The OECD Development Assistance Committee (DAC) is committed to supporting countries in need, particularly towards their achievement of sustainable development practices. Certain countries are considered more vulnerable based on their economic, geographic, political, and societal hurdles. The DAC has categorised countries by the following: Least Developed Countries (LDCs), Landlocked Developing Countries (LLDCs), Small Island Developing States (SIDS), and Fragile contexts (FCs).
Countries and territories most in need: Fragile contexts, LDCs, LLDCs and SIDS
The DAC List of ODA Recipients shows all countries and territories eligible to receive official development assistance (ODA). The list also includes all of the Least Developed Countries (LDCs) as defined by the United Nations (UN).
ODF to Fragile contexts has shown impressive growth: +7% on average per year over the period 2013-20. However, almost one-third is concentrated in only five countries (out of 57) – that is, Bangladesh, Pakistan, the Syrian Arab Republic, Nigeria and Ethiopia.
Humanitarian assistance leads ODF spending in Fragile contexts (16% in 2013-20), followed by the health and government and civil society sectors (13% and 11%, respectively).
Remittances represented almost half of the total external financing mix reaching FCs in 2020 (USD 115 billion or 46% of the total).
The industry sector enjoyed most of the private flows mobilised to fragile contexts in 2013-20 (USD 13.5 billion or 26% of the total).
This category contains 46 developing countries, representing 13% of the world’s population and 38% of the world’s extreme poor.
In 1978, DAC members agreed that the average grant element in official development assistance (ODA) to Least Developed Countries should be either 90% of a given donor’s annual commitment, or at least 86% of the donors’ commitments to each individual country.
In 1981, DAC donors committed to providing between 0.15% and 0.20% of donor gross national income (GNI) in the form of official development assistance to Least Developed Countries.
In 2014, DAC members reached a new agreement to modernise reporting practices regarding ODA loans, thus creating incentives for providing highly subsidised loans to Least Developed Countries.
ODF commitments to LDCs have increased continuously in recent years (over the period 2013-20), showing a rate of growth of +5% on average per year (to reach USD 87 billion in 2020, from USD 63.4 billion in 2013).
Over 2013-20, ODF commitments to LDCs has mainly targeted health spending.
The external financing mix in LDCs has historically been dominated by ODF flows (mainly concessional), and its share is gaining even more prominence in recent years (reaching 50% of the total external mix in 2020 vis à vis 46% in 2013).
LDCs face significant challenges in attracting external private financing, which has decreased, both in absolute and relative terms: FDIs represented 22% of total foreign inflows in 2013 and 15% in 2020.
Investments in the industry sector lead the charge in private finance mobilised to LDCs in 2013-20.
This category is a grouping of 32 developing countries facing particular challenges related to their lack of direct access to the sea, which leads to geographical isolation from international markets.
Import and export of goods and services need to transit through other countries, generating high trade costs and major logistical and infrastructure challenges. Currently, high transport costs erode the competitiveness of Landlocked Developing Countries. They spend almost twice as much of their export earnings on transport and insurance services than the average for developing countries.
In 2003, a programme of action was adopted by the United Nations General Assembly at the United Nations Global Conference in Kazakhstan, focusing on transport infrastructure and maintenance, transit policies and trade facilitation measures.
ODF commitments to LLDCs have shown steady growth over the period 2013-20 (+5.5% on average per year), with non-concessional finance taking up a growing share (25% in 2019-20 vis à vis 18% in 2013-14).
The largest providers of ODF commitments to LLDCs are, in decreasing order, the United States, the International Development Association (IDA) and the Asian Development Bank (representing respectively 15.2%, 14.8% and 7.8% of total ODF to LLDCs in 2013-20).
Total external flows to LLDCs show an slight increasing trend over the period 2013-20; also, its composition has been changing as follows: remittances held a prominent role in 2013 (representing 38% of the total external mix, followed by ODF with 34% and FDIs with 28%). In 2020 it was ODF who led LLDCs’ external mix with 45%, followed by remittances with 35% and finally FDIs with 20%.
Banking and business investments represented 30% of the total private amounts mobilised to LLDCs in 2013-20.