The recently published preliminary ODA data of 2020 show that aid spending by DAC members totaled 161.2 billion USD which constitutes a 3.5% increase in real terms.[1] But while this increase is a welcome development, it is by all measures marginal compared to the magnitude of the crises the world faces today. Considering the extraordinary amount of resources needed to effectively address the global health crisis, donor performance in 2020 is underwhelming and patently incongruous – comprising only 0.32% of DAC member countries’ Gross National Income (GNI) which does not even reach half the 0.7% target.
Out of 24 DAC member countries, only six managed to meet or exceed the 0.7% target, namely: Denmark (0.73%), Germany (0.73%), Luxembourg (1.02%), Norway (1.11%), Sweden (1.14%) and the United Kingdom (0.70%). However, two of these six donors only achieved this target because of the inclusion of in-donor refugee costs. Without these additions, Germany’s performance is 0.66% and the UK is 0.69%. In addition, recent UK aid cuts will gravely affect these figures in 2021 resulting in more than 50% cuts in several development programmes, especially in countries in conflict and fragile situations.
All the more worrying is the rise in gross bilateral ODA disbursed in the form of loans and equity investments at 22%, compared to 17% in previous years. This is an alarming move that is set to entrench heavily indebted developing countries further into debt. In addition, this trend suggests donor countries are increasingly shifting away from grants-based ODA which is crucial for developing countries to support health workers, strengthen their health systems and improve social safety nets.
Consequently, we express alarm over the continued use of multilateral institutions such as the International Monetary Fund and the World Bank as a mode of disbursing ODA funds to developing countries. We call on the DAC and partner governments to establish appropriate accountability and transparency mechanisms to hold these International Finance Institutions accountable for their policy interventions. We further call establishments at the national level to allow citizens to be involved in the planning, implementation and monitoring of recovery efforts post-Covid.
Almost USD 3.2 billion of net ODA flows were coursed through private sector instruments (PSIs) which remained virtually unchanged compared to 2019. There is a continuing trend of donor countries using precious ODA to catalyze private sector growth in the absence of an effective means for enforcing sufficient accountability and transparency mechanisms meant to protect sustainable development objectives from conflicting with for-profit interests. This relentless focus on private sector risks undermining ODA’s added value in developing country capacities especially in terms of healthcare, education, and other social services necessary to curb the impacts of the Covid-19 pandemic.
The 2020 data also show that within total ODA figures, DAC countries spent USD 11.9 billion for Covid-19 responses, of which USD 6.9 billion was identified as new resources. The remaining USD 5 billion comprised of resources merely reprogrammed for Covid-19 purposes. The EU institutions provided an additional USD 9.1 billion. While welcome, these amounts are grotesquely insufficient. The DAC notes that only USD 3.3 billion of the USD 11.9 billion went into direct support for developing countries’ front-line health sector (e.g. testing, prevention, immunization, treatment, and care). The remaining resources were directed to equally important sectors such as improved social protection, humanitarian assistance or protection against gender-based violence.
Since the beginning of the pandemic, many countries in the North have devoted significant amounts of money in pandemic-related social protection programs and health measures within their own borders, compared to the very limited resources available to be spent by governments in the Global South. The OECD Secretary General noted that DAC aid directed towards the pandemic’s impact so far amounts to just 1% of what donor countries have spent on protecting their citizens. This disparity in Covid-19 spending extends to vaccine access where only 10 countries have administered 75% of all Covid-19 vaccines available, as of February 2021,[2] while the poorest countries, particularly those in Africa will be last in line when it comes to mass vaccination.[3]
ODA is one of the most crucial and most reliable lifelines for conflict-affected and fragile countries, and yet net ODA to sub-Saharan Africa, which suffers from the devastating consequences of poverty, conflicts and climate disasters, fell in 2020 by USD 310 million or 1% in real terms. This trend will be further compounded by recent UK aid cuts, which includes slashing the aid programmes in Nigeria by 58%, Somalia by 60%, South Sudan by 59% and Syria by 67% in 2021 and beyond.[4]
Bilateral aid to Least Developed Countries remained insufficient, showing only a marginal 1.8% increase in 2020, representing only 0.07% of donors’ GNI (less than half of the target of 0.15% to 0.2%). On the other hand, aid to all low income countries were only USD 25 billion, a decrease by 3.5% in real terms. By contrast, aid to lower-middle income countries grew by 6.9% and to upper middle-income countries by 36.1%. The latter is likely a reflection of the dramatic increase in the use of loans in donor aid programmes.
