Executive summary
Accompanying Hungary’s fast-growing co-operation on a path towards greater development impact is the objective of its first OECD Development Assistance Committee (DAC) peer review, conducted by Greece and Iceland with the support of the OECD Secretariat. Hungary has rapidly expanded its development co-operation over the last decade. A DAC member since only 2016, Hungary is still building its capacity to move towards established DAC standards and ways of working. The findings and recommendations of this peer review create a baseline against which to track progress and to guide Hungary as it moves forward.
The recent reorganisation is a strong opportunity to pursue reform efforts. Shortly before the peer review mission, Hungary integrated the humanitarian portfolio into the Ministry of Foreign Affairs and Trade, which also assumed oversight of the Hungary Helps Agency (created in 2019). This should boost Hungary’s on-going efforts to establish standards and processes for delivering quality co-operation.
Building on a useful legal and strategic foundation, Hungary now needs to reinforce its policy framework. Act XC of 2014 and the co-operation strategy IDC2025 provide the general principles and priorities for Hungary’s co-operation. Strategies and guidance for select countries and priority areas would strengthen the focus of interventions and support their quality assurance.
ODA growth has been impressive, but the focus and planning of allocations could improve. Since 2010, Hungary has achieved a fourfold increase in the volume of its official development assistance (ODA) and more than tripled its share of ODA to gross national income – reaching 0.29% in 2021. However, its thematic focus is not matched by effective geographic concentration. Allocations are spread across many countries and a high share of small short-term interventions, which could undermine efficiency. At present, Hungary does not plan its ODA allocations in advance, and largely relies on budgetary reserves. Budget rules affect its ability to provide longer-term funding to partners, contributing to fragmentation.
Hungary could use the reorganisation to increase the effectiveness and efficiency of its development co-operation. At the time of the review, the various actors involved were doing little to co-ordinate their efforts. There is room for greater synergy. As long as roles and responsibilities are clearly defined, making the Hungary Helps Agency the lead executing agency could help pool expertise and free up policy-making capacity in the Ministry of Foreign Affairs and Trade (MFAT). Stronger co-ordination notably within the ministry, but also across government, will nonetheless be critical.
Hungary can build further on progress in its engagement with stakeholders and the broader public. It has made substantial progress in integrating sustainable development into formal education but could do more to raise development awareness outside schools. Its notable efforts on public information would gain from greater transparency and a narrative that better reflects the long-term benefits of co-operation. Introducing systematic consultation with stakeholders would provide valuable insights and feedback.
The partnership with civil society organisations (CSOs) would gain from more flexible and long-term funding. Hungary relies on a few select CSOs for implementation, and funding opportunities are not conducive to a more diverse set of partner organisations. Funding is mostly short-term and limited to project delivery, leaving little opportunity for CSOs to lead initiatives or build their capacity. Support to local organisations and prepositioned emergency funding shows Hungary’s willingness to trust CSO partners. It could build on this trust to develop more flexible and long-term funding opportunities for CSOs.
Strategic country partnerships could enhance Hungary’s ability to contribute to partners’ long-term objectives. The programme in Uganda is a welcome step towards more comprehensive country programmes, but remains an exception. Concentrating its efforts would allow Hungary to focus on longer-term results, be more efficient and free up the capacity to invest in and benefit from political dialogue and partner co-ordination. To help leave no one behind, Hungary needs to deepen its understanding of how its interventions can tackle poverty and inequality, and ensure that support to minorities is context sensitive.
Hungary wants to become fit to engage in fragile contexts. A strong disaster management capacity, resilience-oriented humanitarian programming and peacekeeping efforts are part of Hungary’s response to crises. Close partnerships with faith-based actors allow Hungary to support locally-led responses. However, these actions are not yet well linked and are too dispersed to tackle complex challenges. The integration of humanitarian assistance into MFAT provides an excellent opportunity for progress.
Scholarships are the largest part of Hungary’s bilateral programme but greater clarity on their development impact is needed. The Stipendium Hungaricum has grown significantly, supporting more than 11 000 students in 2021, although relatively few from least developed countries. A small programme supports conflict-affected students. Hungary could benefit from an evaluation to assess and enhance the impact of scholarships. Additional efforts to target less-well off students and to enhance alumni outreach further could be ways to enhance development results.
