4/11/2015 - Germany’s foreign aid is at a record high and rising, but more effort will be needed to reach an internationally agreed donors’ target and fulfil Germany’s own goal to send more aid to the neediest countries, according to a new OECD Review.
The latest DAC Peer Review of Germany welcomes Germany’s active stance on sustainable development and recommends the country now bring its aid allocation criteria and instruments into line with its stated intentions on helping the poorest and least-stable countries. Germany should also set out a time frame to increase its official development assistance (ODA) to meet a decades-old UN target of 0.7% of a donor’s gross national income (GNI), it says.
German ODA rose by 12% in 2014 to an all-time high of USD 16.25 billion, and annual increases are programmed through to 2019. However, Germany’s economic growth rate means the increases will only maintain its ODA at 0.4% of GNI.
The Review finds that Germany’s stated aim to focus on the poorest countries is not well reflected in its aid flows. The share of its bilateral aid going to least-developed countries fell to 24% in 2013, its lowest level of the last five years, and the top two recipients of German aid are China and India.
This disconnect is in part because Germany’s aid allocation criteria and instruments are not fully aligned with its goals. For example, an emphasis on good governance as one of several criteria for providing aid to a country may conflict with Germany’s aim to help fragile countries. A rising share of concessional loans in its portfolio means more ODA is going to middle-income countries and less to the poorest.
“Germany’s efforts to increase its aid budget are to be applauded, however its strong economy means Germany could set a more ambitious plan with time-bound milestones for hitting the 0.7% target and doing so, as the EU has called for, by 2030,” said OECD Development Assistance Committee Chair Erik Solheim. “As its aid budget grows, Germany should also strive to make good on its aim of prioritising those countries that are most in need,” he said.
The Review praises Germany for being at the forefront of using ODA to leverage private sector investment for sustainable development. Germany also stands out for its commitment and innovative approaches to financing climate change action and for efforts to improve the quality of its aid, for example by improving efficiency and better tailoring programmes to local conditions.
One of the world’s biggest bilateral donors, Germany implemented or partially implemented all the recommendations in its last Peer Review in 2010.
Each DAC member is reviewed every five years as a way to monitor its performance, hold it accountable for past commitments and recommend improvements. A Review uses input from officials in the country under review and in partner countries – Kenya and Mozambique for this Review of Germany – as well as civil society, the private sector and other development providers. Read more about DAC Peer Reviews.
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