V. OFFICIAL DEVELOPMENT ASSISTANCE: VOLUMES
- The Monterrey Consensus acknowledges the "essential role" of ODA as a complement to other sources of financing for development, especially in the poorest countries, and urges donors to make progress towards the 0.7 percent target and to allocate more of their aid to the poorest countries.[101] Unlike other financial resources, aid can be and is focussed on the provision of basic social services and the elimination of poverty (see also paragraph 38). As the Chancellor reiterated in evidence to us, "whatever we expect and hope that the developing countries are prepared to do to change the way they use money, it is going to be essential, in the next period of time, that we provide more development aid".[102] If the MDG targets are to be met, there must be a massive increase in aid flows to developing countries. Making aid more effective is crucial too, but there is universal agreement that aid volumes will have to increase substantially.
- During the 1980s and early 1990s the amount of aid given by DAC donors—measured as a percentage of national income (ODA/GNI %)—fell steadily. Since 1997, this decline has been halted somewhat, but the figure of 0.22 percent for 2000 falls well short of the 0.7 percent target (see figure 6). For DAC donors as a whole, 0.05 percent of national income was provided to the least developed countries in 2000; the UN-agreed target is to allocate 0.15 percent of GNI to the least developed countries.[103]
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Figure 6: Average ODA as a percentage of GNI for DAC donors (weighted average), 1976-2000 |
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Data source: DFID Statistics on International Development, 1996/7-2000/1.
- In the year 2000, only five countries met or exceeded the 0.7 percent target; these countries were Denmark, the Netherlands, Sweden, Norway and Luxembourg. In absolute terms the USA was the second largest aid donor, contributing US$10 billion in ODA, with Japan leading the way at US$14 billion. Expressed as a proportion of national income however, the US Government is the least generous donor contributing 0.1 percent of GNI in ODA. (See figure 7).
- As far as the UK is concerned, recent years have seen welcome increases in aid contributions, from US$3.2 billion in 1997 to US$4.5 billion in 2000, raising the UK's contribution from 0.26 to 0.32 percent of GNI (see figure 8), and bringing the UK level with France in these terms.[104] In the recent spending review, the Chancellor announced that UK aid will rise to 0.4 percent of GNI by 2006. This increase, whilst leaving the UK well short of its 0.7 percent commitment, will lift it well above the current OECD/DAC average of 0.22 percent, enable it to meet and exceed the EU target of 0.39 percent by 2006, and reinforce the UK's position as the most generous G7 donor in ODA/GNI terms.
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Figure 7: ODA as a percentage of GNI, by DAC donor, 2000. |
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Data source: OECD/DAC Development Cooperation Report 2001.[105]
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Figure 8: UK ODA as a percentage of GNI |
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Data source: Development Initiatives memorandum[106]—using OECD/DAC data.
- As previously outlined (see paragraph 12), in the week before the Financing for Development Conference, both the EU and the USA announced substantial increases in aid. The EU announcement amounts to an extra US$7 billion of aid per year from 2006; the US announcement amounts to an extra US$5 billion of aid per year from 2006. We applaud these announcements and the effort which went into making them possible, not least the work of DFID and HM Treasury in making the case for aid both within the EU and in discussions with the USA. That said, the announced increases in aid still do not provide the resources needed to finance the MDG targets. (See figure 9). More recently at the G8 summit, it was agreed that up to 50 percent of the additional US$12 billion announced at Monterrey could be targeted at Africa. We are pleased that these funds were earmarked in this way, but are disappointed that little in the way of new resources was announced by the G8.
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Figure 9: Total DAC ODA, showing contribution of Monterrey FfD commitments to cost of meeting MDGs (US$ millions) |
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Data source: Development Initiatives memorandum[107]—using OECD/DAC data.
