Swedish cooperation’s decision to exit Honduras leaves behind a highly institutionally fragile partner country assisted by a reduced donor community. This case study, which provides an in-depth analysis of exit practices, is the first in a series of studies within a broad research project on international division of labour. It systematises the perspectives of national actors, gathered through interviews and a workshop held in Tegucigalpa in February 2009. Although carried out before the June 2009 coup, this study offers some highly relevant guidelines which help to understand the relationship between the quality of aid and the downfall of institutional democracy.

The Swedish International Development Cooperation Agency (SIDA) has made great efforts to ensure good practices, particularly through capacity building during the phase-out process. However, significant challenges were identified in adapting communication to Honduras’ tense political context, and in compensating for Sweden’s departure with funding from other donors, particularly in areas relevant to the country’s development.

At a global level, the case of Honduras demonstrates clashes in donor complementarity. Sweden’s exit signifies the departure of the only Nordic+ donor, which for several years was a true champion with regard to the aid effectiveness agenda and support for democratic governance. Honduras is now on the way to becoming an ‘aid orphan’, left with a donor community that is increasingly reluctant to invest seriously in partnership and national capacity-building, both of which are necessary given the country’s profound institutional crisis.

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