Targeting aid to reach the poorest people: LDC aid trends and targets

Overview

‘Least developed countries’  (LDCs) is a group of currently 48 countries recognised by the UN. Their status is based on a combination of low income per capita – central to the income groups often used in aid debates – and assessments of low human assets and economic vulnerability.

Remarkable development progress was seen between 1990 and 2010 as extreme poverty rates were halved. But ending poverty is a different challenge that requires a shift in focus away from the world’s poor countries towards its poorest people. Explicitly targeting improvements for and monitoring the progress of the poorest 20% will help mobilise the resources, investments, partnerships and cooperation needed to realise the post- 2015 development agenda and end extreme poverty by 2030. It will also help track whether outcomes are in line with an equitable growth agenda.

As DI has set out in previous analysis, the existing country-based allocation decision-making criteria for ODA is inadequate, and needs to become more sophisticated, informed by better sub-national data. ODA should be more tightly focused to where poverty exists within countries.

But until sub-national data is widely available, a country-level focus remains important. The grouping of LDCs offers a readily available means to guide resource allocation. These countries tend to have: higher proportions of their populations living in poverty – and this poverty tends to be deeper; low current and projected domestic capacity; and political and environmental vulnerability. These factors support significant long-term investments for LDCs to end poverty globally by 2030.

A number of options have been proposed for increasing official development assistance (ODA) to LDCs. This briefing quantifies the implications of two proposals:

1. The target being proposed by the LDCs and other stakeholders, in current negotiations at the UN Finance for Development negotiations that 50% of ODA should be allocated to LDCs;
2. The more established target, linked to the 2011 Istanbul Programme of Action for LDCs- that 0.15–0.20% of ODA (as a proportion of DAC donor GNI) should go to LDCs.

We also provide evidence on the trends in ODA to LDCs, a review of the LDCs’ share of total ODA and an analysis of donor forward spending plans in relation to existing allocation patterns.