General information on Luxembourg development cooperation
Luxembourg’s development cooperation programme is firmly committed to the goal of poverty eradication, particularly in Least Developed Countries. It falls under the remit of the Ministry of Foreign Affairs and is financed through the Luxembourg Development Cooperation Fund. The legal and regulatory framework for the Grand Duchy’s development cooperation was established by the Development Cooperation Act of 1996, and its vision and policy framework are articulated in its “Strategy and Principles” statement. It is closely aligned to the Millennium Development Goals (MDGs). To ensure policy coherence across the government, an Inter-Ministerial Committee for Development Cooperation serves as the key coordination platform. The bulk of Luxembourg’s bilateral aid goes to social infrastructure and services: health, education (including vocational training and professional integration), integrated local development, and water and sanitation, while 10% falls under multi-sector support. Luxembourg’s structures for managing development cooperation are clearly delineated, with the Ministry of Foreign Affairs leading development cooperation policy formulation and programming, while the Ministry of Finance manages relations with the international financial institutions. The executing agency, Lux-Development, receives project mandates from the MFA and is accountable for the projects’ effective implementation. The Ministry of Foreign Affairs and Lux- Development are co-located with clear responsibilities at the country level: the Ministry of Foreign Affairs engages in policy dialogue, while Lux-Development is responsible for project management.
Aid for Trade (AfT) Strategy
The Government of Luxembourg does not have a stand-alone AfT strategy but approaches AfT as a component of its multilateral development cooperation.
In matters related to international trade policy and negotiations, the Government of Luxembourg carries out debates and formulates its position and policies in such areas as European Union (EU)–African, Caribbean and Pacific (ACP) Economic Partnership Agreements (EPAs) and WTO matters. However, it sees the European Union as the driving force in the preparation of Member States’ policies in areas in which the EU has exclusive competence (e.g. trade). It regards the EU as essential for strengthening policy coherence for development, in the light of EU responsibilities, not only in the important fields of trade and agriculture, but also in other areas, such as climate change and the environment.
Luxembourg has negotiated a third generation of multiannual indicative cooperation programmes (PICs) with the 9 priority countries mentioned below (under Lux-Development), under which it concentrates its interventions more closely in a limited number of sectors. Luxembourg has, in effect, moved ahead with the European Union’s Code of Conduct on Complementarity and Division of Labour in Development Policy, which declares “EU donors will aim at focusing their active involvement in a partner country on a maximum of three sectors”. It is focusing its intervention on Africa, with six of its 9 priority partner countries located in sub-Saharan Africa.
Microfinance is increasingly being given significant policy attention by Luxembourg, and figures as one of its priority sectors. In 2006, the Government prepared an inclusive financial sectors microfinance policy, which guides its intervention in the area of microfinance. Through the Ministry of Finance and the Ministry of Foreign Affairs, Luxembourg has become more actively engaged in international policy dialogue on microfinance, providing support to an increasing number of actors involved in this issue at the national level and increasing its financial support through its development cooperation budget. The rationale and motivation for its engagement in microfinance is linked to its own domestic situation. Luxembourg is a worldclass international financial centre and thus enjoys a comparative advantage in this sector. It has the potential to add value, using small amounts of ODA as leverage for innovative projects.
Principal official agency responsible for TCB assistance to developing countries
Luxembourg Agency for Development Cooperation
Tel: +352 295 8581
Fax: +352 29 585 8200
Lux-Development: is the executing agency entrusted by the Directorate of Development Cooperation of the Ministry of Foreign Affairs with responsibility for the design and implementation of Luxembourg’s bilateral projects. It is a limited liability company with a capital of €250,000. Shares are held by the State (98 per cent) and the Société nationale des crédits et d’investissement (2 per cent). It also manages projects for the Ministry of Finance and other bilateral donors and the European Commission. Projects are focused on a few sectors and geographically concentrated on 9 priority partner countries, namely Burkina Faso, Cape Verde, El Salvador, Laos, Mali, Nicaragua, Niger, Senegal and Vietnam. Lux-Development is gradually disengaging itself from countries moving up the Human Development Index (HDI) Scale (e.g. El Salvador and Vietnam). Lux- Development headquarters are located in Luxembourg City and it has six regional offices which support projects in the privileged partner countries of the Luxembourg Development Cooperation.
For more information: http://www.lux-development.lu/agence.lasso?lang=uk
Other government and official agencies with responsibilities directly relevant to TCB
Ministry of Foreign Affairs, External Trade and Co-operation
Direction de la Coopération au Développement
6, rue de l’Ancien Athenée
Tel: +352 2 478 2351
Fax: +352 46 3842
Ministry of Foreign Affairs (Ministère des Affairs Étrangères - MAE) – Directorate of Development Cooperation (DDC): The Directorate of Development Cooperation (DDC), within the Ministry of Foreign Affairs (MAE), has the primary responsibility of managing Luxembourg’s ODA. The MAE has a network of regional offices in 13 of its partner countries; the DDC reports to the Minister for Cooperation and Humanitarian Affairs and its director chairs the Inter- Ministerial Committee for Development Cooperation. This Committee, established by the Development Cooperation Act of 6 January 1996, advises on the broad orientations of development cooperation policy and on policy coherence for development.
For more information: http://cooperation.mae.lu/fr
Ministry of Finance (MoF)
3, rue de la Congrégration
Tel: +352 2 4781
Fax: +352 475241 / +352 466212 / +352 220673
Ministry of Finance (MoF): manages around 10-15% of Luxembourg’s ODA and manages relations with the international financial institutions. In collaboration with the Central Bank of Luxembourg, it is represented on the executive boards of the Bretton Woods organizations, the World Bank and the International Monetary Fund (IMF), and is thereby able to exert a certain influence, to the extent of its voting power, on the policies of those two institutions. It funds a number of microfinance institutes, such as LuxFlag and LUXMINT.
