22/02/2007 - Aid donors will have to increase funding for aid programmes faster that any other public expenditure in order to fulfil their commitments to increase aid to $130 billion and double aid to Africa by 2010, says the OECD’s Development Co-operation Report. Aid funding, recently rising by 5% per year, would have to rise by 11% every year from 2008 to 2010.
The Report reviews aid volumes, noting which donors give the most (the U.S. by volume, Sweden and Norway as a percentage of their GNI) and which countries get the most (Iraq at $12.9 billion annually in 2004-05 and Nigeria at $3.2 billion, both boosted by exceptional debt relief).
Analysis shows how much aid is going to emergency aid and debt relief, and the importance of development aid to poor countries. Aid equals more than half the GNI of Liberia, the Solomon Islands, and Sao Tome and Principe. The report notes that aid dependency can make governments less responsive to their citizens and less likely to collect taxes. It recommends that donors encourage more representative governments and lend support to civil society and a more independent judiciary and media.
In 2005, Official Development Assistance (ODA) reached a record $106.8 billion. As some 20% of that went to debt relief for Iraq and Nigeria, the report estimates that aid volumes will decline in 2006 and 2007 as the volume of debt relief decreases. Aid to the Far East is expected to decline as the economies in this region continue to grow. More assistance could, however, be given to low income countries where three quarters of the world’s poorest people live. These countries presently receive 47% of bilateral aid.
Aid volume is important, but effective distribution and use are equally necessary. Both donor and recipient countries must be held accountable. For example, there is a gap of billions of dollars between what donor countries report as aid and what recipients see and control through their own budgets. The Report also discusses major trends in aid allocation and contains a special chapter with recommendations to ensure that even the poorest countries can profit from the multilateral trading system.
There are wide variations between donor countries’ aid volumes and priorities. For example, Luxembourg gave $550 per person as ODA in 2005, whereas nine donors gave less than $100. Snap-shots of individual countries’ aid show the amount of ODA they give, the regions and countries receiving it, and the sectors it targets.
Though the 22 member countries of the OECD’s Development Assistance Committee (DAC) continue to supply around 95% of total ODA, this is likely to decline as other countries increase their aid. In 2005 non-DAC aid totalled $5 billion, with an estimated $1.7 billion of that coming from Saudi Arabia. These figures do not include some new Asian donors, notably China which is rapidly increasing its aid, especially to Africa. The report also discusses how new funding mechanisms, including airline taxes and the International Finance Facility for Immunisation, are broadening the sources of aid.
The statistical annex of the report can be found at www.oecd.org/dac/stats/dac/dcrannex.
The OECD's Development Co-operation Report is available to journalists from the OECD’s Media Division (tel.+ 33 1 45 24 97 00) or through the password-protected website. The report can be purchased in paper or electronic form through the OECD’s Online Bookshop. Subscribers and readers at subscribing institutions can access the online version via SourceOECD.