What to make of the 2020 DAC stats

The generosity of OECD Development Assistance Committee members is at its highest in almost 30 years as the impact of COVID-19 saw total official development assistance grow almost $10 billion between 2019 and 2020, reaching $161.2 billion after three years of declining contributions.

The preliminary ODA figures for 2020 released by the Organisation for Economic Co-operation and Development on April 13 show that generosity — determined by ODA as a share of gross national income — increased from an average of 0.29% in 2019 to 0.32% in 2020.

“Some predicted ODA would be on the chopping block,” OECD Secretary-General Ángel Gurría said in launching the data. “In fact, foreign aid from official donors rose to an all-time high.” It was funding mobilized in response to the COVID-19 pandemic, he said, that helped reach this record figure. ODA increased while all other flows to low- and middle-income countries, including trade, declined.

“However we can, we must, we need to do better,” Gurría said, warning that the pandemic was increasing inequality and risking the success of the sustainable development goals.

Leading donors

Leading donor generosity is Sweden, which contributed less than 4% of the total ODA value but saw ODA as a share of GNI sit at 1.14% — up from 0.96% in 2019. This was followed by Norway at 1.11% and Luxembourg at 1.02%.

Based on the financial commitments supporting ODA, the leading donors look a bit different. The United States remains the leading contributor to development assistance with $35.5 billion in 2020 — 22% of the total DAC contribution and a $1.6 billion increase from 2019 due to increased contributions to multilateral organizations. Despite this, their ODA as a share of GNI sits at just 0.17% and their share of total ODA is in decline as the contribution of other donors grows.

Germany has increased its development assistance by 14% from $24.2 billion to $27.5 billion, contributing 17.6% of the DAC total. The United Kingdom is third with a $17.4 billion contribution, down from $19.4 billion in 2019, while France continues to increase its contribution adding $1.3 billion for a total of $13.5 billion in development assistance in 2020.

Contributing to the increase for some donors are sovereign loans from DAC members to recipient countries, which are calculated on a grant equivalent basis. Since 2019, this has increased by 38.7%. Portugal saw the largest growth with their loans increasing 143%, followed by Germany (69%), France (63%), Italy (55%), and Japan (11%).

The role of COVID-19

Following the declaration of a global pandemic a year ago, DAC members issued a statement identifying the importance of ODA in helping governments globally respond to COVID-19. ODA as “an important means of supporting national responses to the COVID-19 crisis,” and that they would “strive to protect ODA budgets.”  Donors including the U.S., U.K., and Australia announced pivots in their aid programs to support this need. But despite this, the preliminary ODA data for 2020 does not show a clear picture of how this is happening.

According to the data, just 1% of development assistance from the U.S., 3% from Australia, and 9% from the U.K. contributed to the COVID-19 response. In comparison, data from Korea shows that 26% of its net ODA for 2020 contributed to the pandemic response, followed by Japan with 22%. Both countries were among the first hit by COVID-19 outside of China.

Jorge Moreira da Silva, director of the development co-operation directorate within the OECD, said that additional surveys being conducted by OECD show a range of approaches and focuses from donors, including redirecting funds and announcing new funds.

And to support better data, he said the OECD working group on statistics is providing guidance to donors: policy information on what is working and what is not, with the expectation that there will be further details provided to donors on how to classify funding as being part of a COVID response.

COVID-19 announcements made by DAC members supporting low- and middle-income countries tend to be multi-year initiatives — including large-scale health and economic programs to help countries with the long road to recovery. Despite the large-scale health and social impacts in 2020, it is likely that the bulk of this new funding will be spent in 2021 and beyond where it will appear more clearly in OECD figures.

While the data is not yet complete, Gurría said that the global response to COVID-19 is overlooking developing assistance. “We have only mobilized 1% of the $16 trillion that has been used to fight the pandemic,” he explained. “Vaccine programs for developing countries remain underfunded by a few billion when trillions are being spent. We need to make a much better effort to help developing countries.”

DAC Chair Susanna Morehead warned that the increased funding in response to the pandemic in 2020 is likely funds brought forward, and may not be sustained in future years.

Donors in decline

Despite the overall growth and statements on the importance of ODA in responding to the pandemic, 13 DAC members saw their net development assistance decline in 2020 by a total of $4.7 billion — led by a 10% U.K. drop. Contributions from Greece declined 36.2%, with Australia (10.6%) Luxembourg (9.2%) and Korea (9%) following.

In the U.K., the OECD cites the economy as the cause of their drop. The government stuck to the line of contributing 0.7% of GNI to development assistance. But with a drop in GNI, this meant that the overall contribution also declined.

For donors including Greece, Italy, and Ireland, drops in development assistance were led by lower costs for refugees within donor countries. In Portugal, a decrease in contributions for multilateral organizations led to declining assistance. And for others, cuts to bilateral aid programs were responsible for the decline.

Only six donors achieved an ODA to GNI ratio of 0.7% or higher, a cause of concern for NGOs reviewing the data.

“Before the pandemic, donors were already off-track to achieve their international aid commitments,” the DAC-CSO Reference Group said in a statement. “In 2020, DAC donors prioritized their national responses towards COVID at the expense of international aid. This 2021, a substantial and immediate increase in ODA levels must be the top priority to ensure the achievement of the 2030 Agenda on time.”

Update, April 14, 2021: This story had been updated to correct that the ODA to GNI ratio for 2020 was 0.32%.