New aid figures reveal 'incredible lack of ambition' from donors

BRUSSELS — Development assistance fell 2.7% last year, largely due to countries spending less on hosting refugees and changes to whether these costs qualify as aid.

Aid advocates said preliminary data for 2018, released Wednesday by the Organisation for Economic Co-operation and Development, painted a worrying picture. Bilateral assistance to least-developed countries fell 3% from 2017, aid to Africa was down 4%, and humanitarian aid dropped 8%.

“It’s unclear precisely why [humanitarian aid] is down,” Susanna Moorehead, chair of the OECD Development Assistance Committee, told journalists. “One would hope that that would mean there was less demand for it, but I think … the opposite is true.”

Excluding in-donor refugee costs, net official development assistance levels were stable compared to 2017. “Official development assistance is flatlining,” Moorehead said, adding that the development committee must redouble its reform efforts “to make sure that we can do everything in our power to reverse this trend.”

The 30 DAC members, who make up most of the world’s major donors, have yet to agree permanent rules on how to count support to developing countries delivered through private sector instruments, such as guarantees and debt relief.

Other changes have taken effect, however. In 2017, it tightened the rules around counting in-donor refugee costs as ODA, which had been controversial because the money is spent at home rather than overseas.

Jesse Griffiths, a development finance expert at the Overseas Development Institute, a London-based think tank, lamented that even though the amount of in-donor refugee spending decreased by 28.4% since 2017, it still represented $10.6 billion of aid.

“It’s not really financing developing countries, so it’s questionable whether that should be counted as ODA,” he said. In-donor refugee costs made up more than 10% of total aid from Belgium, Canada, Germany, the Netherlands, and Spain, and more than 20% from Iceland and Italy.

Government-to-government ODA flows to Africa fell among 18 donors, with the largest falls from the United States, United Kingdom, France, Italy, and Spain.

“The drop in ODA going to countries with the greatest need and those in Africa, which require the most support for development, is worrying,” said Sara Harcourt, director of development finance policy at the ONE Campaign. “We will be watching to see what leaders do at the G-7 Summit and the Global Fund [to Fight AIDS, Tuberculosis and Malaria] replenishment later this year — a first step to righting this course is for leaders to make bold pledges at these meetings.”

Moorehead said the 2018 figures, “combined with the 30% drop in foreign direct investment in developing countries over the last three years, [showed] a clear trajectory of reduced resource flows.” And Griffiths lamented “an incredible, disappointing lack of ambition” from donors. “Some people seem to have given up on the [Sustainable Development Goals] already, even though we’ve still got 11 years left,” he said, arguing that a high-level development financing meeting at the United Nations in September is the moment to “reenergize the ambition on this agenda”.

This year’s DAC figures used a new methodology. In the past, if countries gave a loan, this was counted as ODA with repayments progressively subtracted. Now, only the amount the donor gives away by lending below market rates counts as ODA. 

Using the new grant-equivalent system, donors gave $153 billion in ODA in 2018 or 0.31% of their combined gross national income. Sweden (1.0%), Luxembourg (0.98%), Norway (0.94%), Denmark (0.72%) and the U.K. (0.7%), were the only DAC members to meet the U.N. target of spending 0.7%.

The largest donors by volume were the U.S., Germany, U.K., Japan, and France.