CURRENT AFFAIRS
  News/Comments
State of the world
   
WHO WE ARE
 

Aims of just1WORLD
Contact Us

   
ISSUES
Quality of Life
 

Food & hunger
Water
Health
Education

   
Economic
  Globalisation
Trade
Economics
   
Government
  Good Government
Development aid
Debt relief
Corruption
Money laundering /
tax havens
   
Way forward
  Recommendations
Poverty Poster
 

 

overseas aid (ODA)

Back in 1970, the United Nations (UN) passed a resolution recommending that wealthy countries donate annually 0.7% Gross National Income (GNI) to poor countries in Official Development Assistance (ODA) in order to help the fight against poverty. This is still the target today and every year the Organisation for Economic Co-operation and Development (OECD), produces figures showing how much each wealthy country gives in ODA and what percentage of its GNI that figure represents.

Below is the ODA league table for 2019 (2018, 2000) which shows the aid contributions of the members of the Development Assistance Committee (DAC) of the OECD - 29 of the richest countries in the world.

WORLD 'PREMIER' LEAGUE

.
COUNTRY

2019
AMOUNT ($bn)

2019 ODA/GNI
%
2018 AMOUNT
($bn)
2018 ODA/GNI
%
2000 AMOUNT
($bn)
2000 ODA/GNI
%
LUXEMBOURG
0.5
1.05
0.5
0.98
0.1
0.70
NORWAY
4.3
1.02
4.3
0.94
1.3
0.80
SWEDEN
5.4
0.99
5.8
1.04
1.8
0.81
DENMARK
2.5
0.71
2.6
0.72
1.7
1.06
U.K.
19.4
0.70
19.4
0.70
4.5
0.31
----------------            
GERMANY
23.8
0.60
25.0
0.61
5.0
0.27
NETHERLANDS
5.3
0.59
5.6
0.61
3.1
0.82
             
SWITZERLAND
3.1
0.44
3.1
0.44
0.9
0.34
FRANCE
12.2
0.44
12.2
0.43
4.2
0.33
BELGIUM
2.2
0.42
2.3
0.43
0.8
0.36
FINLAND
1.1
0.42
1.0
0.36
0.4
0.31
             
IRELAND
0.9
0.31
0.9
0.31
0.2
0.30
ICELAND
0.1
0.27
0.1
0.31
   
             
JAPAN
15.5
0.29
14.2
0.28
13.1
0.27
NEW ZEALAND
0.6
0.28
0.6
0.28
0.1
0.26
CANADA
4.7
0.27
4.7
0.28
1.7
0.25
AUSTRIA
1.2
0.27
1.2
0.26
0.5
0.25
ITALY
4.9
0.24
5.0
0.24
1.4
0.13
AUSTRALIA
2.9
0.22
3.1
0.23
1.0
0.27
HUNGARY
0.3
0.22
0.2
0.14
   
SPAIN
2.9
0.21
2.9
0.20
1.3
0.24
             
U.S.
34.7
0.16
34.3
0.17
9.6
0.10
PORTUGAL
0.4
0.16
0.4
0.17
0.3
0.26
SLOVENIA
0.1
0.16
0.1
0.16
   
S. KOREA
2.5
0.15
2.4
0.15
GREECE
0.3
0.14
0.3
0.13
0.2
0.19
CZECH REP.
0.3
0.13
0.3
0.14
   
POLAND
0.7
0.12
0.8
0.14
   
SLOVAKIA
0.1
0.12
0.1
0.13
   
             
TOTAL
152.8
0.30
153.0
0.31
53.1
0.22

From the table it can be seen that total ODA in 2019 amounted to US$152.8bn after US$153.0bn in 2018 and $146.6bn in 2017. In 2016 ODA totalled $145bn after $131.5bn in 2015. For the rest of this century the figures were $137.2bn in 2014, $135.1bn in 2013, $126.9 in 2012, $133.7bn in 2011, $128.5bn in 2010, $119.8bn in 2009, $122.3bn in 2008, $103.7bn in 2007, $104.4bn for 2006, $106.8bn in 2005, $79.6bn in 2004, $69.1bn in 2003, $58.3bn in 2002, $52.3bn in 2001 and $53.1bn in 2000. The total for 2019 represents 0.30% of rich countries' combined Gross National Income against 0.31% in 2018. (Over the last 50 years developed countries are reckoned to have given more than $3.4 trillion in foreign aid.)

