OECD: Latest Trends on Official Development Assistance (ODA)

The Organization for Economic Cooperation and Development (OECD) has published a comprehensive study on the profiles of international cooperation for development in 2020, which includes an analysis of the different international donors, both private and official, as well as an assessment of the recent trends in international cooperation, and the impact of the COVID-19 pandemic on these.

In the chapter where the latest trends are examined, the report considers the volume and distribution of official development finance, especially flows that qualify as official development assistance (ODA) worldwide. It includes flows of members of the OECD Development Assistance Committee (DAC) and from the main providers of development cooperation. It also highlights the performance of individual providers and where they choose to focus their development cooperation efforts, whether this be through bilateral, multilateral, or other delivery channels, as well as some of the most significant geographic and thematic variations in allocations over recent years.

The first of the key trends in 2018 and 2019 was that total ODA continues to increase, but much too slowly to meet international commitments. Preliminary data for 2019 shows a total ODA of USD 169.2 billion from DAC countries and other official providers. DAC countries’ total ODA on a grant-equivalent basis increased by 1.4% in real terms compared to the previous year, which is equivalent to 0.3% of gross national income (GNI). However, current levels of ODA by DAC countries do not match the collective ambition of 0.7% ODA to GNI reiterated in the 2030 Agenda for Sustainable Development. Given the particular role that ODA plays in addressing humanitarian needs, promoting peace and stability, building healthy, productive populations and sowing the seeds of global markets of the future, a sustained increase in ODA is still indispensable.

Secondly, it is observed that ODA to least developed countries (LDCs) increased, but LDCs still receive a small share of the private finance mobilized by official development finance. Net bilateral ODA from DAC countries to the group of least developed countries (LDCs) rebounded in 2019, after a drop in 2018, to reach 23.8% of gross bilateral ODA (USD 28.4 billion), representing an increase of 2.6% in real terms. However, total ODA to LDCs as a share of GNI has not changed since 2017, remaining at 0.09% of GNI – well below the ODA commitment of 0.15-0.20% of GNI reiterated in the 2030 Agenda for Sustainable Development. Several factors leave LDCs with few external financing alternatives to ODA: they received only 4% of other official flows in 2017. Global investment and weak economic performance make it difficult for LDCs to raise financing through other means. For this reason, it is of utmost importance that LDCs receive sustained and increasing ODA.

Third, a continuous increase in flows to fragile contexts was observed since 2014. Support to fragile contexts, which includes 58 countries and territories, accounted for 35.2% of DAC countries’ gross bilateral ODA (USD 42.1 billion) and 76.5% of other official providers’ gross bilateral ODA (USD 16.1 billion) in 2018, while support from multilateral organizations accounted for an additional USD 30.6 billion. This ongoing shift of support to fragile contexts is positive in many ways, with more providers willing and able to participate in the most challenging contexts.

Fourth, it was noted that funding for gender equality is at an all-time high, but the proportion of ODA devoted primarily to gender equality remains low. In 2018, DAC countries committed 42.1% of bilateral allocable aid (USD 53.1 billion) to gender equality and women’s empowerment as either a principal or significant objective, up from 36.2% in 2017. However, only 4% of commitments had gender equality as a principal objective, with no increase in recent years. 2030 Agenda aims for a world in which all women and girls enjoy full gender equality and all legal, social, and economic barriers to their empowerment have been removed. There is compelling evidence that doing so will accelerate progress on all the Sustainable Development Goals (SDGs).

Fifth, funding for the environment and climate change was noted to have increased slightly for DAC countries, but decreased for other official providers in 2018. In that year, DAC countries slightly increased ODA in support of the environment and climate change. They committed 33% of their bilateral allocable aid in support of the environment as either a principal or significant objective, while 11% focused on environmental issues as a principal objective only. DAC countries had a greater focus on mitigation (20% in 2018) than adaptation (12%). The impact of environmental degradation and climate change is felt most acutely in developing countries and within those countries, among the poorest and most vulnerable people. Despite much public engagement and high-level political commitments, these data confirm that a relatively low proportion of ODA programs take this into account. OECD calls for a structured approach to development cooperation to meet the challenge of aligning with international climate agreements.

Finally, the sixth trend shows that predictability of ODA allocations in partner countries and use of national budgets are declining. Even before the uncertainty around the economic implications of the current COVID-19 pandemic, partner country governments had complete forward visibility in order to start medium-term planning on only 65% of development co-operation funding they expected to receive from DAC members, compared to 69% in the 2016 monitoring round. Reduced visibility on future flows has a negative impact on partnerships, trust, and medium-term planning, particularly in the most aid-dependent partner countries. The share of DAC members’ funding recorded in partner countries’ national budgets also continued to decline, which can serve to undermine the accountability role of legislative bodies. Taking the time to establish longer-term partnerships can lead to a huge improvement in the use of country systems and provide more certainty around future development finance levels.

Furthermore, the study shows other trends that occurred over the latest years such as the fact that most ODA goes through the bilateral channel. It also analyses multilateral and bilateral allocations, as well as carrying out a geographic and thematic analyses of these.

To read the full report, please visit the following link: