The Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) recently published its preliminary data of official development assistance (ODA).
It showed that, in 2021 total ODA amounted to $178.9 billion, representing 0.33 percent of the member countries’ combined GNI. It rose by 4.4 percent in real terms compared to 2020, reaching a new peak.
The increase is mostly due to DAC members’ support for COVID-19 activities, particularly in the form of vaccine donations to poorer countries.
Bilateral donor performance on a grant equivalent basis in 2021
In 2021, the United States continued to be the largest DAC member country of ODA ($42.3 billion), followed by Germany ($32.2 billion), Japan ($17.6 billion), the United Kingdom ($15.8 billion), and France ($15.4 billion).
Donor countries such as Denmark, Germany, Luxembourg, Norway and Sweden met or exceeded the United Nations’ ODA target as a percentage of their GNI. Many providers beyond the DAC have long traditions of development cooperation. Among these, according to preliminary figures for 2021 reported to the OECD, Turkey exceeded the ODA/GNI target with 0.95 percent.
In 2021, total ODA for all DAC member countries combined as a percentage of GNI stood at 0.33 percent, the same level as it was in 2020. ODA from EU Institutions fell by 8.1 percent overall in real terms due to repayments on private sector loans, as well as the frontloading of payments in 2020 which ensured rapid support to partner countries in response to the COVID-19 pandemic.
Fluctuations in ODA during different crises
Net ODA has more than doubled in real terms since 2000, increasing by 118 percent. It rose by 69 percent in real terms between 2000 and 2010, after the Millennium Development Goals were agreed in 2000 and other commitments were made by donors to increase their ODA.
ODA budgets subsequently declined, by 1 percent in real terms in 2011 and a further 4 percent in 2012, due to the ongoing financial crisis and eurozone uncertainty, leading some governments to tighten their budgets, directly impacting development aid.
ODA rebounded again in 2013 and continued to rise until reaching its first peak in 2016, particularly due to the influx of refugees into Europe and associated in-donor refugee costs. It declined in 2017, 2018 and 2019 due to the tapering off of in-donor refugee costs. Since the adoption of the Sustainable Development Goals in 2015, net ODA has increased by 20 percent.
In April 2020, as the pandemic was spreading around the world, the DAC issued a statement on how members would work together to support developing countries and strive to protect ODA budgets. ODA peaked in 2020 and again in 2021, despite fiscal pressures in all countries.
ODA has long been a stable source of development financing and has cushioned the immediate impact of previous financial crises. ODA increased in 2020, while all other major external resource flows for developing countries dropped.
Total external private finance to developing countries fell by 13 percent in 2020, trade declined by 8.5 percent, foreign direct investment by 19 percent and remittances by 1 percent. The resilience of ODA in responding to the current COVID-19 crisis is once again demonstrated with the 2021 figures.