In 2019 Luxembourg leapt to the top of the ODA League Table with 1.05%GNI. In second place is Norway with 1.02% closely followed by Sweden with 0.99%. Other countries reaching the UN target are Denmark with 0.71% and the United Kingdom 0.70%. Germany with 0.60% and The Netherlands with 0.59% are next. Bringing up the rear are Poland and Slovakia with 0.12%.

The US, the largest donor nation in total with $34.7bn, provides aid to more than 140 countries with Afghanistan, Israel, Jordan, Pakistan, Iraq, Kenya, Ethiopia, South Sudan, Tanzania and South Africa heading the list in 2019. Germany, UK, Japan and France are the next largest donors.

The EU remains the largest donor group investing US$84.5bn, more than half the world total.

Luxembourg, Norway, Sweden, Denmark and UK surely deserve to be congratulated on meeting their international obligations again in giving 0.7%+ GNI annually in aid. Governments in these 5 nations, it seems, really do believe that their contributions help to make a lasting difference to people's lives in the developing world.

Another way of looking at these figures could be to say that every Luxembourger contributes $772 annually to the developing world in aid whilst each American only hands over $105 (UK$290/£230). But Official Development Assistance (ODA) only shows each government's support for international development; it does not take into account donations from private individuals in each country. When these are taken into account the US comes out much more favourably. For example, Bill Gates, founder of Microsoft, through the Bill and Melinda Gates Foundation has invested heavily in, amongst other things, helping combat HIV/Aids in Africa, family planning and medical research. Together with Warren Buffet, chair of Berkshire Hathaway, Gates has promised to give away the bulk of his wealth in his lifetime mainly to help tackle suffering in the developing world. The Bill and Melinda Gates Foundation takes the giving of aid so seriously that it supposedly tracks every dollar to ensure it buys what it is intended to buy. Gates and Buffet have also signed up more than 175 American billionaires to do likewise as part of the Giving Pledge. In the US philanthropy seems to be celebrated as part of the nation's culture with an estimated 98% of top taxpayers giving, on average, 7.4% of their income to charity whilst 35% of American workers give to charity through the tax-efficient payroll system.

(Comparable figures for the UK show a shocking comparison. Only ONE in FOURTEEN of top taxpayers give away more than 1% of their wealth and only ONE in TEN give anything to charity at all. It is estimated that 4% of employees in the UK give from their pay packets.

Other countries' contribution include, somewhat surprisingly perhaps, Turkey with $8.6bn (1.15%) mainly in support of refugees and Saudi Arabia $4.4bn (0.56%) and United Arab Emirates $3.9bn (0.55%) through providing exceptional support for Egypt. [China uses multiple ministries and agencies to give money, mainly in the guise of concessional lending, and does not release reports about how much aid is provided although in 2012 it is estimated to have given about $18bn or 0.31%GNI in ODA. This is thought to have been made up of medical teams, training and scholarships, humanitarian, youth volunteers, debt relief, budget support, infrastructure projects, ODA-in-kind and technical assistance]

Overseas aid (ODA) donated by rich governments to poor countries can be given in 5 different ways:-
bilateral aid is money given directly to the recipient government or spent on a project in that country;
multilateral aid would be given through a third party i.e. World Bank, IMF, African Development Bank (AfDB) etc.;
humanitarian aid would be given in an emergency, most probably through an international NGO like Oxfam or Save the Children, to provide food, clean water, shelter, medical supplies;
support for refugees ODA budgets in many EU nations are now being used to support refugees;
debt relief cancels outstanding debts between the donor and recipient.

Support for refugees reached $10.2bn in 2019 a fall in real terms of 2% from 2018. Humanitarian aid totalled $15.4bn. Debt relief grants fell to $0.14bn. Multilteral aid reached $43.3bn and bilateral aid was at $83bn.

A rule introduced in 1988 by the DAC allows donor countries to count certain refugee expenses as ODA for the first year of arrival. The number of refugees entering Europe has dropped since its peak in 2015/16 and these costs in 2019 represented 7.1% of total net ODA compared to 7.1% in 2018, 9.6% in 2017 and 11% in 2016, when in-donor costs were at their highest. For 7 countries, these costs represented more than 10% of their total ODA and for 2 of them it was over 20%.