Luxembourg Microfinance Development Fund (LMDF): is a regulated investment fund incorporated in Luxembourg. It aims to contribute to the alleviation of poverty in developing countries through the provision of permanent and adapted financial services to marginalized communities and individuals. It seeks to help young and promising microfinance institutions (MFIs) that have a positive social impact towards achieving financial autonomy and growth. In pursuance of this, the Fund may invest in the equity, debt and guarantees of MFIs and in other microfinance-related products. It has two principal objectives, social and financial:
(i) help socially-oriented MFIs to become long term viable enterprises that reach more poor people and offer better services; and (ii) generate sufficient income to sustain its own operations and give its shareholders a financial return that at least compensates for inflation. Investors in LMDF have an interest in microfinance as a development tool and support the Fund’s dual objectives of social impact and financial return.
Luxembourg Round Table on Microfinance (LTRM): was initiated in 2003 by the Department for Development Cooperation in collaboration with a number of other actors from various backgrounds with the objective of acting as a catalyst for regular interactions between the main players in the field of microfinance and inclusive finance in Luxembourg. It is an informal platform bringing together representatives from the private sector, the public sector and civil society in a multi-actor forum to promote the development and spread of microfinance and inclusive finance. It is chaired by the Department of Development Cooperation within the Ministry of Foreign Affairs with the assistance of Lux-Development. LRTM serves as a networking and communication tool aimed at increasing public awareness of the sector, advocating its members’ positions on key issues, increasing the possibility of shared projects, and allowing other financial-sector members into microfinance.
Other official or government trade-related organizations
Agence de Transfert de Technologie financière (ATTF): ATTF Luxembourg was created in 1999 by the State of the Grand-Duchy of Luxembourg (Ministry of Finance) as the main shareholder. The other shareholders are the Central Bank of Luxembourg (BCL), the Chamber of Commerce of the Grand-Duchy of Luxembourg, the Financial Sector Supervisory Commission (CSSF), the Institute for Training in Banking, Luxembourg (IFBL), the Luxembourg Bankers’ Association and the University of Luxembourg. ATTF has two objectives: to provide technical assistance and to promote Luxembourg as a financial centre to partner countries and regions. The services it provides are training, consulting and technical assistance in financial matters emanating from countries that have a proven need for the acquisition of financial knowledge.
For more information: http://www.attf.lu/contact.php
Appui au Développement Autonome (ADA): ADA, expert in microfinance, has for over 15 years been initiating innovative concepts that have been successfully tried out and developed through microfinance institutions in the South. Its action with partners aims at increasing access to inclusive and responsible financial services for millions of people worldwide for whom traditional bank services are inaccessible (bank accounts, loans, saving schemes or money transfers). It is a preferred partner for knowledge and competences sharing as well as information and specialized documentary source research and microfinance awareness campaigns. ADA is a non-profit organization under the High Patronage of H.R.H. the Grand Duchess of Luxembourg, and is coordinator of the secretariat of the Microinsurance Network, the African Microfinance Transparency Forum and the Rating Initiative Program, and a partner of Etika, Luxflag, and the European Microfinance Platform (e-MFP).
Luxembourg for Finance: is the agency for the development of the financial sector. It is a public-private partnership between the Luxembourg Government and the Luxembourg Financial Industry Federation (PROFIL). The objective of this partnership, which was set up as an Economic Interest Grouping (EIG),
is to contribute to the development of the Luxembourg Financial Centre through a coherent and structured communications policy. The agency’s principal mission is to create a strong brand image for the Financial Centre, communicating the advantages of its products and services to a wide public and highlighting the numerous opportunities available to investors and clients, whether institutional or private, from around the world.
For more information: http://www.lff.lu/
Non-governmental organizations involved in TCB
Luxembourg Fund Labelling Agency (LuxFLAG): is an independent, non-profit microfinance labelling organization created in Luxembourg in July 2006, with seed funding from the Ministry of Foreign Affairs and the Minsitry of Finance. . It aims to promote microfinance by awarding a recognisable label to eligible microfinance investment vehicles (MIV) , based on internationally recognized standards in the microfinance sector worldwide. The label enhances the image and credibility of the MIVs and thus facilitates fund raising for them. Since its creation, LuxFLAG has awarded the microfinance label to a number of investment funds.
Selected TCB programmes and initiatives in this guide
TRADE POLICY DEVELOPMENT
- WTO Doha Development Agenda Global Trust Fund (DDAGTF)
- E-health for Sub-saharan Africa (2011-2013)
- African Internet Exchange System (AXIS; 2011-2014)
- Developing Business with the Rural Poor − Vietnam
- Integrated Rural Development Project − Mali
- Technical assistance to the WAEMU in the ITC sector
- Support of the Network of Associations of Microfinance Institutions in Central America (REDCAMIF) through the funding of a project entitled “Regional Project of micro-insurance.”
- Institutional strengthening of institutions affiliated with the Nicaraguan Association of Microfinance Institutions, Nicaragua (2011-2014)
- Support to the Salvadoran Association of Microfinance Institutions (ASOMI) to strengthen microfinance services in rural areas of El Salvador (2009-2013)
- Development of microfinance in Cape Verde: action plan 2011-2015
TRADE RELATED FINANCIAL SERVICES
- Awareness campaign on Microfinance
- Discover the Luxembourg Financial Centre Programme
- Ministry of Foreign Affairs (MFA) Advocacy