Good news: Foreign aid jumped in 2013, after two years of decline

Aid from governments like the US are important to reaching our goals to bring global poverty to zero.
Photo credit: USAID. 

Yesterday, the Organization for Economic Co-operation and Development’s Development Assistance Committee (OECD DAC) – the body responsible for collecting aid statistics – released the preliminary Official Development Assistance (ODA) figures for 2013, showing how much donor countries gave in total last year.

The preliminary DAC statistics show that global aid flows to developing countries rose by 5 to 3 percent in 2013, after two years of decline due to budget tightening in developed countries.

ODA from the European Union shows that in 15 countries, aid increased even more – by 7.8 percent in 2013. Today’s good news should begin to offset two years of cuts to aid to the world’s poor.

The UK, the second largest aid donor, met its long-standing aid commitment for the first time this year, allocating 0.72 percent of national income to aid.  The UK is the first G8 country to meet the 0.7 target.

Italy’s aid increase is the fourth biggest relative increase of all DAC donors, and the fifth biggest increase in volume. This reflects the commitment of the current Italian government to getting development spending back on track.

The US remains the largest aid donor in 2013, with a relatively stable increase of 0.9 percent. Germany was the third largest donor, increasing aid by 6.6 percent. Denmark, Luxembourg, Norway and Sweden continued to exceed the 0.7 percent target.

Aid to Africa and sub-Saharan Africa increased by an estimated 4.8 percent and by 6.9 percent, a promising sign after no significant increase to these regions in 2012. For the world’s poorest countries, many of which are in sub-Saharan Africa, aid remains a crucial source of financing. The largest relative increases in aid to Africa and sub-Saharan Africa came from New Zealand, Poland, the UK, Japan and Iceland.

But despite this positive news, yesterday’s release also points to some more worrying trends.

Ten donors cut their overall aid budget in 2013. Dutch aid has fallen to below the international target of 0.7 percent of Gross National Income for the first time in 40 years. France, although it was still the fourth largest aid donor, also cut aid significantly in 2013, declining by 3.3 percent. and Australia made cuts of 4.5 percent last year.

Bilateral aid to Africa (from donor countries directly and not multilateral agencies such as the EU and the World Bank) decreased by 0.9 percent. Bilateral aid to sub-Saharan Africa increased by only 1.2 percent. This decrease, or relatively low increase, in bilateral aid for the region is concerning. Furthermore OECD projections over 2014 to 2017 suggest a worrying trend of declines in aid to the poorest countries, particularly in Africa.

The OECD also noted that more aid was provided in forms other than grants, such as equity investments or loans that poor countries must pay back.

Concessional loans are an important source of financing, particularly for middle income countries and to finance infrastructure projects. However grants are usually the most appropriate instruments for the poorest countries. Government spending in these countries is very low, other external flows remain highly volatile, and they have a limited ability to sustain debt. The OECD is currently reviewing its definition of aid, including how to better target it. It is vital that donors focus aid on the poorest countries where it is most needed.

ONE applauds countries that are holding the line on development spending, and working towards their commitments despite tough economic times.

Incredible progress has been achieved in the fight against extreme poverty. The number of people living in extreme poverty has been halved since 1990. If this trajectory is continued, we could see the virtual end of extreme poverty by 2030.

But rich countries need to keep up the fight and make sure aid is focused where it is most needed. All donors must step up and meet their long-standing aid commitments to help eradicate extreme poverty.

Explore the data:

Note: all figures exclude debt relief and are in 2013 constant prices.