Tag: OECD

2023 figures for Official Development Assistance and humanitarian aid

An article by Cyprien Fabre.

The VEDI dam in Armenia was built in partnership with the Agence Française de Développement and with the support of the European Commission. It will irrigate 3 000 hectares of farmland in the Ararat plain. Photo AFD.

2023 is already a long way off, everything is moving so fast. Humanitarian actors live in an eternal present. It’s cold right now in Armenia or Ukraine, it’s scary tonight in Sudan too, and thirst won’t wait until tomorrow in Mayotte or elsewhere. Humanitarians don’t drive looking backwards, but the OECD does.

All the humanitarian responses around the world involve thousands of individual projects that need to be aggregated to get an idea of the overall amounts, to measure and compare. Once a contract has been signed, the amounts disbursed are recorded by each of the geographical or thematic offices, then put together by a ministry – Bercy for France – and sent to the OECD, which checks line by line that the projects correspond to the definition of Official Development Assistance (ODA), of which humanitarian assistance is an important part.

In mid-January this year, the OECD published the official Official Development Assistance figures for 2023. In 2023, this ODA amounted to USD 223.3 billion, continuing an upward trend that began in 2007. This increase can be explained in part by the 5.9% rise in humanitarian funding.

The largest donors

For ODA in general, and for humanitarian assistance in particular, the concentration remains as high as ever. Firstly, the United States (USD 64.7 billion in ODA, including USD 14.5 billion in humanitarian assistance). Humanitarian funding increased in volume and as a percentage of ODA under the first Trump administration, and it is difficult to predict what will happen from now on even in the short term. Much further behind is Germany (USD 37.9 billion in ODA, including USD 2.4 billion in humanitarian assistance), followed by the European institutions (USD 26.9 billion in ODA, including USD 3 billion in humanitarian assistance). In sixth place, after Japan and the United Kingdom, France was one of the ‘big donors’ in 2023 (USD 15 billion in ODA, but only USD 410 million in humanitarian assistance). A drop in one of the largest contributors has the potential to destabilise the entire humanitarian funding system, as this drop could not be compensated for by the sum of the medium-sized or smaller contributors, if only they were able and willing to do so. The budget announcements for 2024 and 2025, already discussed in previous editions of Humanitarian Challenges, show that this is where we are. The members of the Development Assistance Committee (DAC), which brings together the main contributors to ODA, still provide by far the largest share of the effort. Non-DAC donors, i.e. those who are not part of what are sometimes called “traditional donors”, are major contributors to humanitarian solidarity, but the systems in place do not allow for much predictability. In 2023, humanitarian funding from non-DAC donors will be driven by Turkey, which will remain above the USD 5 billion mark for the seventh consecutive year, followed by the United Arab Emirates, which will increase from USD 278 million in 2022 to USD 1 billion in 2023.

French ODA

French ODA is following the same overall trends as the other DAC countries. However, in addition to the overall drop in ODA in 2023, France is characterised by significantly lower humanitarian funding. The recent increase in humanitarian funding is an interesting development, but does not really change the “humanitarian effort”, as humanitarian funding will rise from 2% to 4% of French bilateral ODA between 2022 and 2023, still far behind the DAC average of around 15%. The two graphs below show the nature of France’s ODA and that of DAC countries. (The graphs are interactive here: FR Final 2023 statistics | Flourish)

Source : OECD, FR Final 2023 statistics | Flourish
Source : OECD, FR Final 2023 statistics | Flourish

Where does this aid go? In 2023, Ukraine was for the second consecutive year the largest recipient of ODA and other concessional financing, with USD 38.9 billion, an increase of 28.5% compared to 2022. Ukraine received almost five times more aid from DAC members than the second largest recipient, India. This also applies to humanitarian funding, which, taking all donors together, has increased by 23% in 2023, reaching USD 3.5 billion, the leading global recipient.