Continuing to invest in internal systems will strengthen Hungary’s capacity. Quality assurance would benefit from deeper analysis and expert advice to reflect fragility, complex challenges and cross-cutting issues in project design. Systematically deploying its new risk management mechanisms would allow Hungary to capture the full range of risks, including wider corruption risks. Hungary’s significant efforts to track results also need to encompass outcomes and impact. As already highlighted when it joined the DAC, Hungary should carry out evaluations to inform decision making, learning and accountability.
Building on its small team of young, dedicated staff, investments in capacity and skills for improving Hungary’s development programme will be critical. The reorganisation will pool staff, which can bring efficiency gains. However, high turnover and a limited number of development experts mean Hungary needs to attract skilled staff, provide systematic training and improve knowledge management.
Hungary needs to decouple private sector engagement from ODA tied to domestic firms. Hungary supports the engagement of its private sector in developing countries by funding feasibility studies and pilot projects. A large part of Hungary’s co-operation projects are tied to Hungarian providers, which prevents partner countries from seeking the best value for money. Hungary needs to explore how it can progressively open up projects to competition. Promoting responsible business conduct would be an important complement to Hungary’s current efforts.
Greater attention is needed to balance domestic and global development objectives. Hungary’s water diplomacy and active engagement in multilateral fora show that it can make strong contributions to international dialogue on development. However, its stance on migration and gender equality sometimes block consensus, and frictions with the EU risk undermining the opportunities for driving collective action for sustainable development that will be presented through Hungary’s Presidency of the Council of the EU in 2024. Determining clear priorities, carefully considering its positions and investing early in the EU Presidency could allow Hungary to build a reputation as a force for sustainable development.
The Development Co-operation Profile of Hungary (https://doi.org/10.1787/a80b014d-en) provides additional information on Hungary’s co-operation. Hungarian good practices to inspire other DAC members and development actors are described on the learning platform, Development Co-operation TIPs ∙ Tools Insights Practices (https://www.oecd.org/development-cooperation-learning).
The following recommendations aim to support Hungary in building on the strengths of its development co-operation, while addressing some remaining challenges and pursuing its reform efforts.
Hungary should take the following actions, grouped under four broad objectives:
Increase the sustainability and impact of its partner country engagement
1. As it continues to increase its official development assistance, reduce fragmentation and enable multi-annual planning and financing for larger, longer-term interventions with a limited number of strategic country partnerships.
2. Ensure clear processes, guidance and staff capacity to quality-assure interventions, making sure that they systematically address poverty and inequality and consider cross-cutting issues such as climate, environment and gender equality, while being sensitive to context and humanitarian principles.
3. Further integrate approaches for community-based peace-building and religious tolerance into its partnerships with local faith-based organisations to strengthen the potential for longer-term conflict reduction.
Deepen collaboration across institutions and with stakeholders
4. Clarify institutional roles and co-ordination, notably within the Ministry of Foreign Affairs and Trade and vis-à-vis the Hungary Helps Agency as lead agency, to strengthen efficiency and synergies, including across the humanitarian-development-peace nexus.
5. Strengthen engagement with the full range of stakeholders by:
Strengthen internal systems for effective co-operation
6. Use the new mechanisms to manage the full range of risks and raise awareness of the need to address corruption risks through an approach that goes beyond fiduciary risks, notably to implement the Recommendation of the Council for Development Co-operation Actors on Managing the Risk of Corruption and the DAC Recommendation on Ending Sexual Exploitation, Abuse, and Harassment in Development Co-operation and Humanitarian Assistance.
7. Track the outcomes and impact of development co-operation through both results management and evaluations, especially for significant and strategic interventions such as scholarships and tied aid loans.
8. Invest in building and maintaining skills in development co-operation, including through relevant training, career opportunities for staff and support for a broader ecosystem of development experts in Hungary.
Find the right balance between domestic and global objectives
9. Define an approach to private sector engagement that enables Hungary to progressively untie grants and loans in order to increase value for money for partner countries, and that encompasses responsible business conduct.
10. Promote adjustments of policies that risk having negative effects on developing countries, including those affecting Hungary’s ability to join international consensus on efforts for global sustainable development.
