1.1 What is Official Development Assistance - ODA?

Please see the definition of ODA up to 2017 and the one starting in 2018 here.

More details
	The DAC sets the official definition of ODA, see above, and provides instructions through reporting directives.  A guidance note, What is ODA?, provides a summary of what can and cannot be counted as ODA or a concessional flow.

As a country develops, it can often create its own virtuous circle of investment and development that drives progress up the income scale. Experience shows that many of the fundamentals of a modern society such as good health, sanitation, education and governance systems, which are often the focus of ODA, have to be in place before the private sector has the confidence to invest, often with a varying level of support from the official sector. This is reflected in the mix of development finance flows that are seen going to different categories of countries as defined by the United Nations’ list of Least Developed Countries (LDCs) and the World Bank’s low and middle income classsifications.

The long term trend sees increasing numbers of countries moving up the income scale and attracting more, and an increasing number, of kinds of development finance. Looking across a number of types of development finance all have grown significantly in recent years. However, it is also useful to look beyond the absolute numbers, and to look also at the share of each type of development finance.

There are two ways of looking at ODA provided by donors and received :

    1. In terms of volume i.e. USD
    2. As a percentage of a country’s wealth (using a donor country’s Gross National Income (GNI))

The best known target in international aid is the UN ODA target of 0.7% of GNI which dates back to 1970. Since then, many donor countries have re-affirmed their commitment to meet, or surpass, this target. You can read more about this target and how donor countries have performed against it in section 3.

2.2 ODA flows from Multilateral agencies

Data on outflows from multilateral agencies are available to view and search through our database query wizard, QWIDS.

3.1 The history of the current 0.7% of Gross National Income as aid (ODA) target

The story of these targets started in 1958 when the World Council of Churches suggested that at least 1 per cent of contributing countries’ national income should be devoted to grants and generous loans.  This became an official UN target for total net official and private flows in the 1960s and was widely endorsed by DAC members.

In 1970 a UN Resolution agreed that within the 1 per cent target: “Each economically advanced country will progressively increase its official development assistance to the developing countries and will exert its best efforts to reach a minimum net amount of 0.7 per cent of its gross national product at market prices by the middle of the Decade.” The DAC has published brief notes on the 1 per cent target for total flows and the 0.7 per cent target for ODA. 

Many countries have since made specific commitments to meet these or other targets.  A major round of international pledging took place at the 2002 International Conference on Financing for Development, held in Monterrey, Mexico. In 2005, further commitments were made by the European Union, by G8 leaders in the Gleneagles agreement and by donors participating in the UN World Summit.

From 1960 to 1990, net ODA from DAC donors rose steadily in absolute terms. By contrast, total ODA as a percentage GNI fell between 1960 and 1970, and then cycled between 0.27% and 0.36% for a little over twenty years.

Between 1993 and 1997, net ODA flows fell by 16% in real terms due to fiscal consolidation in donor countries after the recession of the early 1990s. Aid then started to rise in real terms in 1998, but was still at its historic low as a share of GNI (0.22%) in 2001.

Since then, the political commitments made in Monterey in 2002 and by the EU, G8 and UN in 2005, all seem to have contributed to an increase in ODA flows as in 2005 and 2006 aid peaked due to exceptional debt relief operations for Iraq and Nigeria.
 
Despite the recent financial crisis, net ODA flows have continued to rise and in 2010 reached their highest real level ever at USD 129 billion.  This demonstrates how effective aid pledges can be when they are made on the basis of adequate resources and backed by strong political will. More recently, net ODA levels have again slipped back to USD 125.9 billion in 2012, reflecting the most recent set of economic challenges faced by DAC donors.

Further reading:

• The history of ODA (2001)