Other countries receive substantial humanitarian assistance. Ethiopia (USD 1.6 billion, +6%), Gaza (USD 1.7 billion, +122%), Somalia (USD 1.2 billion, +51%), DRC (USD 1.2 billion, +108%), Sudan (USD 865 million, +19%)

Other countries receive more modest amounts of humanitarian aid, with significant variations in response to the year’s events. Armenia received USD 5 million in 2022, but USD 35 million in 2023. Chad received USD 379 million in assistance, up 119% with the additional arrival of Sudanese refugees.

Don’t forget that 2023 was also marked by several natural disasters in already fragile contexts such as Libya, Syria and Papua New Guinea, Madagascar, Malawi and Tanzania, as well as Morocco and Turkey. In all these contexts, including those that generally receive little aid, humanitarian funding has been substantial.

The central Sahel has remained at similar levels of humanitarian funding, showing that the various coups d’état, while they have had a clear impact on bilateral development cooperation, have had less of an effect on the response to humanitarian needs.

With a 32% fall, Afghanistan remains at USD 1.4 billion, a level of humanitarian assistance that is still well above the 2020 level (USD 562 million). In Yemen, aid has fallen by 16% but remains high (USD 1.4 billion). Few other crisis contexts have seen a significant drop in humanitarian funding. Countries that used to receive little humanitarian aid have received less, with a notable downward trend in Iraq since 2016, and other countries with more established development trajectories (Sierra Leone, Liberia).

Who delivers this humanitarian aid? Financial structures are well established, built by and for actors who have developed mechanisms that enable them to mobilise funds quickly. In 2023, multilateral agencies mobilised half of all humanitarian funds, although the trend is downwards. These same agencies mobilised 60% of humanitarian funds in 2020. The proportion of humanitarian funding mobilised by NGOs remains more or less stable at 28% in 2023.

Since 2021, there has been a noticeable shift towards increasingly significant contributions to resilience projects marked as humanitarian, for example by the International Finance Corporation (IFC) in Afghanistan or Ukraine, on issues of forced displacement or food security. These channels, marked ‘other’ in the graph above, will reach 15% in 2023, compared with just 3% in 2020.

At a time when the classification of projects is not always clearly humanitarian in the “Dunantian” sense of the term, when the long-term and the short-term are intertwined, new players are appearing on the humanitarian finance scene. This trend is set to continue, taking into account the expected decline in traditional ODA and even the conceptual changes underway regarding the very nature of cooperation between countries. It’s best to be prepared.

 

Cyprien Fabre is head of the “crises and fragility” unit at the OECD. After several years of humanitarian missions with Solidarités, he joined ECHO, the European Commission’s humanitarian department, in 2003, and held several positions in crisis contexts. He joined the OECD in 2016 to analyze the engagement of DAC members in fragile or crisis countries. He has also written a series of “policy into action” and “Lives in crises” guides to help translate donors’ political and financial commitments into effective programming in crises. He is a graduate of Aix-Marseille Law School.

 

I invite you to read these interviews and articles published in the edition :

Aid management systems: an essential tool for recipient countries

The Zaporijjia nuclear power plant in Ukraine. Ⓒ IAEA

When we undertake humanitarian programmes, the aim is to reach the most distressed populations in order to help them as best we can, to help them live and even survive in crises for which they have no responsibility, but which hit them hard. We’re thinking of Gaza, Sudan and Ukraine, as well as natural disasters. Under the current system, this involves large-scale cash transfers that go well beyond humanitarian aid. Countries whose populations receive humanitarian aid receive even greater amounts of non-humanitarian Official Development Assistance (ODA).

International aid from official donors continued to grow in 2023, reaching USD 223.7 billion, compared with USD 211 billion in 2022. The increase is due to aid flows to Ukraine as well as an overall increase in humanitarian aid. All this is well counted, each year with a sometimes imperfect but always clear definition of what constitutes aid. Discussions within the Development Assistance Committee (DAC) are ongoing to ensure that the 32 member countries agree on what is ODA and what is not. Definitions are evolving slowly, so as not to create statistical breaks, but they are evolving in line with the crises we are experiencing and the major issues of the day. Is aid to refugees in donor countries aid or not? Is support for peacekeeping missions ODA or not? What part of loans to countries is ODA? Are private sector guarantees counted on the amount of the guarantee alone, or on the total investment that would not be possible without the guarantee? Everything quickly becomes very technical and complex in this area. Some donor countries want to count as much as possible to get closer to the commonly accepted target of 0.7% of gross national income dedicated to ODA. Other countries have this target set by law and therefore want to exclude as much ODA activity as possible in order to preserve their budgets. Everything quickly becomes a bit political too. But at the end of the day, the rules exist, they are reliable and if you put the counter at donor level, you get a good idea of the volumes of aid generated each year.