Net bilateral aid flows to Africa totalled US$37bn of which US$31bn went to sub-Saharan Africa. An increase of 1.3% and 1.1% respectively.

Net ODA has doubled in real terms since 2000.

Over recent years the World Bank has been monitoring aid distribution and is now encouraging countries to start to untie more of their ODA for the Bank maintains that tied aid is 25% less effective than untied aid. Several donors have already moved to completely untie their overseas aid including UK, Canada, Denmark, Australia, Norway and Switzerland. Chief culprits in still tying their aid to goods and services produced in their own country are Italy, US and Germany. At present it is estimated that as much as 50% of aid is still tied.

At the same time Australia and Canada, and now UK since June 2020, have perhaps surprisingly recently moved to dismantle their own aid agencies and merge them with foreign affairs. The aim here is to concentrate more on surrounding countries - Australia on Pacific nations, Canada on Latin America and the Caribbean and all also to seek to engage more with the private sector and to lessen links with multilateral institutions.

Likening DfID's largesse to a cash-point in the sky, Boris Johnson has decided to fold DfID back into the Foreign Office from September 2020. This joint department will now be known as the Foreign, Commonwealth and Development Office (FCDO). The objective of aid policy now appears to be to 'serve the national interest' no longer necessarily in reducing poverty and making the world safer and better off, but to maximise UK influence. The means taking a more strategic, political and hard-fisted approach to the way ODA is spent with possible upgrades to Britain's intelligence and defence capabilities as well as countering Russian influence in nearby eastern Europe. Perhaps, in due course, the 0.7% commitment will go altogether too. Currently DfID spends £14.6bn on aid whilst the Foreign Office budget is £1.2bn. So UK civil servants dolling out cash can be said up till now to have had much more influence than diplomats trying to promote and protect British interests abroad.

The recently published 'Agenda for Change' is an attempt by the EU to improve poverty reduction efforts. This aims to direct EU aid to where it is needed most and where it will have the greatest impact; concentration on a maximum of three sectors per country; a clearer focus on good governance, growth, democracy and human rights; improved policy coherence, continuity and member-state co-ordination. This has several advantages - poor countries would be able to plan ahead more confidently, there would be fewer donor missions to recipient countries (currently there are on average 250 to each recipient country each year), there should be less waste, duplication will be avoided and, eventually, it should lead to most ODA being untied. The success of this idea, however, will depend on the ability of EU member states working together on development to ensure a coherent and effective approach. This suggestion is certainly a constructive way forward in maximising ODA but the EU could and should have been bolder.

The recently published 2019 'Principled Aid Index', by the Overseas Development Institute, ranks bilatral DAC donors by how they use ODA to pursue their long-term national interest in a safer, sustainable and more properous world. A principled approach targets aid to countries that need it most, supports global co-operation and adopts a public-spirited focus on development impact rather than a short-sighted domestic return. Overall Luxembourg comes out on top with a score of 24.5/30. In second-place is UK with 23.9 followed by Sweden with 22.7. The rest of the top ten are Ireland 22.6, Norway 22.5, Canada 22.0, Japan 21.5, Finland 19.5, US 19.0 and France 18.6. At the bottom lie the Slovak Republic 5.9, Greece 7.9 and Austria 9.9.

As UK prime minister Tony Blair's Commission for Africa report in 2005 highlighted, many countries in Africa suffer from a lack of expertise not just in organisation and administration but in many technical fields as well. As a result new ideas and projects are often instigated but then when difficulties are incurred things fizzle out. This is underlined by the staggering fact that only 1 in 6 World Bank projects set up in Africa continued after funding ceased. Rich countries abound with people with a great number of skills desperately needed in Africa. As a further approach to using ODA more effectively then rich countries could send experts to work with individual governments to help implement future development plans throughout the country. This could involve helping to secure food supplies by advising on different seed varieties/ fertilisers, searching and securing sources of water, reducing the energy deficit by exploiting solar/hydro power, helping to improve the physical infrastructure of the country and developing telecommunications. Assistance with the provision of health and education could also be given. The value of this kind of technical assistance is further underlined by Paul Collier, Director of the Centre for the Study of African Economies at Oxford University who argues, in his book The Bottom Billion, that 'demand driven technical assistance adds US$15 for every US$1 spent.' At the same time nationals of each country could be trained in numerous relevant skills on the job. (China is already doing many of these things).