- Additionally, in the case of the US announcement—an increase of aid that will likely make the USA the biggest donor but still leave it as the least generous in ODA/GNI terms—there are a range of concerns. Firstly, any increase in aid will require congressional approval, something which cannot be taken for granted. Secondly, the increase has not been expressed as a percentage of national income, and hence will be eroded over time by inflation. Thirdly, the USA intends to disburse the funds through its own Millennium Challenge Accounts; this will duplicate existing frameworks and will mean that the USA will attach its own strict—and in some critics' eyes excessively political rather than developmental[108]—conditionalities to the funds (see also paragraphs 94-99). In the case of the EU announcement: it is not clear what, if anything, can be done to ensure that member states honour their commitments to reach a minimum of 0.33 percent; there are question marks about the impact which accession countries will make on EU aid levels; and, it is disappointing that the timetable extends only as far as 2006 and the attainment of an EU average of 0.39 percent.[109]
- The ability of the EU to deliver the promised increase in aid, and to make progress towards the 0.7 percent target, depends on the actions of individual member states. As one of the most respected players in international development, the UK has the responsibility to show leadership in this area, including as regards aid levels. In their written evidence, DFID and HM Treasury assured us that, "The Government is committed to significantly raising the amount of our development assistance, and its share in national income, in the current spending round".[110] We are pleased that such commitments have been kept, and that in the recent spending review, the Chancellor announced that UK aid—including debt relief—will rise to nearly £4.9 billion per year by 2005-06. However, we were disappointed that the Chancellor side-stepped our question as to when the UK would set a timetable for reaching 0.7 percent, reiterating that the UK is committed to the target, but refusing to be drawn on any timetable beyond 2006.[111] We understand the difficulties involved in committing future governments to spending, but indicative long-term commitments have been made in relation to domestic issues such as transport and health. We see no reason why similar long-term commitments can not be made as regards international development. We recommend that the Government follow the example of Belgium and Ireland (see figure 10) in setting a date—a date which is sufficiently in advance of the 2015 MDGs' deadline—for reaching 0.7 percent, and a timetable for hitting that target.
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Figure 10: EU Member States' Current Aid levels and Future Commitments |
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Country |
Current Aid Level |
Future Commitments |
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Austria |
0.23 |
0.35 by 2003 |
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Belgium |
0.36 |
0.4 or 0.41 by 2003, 0.7 by 2010 |
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Denmark |
1.06 |
To be reduced to 0.7 |
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Finland |
0.31 |
0.4 by 2007 |
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France |
0.32 |
Committed to at least EU average |
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Germany |
0.27 |
0.35 or 0.36 by 2006 |
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Greece |
0.2 |
0.33 by 2006 |
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Ireland |
0.3 |
0.45 by 2002, 0.7 by 2007 |
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Italy |
0.13 |
0.25 by 2006 |
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Luxembourg |
0.71 |
1.0 by 2005 |
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Netherlands |
0.84 |
Current level to be maintained |
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Portugal |
0.26 |
0.36 by 2006 |
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Spain |
0.22 |
0.3 by 2003/4 |
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Sweden |
0.8 |
1.0 by 2006 |
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UK |
0.32 |
0.4 by 2006 |
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EU average |
0.32 |
0.39 by 2006 |
Data Source: DFID/HMT memorandum[112] and Action Aid/BOND supplementary memorandum.[113]
101 Monterrey Consensus, paragraphs 39 and 42. See footnote 12 for web-site. Back
102 Q124 Back
103 OECD/DAC Development Cooperation Report 2001, Table 7. Back
104 Ev 81-82 Back
105 Although the UK and France are shown as equally generous in ODA/GNI terms, the UK's contribution is rising more sharply than that of France. Back
106 Ev 12. Figure 8 does not take account of the aid increases announced recently in the spending review, increases which will put the UK at an ODA/GNI level of 0.4 percent by 2006. Back
107 Ev 14 Back
108 Ev 2, para 2 and Ev 8 Back
109 Ev 2, para 2 Back
110 Ev 80, para 14 Back
111 Q105 Back
112 Ev 81-82 Back
113 Ev 35-39 Back
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