 

A bombardment partially destroyed a flat block in the Obolon district of Kiev on 14 March 2022. Photo: Oleksandr Ratushniak, UNDP Ukraine.

As for the country receiving the aid, that’s another story.

Development aid has long ceased to be a direct transfer of resources from donor budgets to the budgets of recipient countries. Originally, development aid was intended to compensate for the lack of national savings in newly independent countries, in order to finance the economic infrastructure necessary for their economic and human development. It was impossible to finance a port, a road or a social security system with non-existent national savings and still nascent tax resources. Countries received external resources from their sponsors at the time – the USSR, the USA, the former colonial power, and then the EU.

Gradually, these resource transfers have gone less and less directly into the budgets of developing countries, and are now mobilised through numerous channels, so that it is virtually impossible for anyone – starting with the governments concerned – to know how much a country receives from external sources and how.

For each country, and particularly for countries in crisis where the aid channels are even more complex, there is therefore a very large gap between the amounts indicated by the OECD and donors and what the government is actually informed of. This is important to understand, because it feeds suspicions and resentments that have a direct impact on trust – or lack of trust – between international players who suspect systemic misappropriation of aid and national authorities who suspect that aid benefits its providers more than its recipients.

The diagram below is a simplification of the mechanisms, but it helps us to understand this hiatus. On the left is what comes out of donors’ pockets. All DAC donors, a large proportion of non-DAC donors and the largest private foundations report their aid to the OECD. With a year and a half’s delay, the time it takes to count everything, we now know the precise amounts. By aggregating all these amounts, we know that in 2023, Ukraine will have become the world’s largest recipient of ODA, with around 20 billion dollars in aid.

On the right, governments have a precise idea of the amounts of direct aid, budget support or loans, since it is the central government, often the Ministry of Finance, that signs the loans and manages the budget. For the rest, they have little or no idea.

Donors or multilateral organisations sometimes support technical ministries directly, or regional authorities, and there is not always a system in place for them to inform someone who would centralise the information somewhere. The donors all support multilateral organisations, development banks or United Nations agencies, which sometimes inform the central government (the arrow is blue) and sometimes do not (the arrow is green). These agencies often become donors themselves and fund other multilateral organisations or NGOs to implement programmes. Humanitarian programmes, operating in contexts of heightened mistrust, are rarely reported. With large sums of money in some contexts, generally untaxed, there is often obvious frustration.

Beyond the aspects of mistrust that this lack of clarity causes, it also has an impact on the budgetary priorities of the countries concerned. To stay with Ukraine, the country has an urgent need for generators and other electrical equipment, which is now particularly targeted. It also urgently needs civil and military equipment. If the government prioritises the purchase of generators while the country receives generators from other sources, there will be stocks of generators and a lack of equipment for hospitals or the front line. Even if Ukraine is a special case, given the sums involved and the geographical and political proximity of most of the donors, setting up an aid management system is an important step in helping a country regain its budgetary autonomy. Understanding this complexity is also important for humanitarian actors involved over long periods.

Cyprien Fabre.

 

Cyprien Fabre is Head of the Crisis and Fragility Unit at the OECD. After several years on humanitarian missions with Solidarités, he joined ECHO, the European Commission’s humanitarian department, in 2003, and has held a number of positions in crisis contexts. He joined the OECD in 2016 to analyse the involvement of DAC members in fragile or crisis countries. He has also written a series of “policy into action” and “Lives in crises” guides to help translate donors’ political and financial commitments into effective programming in crises. He is a graduate of Aix-Marseille Law School.