Whilst technical assistance points the way to extraordinary value in development, donor countries should also make it clear that the continuing flow of ODA to any country is dependent on better governance. The Meltzer Commission set up by the Clinton administration in the US concluded that foreign aid should be targeted to where it can be used best. To this end it recognised that aid fosters development only if officials in recipient countries willingly promote and sustain reforms. Further evidence here lies in a report by the World Bank which concluded that an annual increase in aid of $10bn would take an extra 25m people a year out of poverty if it was targeted at poor countries with governments adopting progressive policies; spread across the board, the same amount would lift only 7m people out of poverty.

Together, then, technical assistance combined with the targeting of aid at the better governed developing countries would appear to deliver a win/win situation for poor people. Direct technical assistance would help those immediately involved whilst the whole country would benefit from improving governance. Yet this is something that the UK and other OECD nations seem reticent about and give too little weight to. In fact the UK should offer to educate/train future potential leaders, on a continuing basis, in areas of government, civil service and the public sector and so help to ensure that governance continues to improve in poor countries going forward.

However, in this whole debate on the giving of overseas aid there are still the sceptics. Many people still view aid as wasteful, often going to criminal, corrupt and complacent regimes and seldom finding its way to those who need it most. For some people like Lord Bauer, it is 'the transfer of money from poor people in rich countries to rich people in poor countries.' And he may be right. For a report by the World Bank 'Elite capture of foreign aid' in February 2020 suggests that the higher the amount of aid received relative to the GDP of the recipient country, the greater the leakage to tax havens. In such countries it is estimated that 15% of the aid received leaks out. That is because the countries attracting most aid are usually the least developed and among the worst governed.

As can be seen from our World 'Premier' League table above, the total collective giving of all DAC countries in 2019 only represents 0.30% GNI, and is still less than half way to the 0.7% target set by the UN in 1970. This means that developing countries lost out by $194bn in 2019.

Overseas aid though should also be seen in the wider context. In 2019, for all of sub-Saharan Africa, total ODA is estimated at around US$49bn comprising US$31.1bn in bilateral ODA, US$12.8bn in multilateral support, US$4.7 in humanitarian aid and US$0.4bn in debt relief. Of this total about US$20bn would probably represent direct budget support to governments. (In contrast, inward remittances sent by the diaspora totalled US$35bn in 2017.) At the same time the collective budgets of all sub-Saharan African countries in 2019 totalled around US$360bn raised mainly through taxes and the sale of rights to exploit natural resources. This means that only around 6% of government budgets in countries in sub-Saharan Africa comes from Western support which means that home grown development should be fundamentally more important than ODA. However, to cap it all, according to Global Financial Integrity, US$45bn is transferred out of sub-Saharan Africa each year through illicit flows resulting from tax exemptions to foreign companies and tax evasion.


On a per capita basis, somewhat surprisingly perhaps, the country in sub-Saharan Africa receiving most ODA is Cape Verde with US$438 per head; the country in receipt of the least is Nigeria with US$10 per head. This could perhaps be down to rich countries underestimating the size of the population of Nigeria currently estimated at 200million, but equally, it could be down to the fact that Cape Verde is much better governed. However, Nigeria does produce almost 1bn barrels of oil every year worth US$55bn whilst, in the next two years, despite pervasive poverty, the country has it in mind to send astronauts into space!

==================================================

According to the UK Independent Commission for Aid Impact (ICAI) in a report in June 2019 'UK Aid has demonstrated that it can deliver in the midst of conflict, in some of the world's most challenging contexts. This has given the UK more flexibility to pursue its objectives and enhanced its leadership role in international response to crises. Also 'DfID, often working closely with multilateral partners, had helped galvanise action on some key "leave no one behind" themes including the global campaign against female genital mutilation/cutting and reproductive health and rights to ensure a global supply of affordable family planning commodities.' However, ICAI is less positive about DfID's efforts to promote universal, quality public services in key areas such as education, health, water and sanitation. 'Although many of the DfID programmes had expanded access to basic services that did not mean necessarily improved quality. In maternal health, in particular, it was found that poorer service quality posed a significant risk to the achievement of better health care outcomes.'

