Official development assistance

ODA is the key international resource that can be targeted at the world’s poorest people – however allocations do not respond well to the characteristics of poverty.

ODA has risen, but the proportion going to LDCs has recently dipped

Total ODA rose since the mid-90s, but declined in 2011 in the wake of the international financial crisis.  However, ODA rose again to a new peak of just under $135billion in 2013. ODA to LDCs grew faster than total ODA for most years since 2000, but the post crisis fall disproportionately affected LDCs, with ODA falling 7% over 2011-12, compared to 0.4% in other countries.

Many donors have not met commitments on ODA

The widely-recognised target of providing ODA equivalent to 0.7% of a donor’s GNI was met by only met by 5 DAC donors in 2013 and only 9 donors gave at least 0.15% of GNI as ODA to LDCs, as required by the Monterrey target on ODA to LDCs.

ODA is a diverse bundle of instruments, not a homogenous resource

Most of the discourse around ODA treats it as a transfer of cash from donors to developing countries. In fact ODA consists of a wide variety of instruments: cash grants, cash loans, technical cooperation, commodities, food (and the shipping costs of food) and resources spent on developing global public goods or supporting donor-country based NGOs. Some forms of ODA do not result in any new direct transfer of resources: such as debt relief, admin costs and costs of developing-country students or refugees in donor countries.  Analysis of the 2012 ODA data shows that 17% of donors’ reported ODA is not transferred to developing countries.

Figure 5:ODA is not a single resource but a bundle of diverse instruments

Global Context Briefing_fig 4

Source: Development Initiatives calculations based on OECD

ODA allocations do not reflect the distribution of poverty

Many of the largest recipients of ODA are countries with high poverty rates and the top 10 recipients include 6 of the 10 countries with the largest numbers of people living in poverty.

However there are both countries with significant poverty that are not prioritized in ODA allocations, and countries with comparatively little poverty that are prioritized. And the scale of ODA does not reflect the scale of poverty: ODA per poor person is lowest in many of the poorest countries. In 20 countries ODA is less than US$ 100 per poor person – these countries account for 75% of the world’s poor. Conversely, ODA exceeds US$ 1,000 per poor person in 33 countries, which together account for less than 1% of the world’s poor.[i]

[i] Forthcoming study by Development Initiatives for the Development Cooperation Forum

Data on ODA is good, but could be better

Data on ODA is more comprehensive and detailed than for any other international flow.  However, this data still has many shortcomings, especially the fact that annually-produced data is always between one and two years out-of date. It is also unnecessarily difficult to establish how much of the ODA actually represents a flow of money and how much is in other forms.  Data is available only at a national level which is unhelpful when many countries contain pockets of poverty in specific regions.  The International Aid Transparency Initiative (IATI) has set a standard for ODA reporting which addresses many of these shortcomings.  However only about half of DAC donors currently publish data to the IATI standard and the donors that do publish data to this standard often do not report all their ODA in the IATI format.