Development aid drops for the first time in 15 years
Figures just published by the OECD show that major donors’ aid to developing countries, known as Official Development Assistance or ODA, fell by nearly 3% to 133.5 billion in 2011 compared to 2010, the first drop since 1997 when debt relief figures are not included.
This global average hides even worse news. Within total net ODA, aid for core bilateral projects and programmes (in other words, excluding debt relief grants and humanitarian aid) fell by 4.5% in real terms and by 8.9% for flows to the Least Developed Countries.
In 2011, the largest donors were the United States at $30.7 billion (a fall of 0.9%); Germany ($14.5 billion, up 5.9%); the United Kingdom ($13.7 billion, -0.8%), France ($12.9 billion, -5.6%); and Japan (10.6 billion, -10.8%).
Denmark, Luxembourg, the Netherlands, Norway and Sweden continued to exceed the United Nations’ ODA target of 0.7% of GNI.
In real terms, the largest rises in ODA was registered in Italy at 33%, while Greece showed the sharpest drop, at -39.3%.
The recession and sovereign debt crisis certainly played a large role but they don’t explain everything when you look at the national-level data. Spain’s ODA fell by almost as much as Greece’s (36%) but Portugal’s aid was down by only 2.8%. OECD Secretary-General Angel Gurría warned that “the crisis should not be used as an excuse to reduce development cooperation contributions”.
Governments are however under pressure to reduce aid spending in line other cuts, and the OECD-DAC Survey on Donors’ Forward Spending Plans for 2012 to 2015 suggests that global country programmable aid (CPA, one measure of receipts by developing countries) may rise by 6% in real terms in 2012. However, this is mainly because of expected increases in soft loans from multilateral agencies funded from capital replenishments during 2009-2011. From 2013, global CPA is expected to stagnate, and could confirm earlier findings such as those of the 1996 Development Cooperation Report that it takes several years from the onset of a recession for the full impact to be felt on aid flows.
Apart from calls to help combat the effects of the crisis at home before spending money abroad, there is a more general criticism of aid, claiming that it has not only failed to do its job, but has held back development and helped keep corrupt regimes in power. Brenda Killen of the OECD Development Co-operation Directorate answered these arguments in the latest OECD Yearbook, and concluded that aid is needed because “in our highly interdependent world, what happens with the economy, security, climate and health of any country affects us all”.
DAC Chair Brian Atwood, a regular contributor to the Insights blog, echoed this in a statement to the press when the figures were released, saying that while he was “disappointed that some countries have failed to maintain their commitments, the overall level reflects the growing awareness that global challenges… cannot be resolved without development progress.”
Aid is a small part of financial flows to developing counties, behind investment and remittances from workers living abroad, but it is still a vital tool in the fight against poverty. Everybody would like to see its role diminish, and even disappear because it was no longer needed.
- Net official development assistance from DAC and other OECD Members in 2011 (Preliminary data for 2011)
- Net official development assistance from DAC Members in 2011 by volume and as a percentage of GNI (Preliminary data for 2011)
- Components of DAC Donors’net ODA
- Gross official development assistance in 2011 (Preliminary data for 2011)