DI’s response to the DAC 2020 aid spending release

The first full view of 2020 aid spending shows a mixed picture for this vital resource during the year the Covid-19 pandemic hit. Overall, volumes increased by 3.5% to an all-time high of US$161 billion. However, support to the least developed countries increased by only 1.8%.

Ahead of the G7 Summit in June, it is positive that donors stepped-up their contributions, with notable increases coming from Germany (US$3.4 billion), the US (US$1.6 billion), France (US$1.4 billion) and Canada (US$361 million). Given the UK’s presidency at the summit, its 10% cut in aid is at odds with these donors and does not reflect its ambitions to be seen as a global player.

Amy Dodd, Head of Engagement at Development Initiatives, said, “Seeing so many donors increase aid when they were also facing challenges at home provides a glimmer of hope amongst fears for declining multilateralism.

“Of course, a concern right now is how to ensure countries most affected by poverty and crisis are not left struggling behind by the pandemic. The latest data shows these countries have seen much lower growth in support. This is concerning and needs to be addressed by donors.”

Some key points on what the data is showing that are pertinent to the poorest countries:

• Aid to sub-Saharan Africa fell by 1%, despite this being where extreme poverty has become increasingly concentrated over the last decade.
• Notable decreases in ODA to the least developed countries included that of the UK (a decrease of US$751 million or -20%) the US (a decrease of US$437 million or -4%) and Denmark (a decrease of US$151 million or -29%).
• Bilateral aid in the form of loans and equity investments is up by 28% in 2020, a significant leap following a general increase over the last decade. They now make up almost a quarter of all bilateral aid (22%). While we do not yet know what proportion of ODA loans have gone to the least developed countries in 2020, we do know that between 2010 and 2019 bilateral ODA loans to LDCs grew 5-fold while grants were cut by 9%, and so it is likely this increase in ODA lending will mean more loans to countries with less ability to repay debt.

Development Initiatives has produced a factsheet of the key data from the 2020 OECD DAC release.

A summary of key findings and full details is available from the OECD DAC.