.

According to the review, Finland has increased support for funding private sector instruments in developing countries, such as through its business impact programme on technology and innovation (BEAM). Although stakeholders in Finland agree that the private sector is “a vital and necessary partner for achieving sustainable development,” consensus is lacking on the implications of private sector engagement for development. The authors suggest that Finland’s government establish a common understanding of private sector engagement for implementing the 2030 Agenda in partner countries.

Presenting the review in Helsinki, DAC chair Charlotte Petri Gornitzka welcomed Finland’s active leveraging of private finance for development, but noted that “it is important to uphold public obligations.”

The review recognizes that Finland addressed 77% of DAC recommendations from the 2012 peer review. These achievements include focusing its ODA on long-term partner countries and priority areas of expertise, as well as conducting pilot studies on tax, development and food security. For example, it launched the Action Programme for Tax and Development in 2016, aiming to increase transparency and reduce tax evasion, tax corruption, and corruption in developing countries. This cross-government effort with US$4.8 million aid for domestic resource mobilization has confirmed tax and development as a priority.

The allocation of development aid also reflects Finland’s continuous commitments to the SDGs, according to the review. Besides its reputation of leadership in the areas of tax and food security, Finland outlines four development priorities and a clear approach to poverty reduction, in its 2016 development cooperation policy: strengthening the rights and status of women and girls (SDG 5); developing economies to generate jobs, livelihood opportunities and well-being (SDGs 8, 9 and 12); making societies more democratic and function better (SDGs 2, 6, 16 and 17); and increasing access to water and energy, food security and sustainable use of natural resources (SDGs 7, 13 and 15).

In order for Finland to help deliver sustainable development with more limited development resources, the DAC review recommends that it make an assessment of the comprehensive picture of its investments, including grants, blended finance and equity in partner countries, and incorporate them in long-term planning. [Publication Page] [Publication: OECD Development Co-operation Peer Reviews: Finland 2017] [Peer Reviews of DAC Members]

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