Preliminary ODA data 2018 – total falls for second consecutive year
Headline ODA has fallen for the second year in a row – down by US$4.1 billion (2.7%) on the net ODA measure and by US$2.5 billion (1.6%) according to the new measure.Downloads
This factsheet contains an initial analysis of the preliminary official development assistance (ODA) data for 2018, released by the Organisation for Economic Co-operation and Development’s (OECD) Development Assistance Committee (DAC) on 10 April 2019.
The rules governing ODA are changing and these are the first set of ODA statistics published under new rules regarding how ODA is accounted for. Under these rules, only a percentage of each ODA loan is counted as ODA – the percentage is dependent on how concessional the loan is. This is offset by the fact that loan repayments are no longer deducted from the headline ODA figure for each donor.
Donors are also now able to report some additional investments in the private sector of developing nations as ODA – known as private sector instruments (PSIs).
In order to compare data against previous years, the OECD has published ODA figures for 2018 calculated according to the previous ‘net ODA’ measure as well as the new ‘grant equivalent’ measure of ODA.
- Headline ODA has fallen for the second year in a row – down by US$4.1 billion (2.7%) on the net ODA measure and by US$2.5 billion (1.6%) according to the new measure
- Lower in-donor refugee costs (IDRCs) is the largest single factor in this fall; however there were also large falls in net ODA from the US and Japan between 2017 and 2018, which were not principally driven by a fall in IDRCs
- ODA to the least developed countries (LDCs) fell by more than 3% and ODA to Africa was down by 4% – in both cases a steeper fall than ODA overall
- The new rules cause Japan’s 2018 ODA to appear much higher compared with ODA calculated according to the previous rules – however, the new rules make Germany’s 2018 ODA appear significantly lower
- Only five DAC members achieved an ODA-GNI ratio of 0.7% or higher – the same as in 2017 and one fewer than 2016
- There are very wide disparities between the level of concessionality attached to loans from different donors
- The UK reported by far the greatest amount of private sector instruments in their ODA figures – over US$1 billion. The vast majority of this was in the form of a capital injection to CDC, the UK’s development finance institution (DFI)
Figure 1: ODA fell in 2018 on both the new grant equivalent measure and the previous net ODA measure
- Using the previous net ODA measure, total ODA fell by US$4.1 billion or 2.7% in 2018
- After following a rising trend since 2000, ODA levels have fallen since 2016 for the second year in a row
- The main factor in the fall is lower in-donor refugee costs (IDRCs), which were down by US$4.2 billion
- Under the new grant equivalent measure, total ODA also fell, by US$2.5 billion between 2017 and 2018
Table 1: Several large donors reported significant falls in net ODA
- Using the net ODA measure, ODA rose in 17 DAC members and fell in 12 – however, the largest percentage rises were among smaller donors
- The largest falls, in cash terms, were reported by four members of the G7: the US (US$1.8 billion), Japan (US$1.6 billion), Italy (US$1.3 billion) and Germany (US$0.8 billion)
Table 2: Under the new rules, 2018 ODA from Japan and the US appears higher than under previous rules, while ODA from France and Germany appears lower
- Japan’s ODA appears much higher under the new grant equivalent measure – this means that Japan’s headline ODA is now higher, despite a fall in net ODA
- ODA from the US is higher under the new measure because, although the US does not now give ODA loans, it has a large stock of old loans on which it is receiving repayments – under the new rules these repayments are no longer deducted from headline ODA
- France and Germany, who give loans at relatively low levels of concessionality and receive less loan repayments than Japan, both have lower levels of headline ODA under the new measure
Figure 2: Five donors gave at least 0.7% of GNI as ODA in 2018, unchanged since 2017
- In 2018, the same five donors achieved an ODA/GNI level of 0.7% or higher as in 2017, down from six donors in 2016 – Germany achieved 0.7% in 2016 but has reported a fall in ODA in each of the two years since
- Japan’s ODA rose to 0.28% of GNI from 0.23%, despite ODA falling by US$1.6 billion on a net ODA basis – this is due to the fact that Japan’s apparent ODA level is much higher under the new grant equivalent measure
- Conversely France remained unchanged at 0.43% despite an increase of US$0.5 billion in net ODA – this is due to the fact that the grant equivalent measure values French ODA less highly than the previous measure
Figure 3: ODA to LDCs remains below its 2011 peak
- After rising in 2017, largely due to increased lending, net ODA to least developed countries (LDCs) fell by US$0.9 billion, or over 3%, in 2018
- This leaves ODA to LDCs almost US$2 billion below its 2011 peak, a decline of nearly 7%
- Ireland alone gives over 50% of its bilateral ODA to LDCs. Seven other donors: Belgium, Canada, Korea, Luxembourg, Poland, Sweden and the US all gave over 30% of their bilateral ODA to LDCs in 2018
- ODA to Africa also fell by 4% on a like-for-like basis
Figure 4: The proportion of ODA spent on short-term priorities was almost 22% in 2018 compared with less than 13% in 2010
- ODA to short-term interventions in humanitarian crises or for refugees in donor countries took an increasingly large share of ODA between 2012 and 2016
- This trend has somewhat reversed – both IDRCs and humanitarian aid fell in 2018
- IDRCs fell by US$2.4 billion in Germany, US$0.8 billion in Italy, US$0.3 billion in the Netherlands and US$0.3 billion in Sweden
- The falls in IDRCs since 2016 not only reflect lower rates of refugee arrivals in Europe, but are also due, in part, to a tightening of DAC rules around the reporting of IDRCs
- However, aid to short-term priorities still comprised a much higher proportion of total ODA than was the case prior to 2014
Figure 5: Loans from Korea are almost three times as concessional as loans from the EU
- Loans, as a component of ODA, have risen rapidly since 2007 with the vast majority of bilateral lending being carried out by a handful of DAC members
- There are wide disparities in the level of concessionality attached to loans advanced by different donors with loans from Korea and Japan being on significantly softer terms than loans from France, Germany and the EU
- This is a key factor in the apparent reduction in Germany’s ODA levels when measured according to the new grant equivalent measure compared with the previous net ODA measure
Figure 6: Almost US$2.5 billion in PSIs was reported as ODA in 2018
- Only 12 DAC donors reported giving any ODA in the form of PSIs
- Collectively these donors reported US$2.46 billion: US$1.47 billion in the form of increased capital allocations to national DFIs and US$0.99 billion of loans and other investments to the private sector within developing countries
- 44% of PSIs came from the UK with a further 17% from France and 14% from Canada
- The majority of the UK’s reported PSIs was in the form of a capital injection to CDC, the UK’s DFI
- The amounts reported as capitalisation of national DFIs pose a transparency problem as no data currently exists to indicate the use that DFIs make of this funding
For more complete information on the changes to ODA rules see the technical note from the UK’s Department for International Development (available here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/792460/Grant-Equivalent-Technical-Note.pdf) and Development Initiatives’ ODA modernisation background paper: http://devinit.org/wp-content/uploads/2017/09/Backgound-paper_ODA-modernisation.pdfReturn to source text
Development Initiatives, 2019: Six ways to refocus ODA to end poverty and meet the SDGs’ available at: http://devinit.org/wp-content/uploads/2019/02/Six-ways-to-refocus-ODA-to-end-poverty-and-meet-the-SDGs.pdfReturn to source text
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