In the year 2019 the UK overseas aid spending amounted to £15.1bn (0.7%GNI) up from £14.6bn in 2018 (0.7%), £14.1bn in 2017 (0.7%) and £13.4bn in 2016 (0.7%). It totalled £12.1bn (0.70%) in 2015, £11.73bn (0.70%) in 2014, £11.43bn (0.70%) in 2013, £8.8bn (0.57%) in 2012, £8.63bn in 2011 (0.56%) and £8.52bn (0.57%) in 2010. (These percentages are the highest ever recorded for UK ODA since 1970 and the 0.70% GNI target has been enshrined in law since 2015.) This also makes the UK's DfID the 3rd largest donor of overseas aid after the US and Germany.

In 2019 66.6% of UK ODA was bilateral whilst 33.4% was given as multilateral assistance. The humanitarian sector, health and multisector (urban, rural, environment) received the largest portion of bilateral aid all at 14% followed by government and civil society (human rights, conflict prevention) with 13%. In 2018, Africa received the largest proportion of bilateral ODA with 56.4% of the total followed by Asia with 40.8%. (UK aid has been untied since 2001 thus ensuring cost effectiveness. Nevertheless, British companies still win 90% of contracts.)

For 2018 Pakistan was again the largest recipient of UK bilateral aid with £331m followed by Ethiopia £301m, Nigeria £297m, Afghanistan £249m, Syria £231m and Democratic Rep. of Congo £204m. Completing the top ten were Somalia £194m, Bangladesh £190m, Yemen £166m and Tanzania £152m. The next ten countries were South Sudan £151m, Jordan £138m, Kenya £116m, Uganda £107m, Burma £100m, Lebanon £96m, Nepal £96m, India £95m and Zimbabwe and Sierra Leone with £94m.

In 2018, multi-lateral ODA totalled £5.3m. The International Development Association (IDA), part of the World Bank, with (36.5%) topped the list of recipients followed by the European Commission with 26.2%. Then came the Global Fund to Fight Aids, TB and Malaria 6.8%, the Global Alliance for Vaccines and Immunisation 3.8%, Green Climate Fund 3.7%, Asian Infrastructure Investment Bank 3.0% and African Development Fund 3.0%.

Previously DfID has been accused of dumping billions of pounds in obscure World Bank trust funds in an apparent attempt to meet the country's annual target for aid. According to a senior aid consultant DfID gives large sums to trust funds in order to fulfil Britain's requirement to spend 0.7% of GNI annually when time is about to run out. And sometimes that money can sit in there for years it is claimed.

DfID also channeled £0.3bn through CDC, the government's private equity division. And projects that have been financed by CDC recently include several large shopping malls in Nigeria, an Indian online fashion retailer, a chain of electronics stores selling iPhones in Egypt, Chinese budget hotel franchise called '7 days' as well as restaurant chains in Vietnam, India and Peru. According to Global Justice Now this is a betrayal of the whole point of aid for the evidence that these investments are effective at tackling poverty is absolutely minimal. Nick O'Donovan, CDC chief executive, took home a salary of £340,000 in 2019. The company employs 290 staff, half of whom take home a salary exceeding £100,000.

At the same time, it might come as a bit of a surprise to some to learn that millions of pounds of DfID's budget are spent in the UK every year in some esoteric areas. According to ICAI in 2018 grants were being given for student fellowships which included £110,000 for a biography of the Boer leader Paul Kruger; £98,000 for a student from Brazil to examine the work of the Roman orator Cicero as well as £72,000 on the study of jazz in the Western cape. Also, in 2012, £12m went on projects like global citizenship lessons in Scottish schools, military and security training for officials from African countries at the UK's Defence Academy, and a study visit to the UK for North Korean officials. Also counted as ODA are cultural and scientific promotions by the Foreign Office to serve diplomatic goodwill. Under this banner come touring Shakespeare plays and zoological initiatives.

(According to the UK Taxpayers Alliance, £730m (9%) of UK overseas aid never made it to the communities for whom it was intended in 2009.)

 
[top]

just1world@just1world.org
© 2001, 2002 Just 1 World - All rights reserved - Legal
Site Designed by IWS
Hosted on the IWSNET network