We call on the DAC to meet long-standing commitments to protect the quantity and quality of ODA, especially during the pandemic. At this point, meeting the 0.7% of GNI allocated as ODA necessarily becomes a minimum target, not a maximum goal considering the gravity of the pandemic and its related crises. If all DAC donors had met this target in 2020, there would have been USD 350 billion in concessional resources for partner countries, compared to the USD 161 billion provided.
Achieving this goal is realistic. Donors mounted massive finance to address the pandemic in their own countries and also increased ODA flows despite a 5% decline in their GNI in 2020. If the world is to stay on track in achieving the Sustainable Development Goals, development actors especially the donor community must step up to provide new and additional grants needed to address the immediate and structural impacts of the pandemic and the impacts of growing inequalities and the climate emergency.
In this context, the Reality of Aid Network reiterates its 10-point action agenda to transform aid[5]:
- Meet and exceed the 0.7% GNI target without further delay and separate from in-donor refugee costs, debt cancellation and principal purpose projects for climate finance;
- Meet the 0.2% GNI commitment to LDCs and other countries in chronic conflict and state of fragility;
- Establish a human rights-based framework and anchor all forms of development finance on the four development effectiveness principles;
- Mainstream gender equality and women’s empowerment;
- Address other inequalities such as those based on economic marginalization, disabilities, race, ethnicity, or age;
- Reverse closing civic spaces and authoritarian measures, institute enabling legal frameworks and allocate ample resources to CSOs;
- Increase country programmable aid, grants, demand-led technical cooperation, and support for domestic resource mobilization rather than loans, informal and formal tied aid;
- Deploy ODA only in projects/activities directly related to building capacities of developing country private sector, i.e. small-scale enterprises that support the creation of decent jobs and livelihoods;
- Stop shaping humanitarian and development strategies according to their own foreign policy, geopolitical and security interests; and
- Respond to the climate emergency without diminishing ODA and/or provision of loans for these purposes.
[1] OECD, “Covid-19 spending helped to lift foreign aid to an all-time high in 2020 Detailed Note,” April 13, 2021, accessed April 14, 2021 at https://www.oecd.org/dac/financing-sustainable-development/development-finance-data/ODA-2020-detailed-summary.pdf. Real ODA for 2020 (net ODA disbursements less in-donor refugee and student costs, debt cancellation and interest received on previous loans) was $142.2 billion, which represented an 8% increase over 2019 ($131.7 billion).
[2] UN News, “COVID-19 vaccination ‘wildly uneven and unfair’: UN Secretary-General,” February 17, 2021, accessed April 14, 2021 at https://news.un.org/en/story/2021/02/1084962
[3] Vitalice Meja, “The reality of Covid-19 vaccines in Africa,” February 1, 2021, accessed at https://www.linkedin.com/pulse/reality-covid-19-vaccines-africa-vitalice-meja/
[4] Patrick Wintour, “Leak reveals UK Foreign Office discussing aid cuts of more than 50%,” The Guardian, March 6, 2021, accessed April 14, 2021 at https://www.theguardian.com/politics/2021/mar/05/uk-foreign-office-discussing-aid-cuts-more-than-50-leak-reveals
[5] The Reality of Aid Report 2018, “Changing Faces of Development Aid and Cooperation,” 2018, accessed April 14, 2021 at https://www.realityofaid.org/wp-content/uploads/2018/12/Full-Version-RoA-Report-2018-min.pdf