Aid spending bounces back to hit all-time peak

11 Apr 14

Foreign aid to the world’s poorest countries hit the highest level ever recorded in 2013, with the largest donations coming from the US, UK, Germany, Japan and France, according to the Organisation for Economic Co-operation and Development

By Judith Ugwumadu | 11 April 2014

In its annual survey of donor spending, the OECD’s Development Assistance Committee found that development aid grew by 6.1% to $134.8bn, marking a rebound after two years of decline. The organisation said aid spending was likely to grow further this year because of the improving economies in donor nations.

But it warned that the share in aid spending going to the neediest sub-Saharan African countries was falling and looked likely to continue. In 2013, aid to the African continent fell by 5.6% to $28.9bn.

OECD secretary-general Ángel Gurría said: ‘It is heartening to see governments increasing their development aid budgets again, despite the financial constraints they are currently facing.

‘However, assistance to some of the neediest countries continues to fall, which is a serious concern.’

He called on governments to address this issue when the Global Partnership for Effective Development Co-operation meets in Mexico next week.

The OECD said 17 of the Development Assistance Committee’s 28 member countries increased their aid spending in 2013, while 11 reported a decrease.

The UK increased its aid spending by 27.8% and hitting, for the first time, the international target to spend 0.7% of gross national income target (GNI) on aid. Aid from the United Arab Emirates, meanwhile, shot up by 375.5% after it provided exceptional support to Egypt. In 2013 it spent 1.25% of its GNI, more than any OECD-DAC donor.

Aid fell in nearly a dozen countries during the same time period, with the largest drops coming from Portugal (-20.4%), Canada (-11.4%) and France (-9.8%).

Aid from rich countries grew steadily from 1997 to a peak in 2010, falling in 2011 and 2012 as many governments took austerity measure and trimmed aid budgets. The US remained the largest donor, spending $31.5bn. Denmark, Luxembourg, Norway and Sweden continued to exceed the 0.7% target. The Netherlands fell below 0.7% for the first time since 1974.

The OECD also noted that more donors were giving aid in forms other than grants that must be paid back. In 2013, grants increased by only 3.5% but non-grant aid grew by 33%.

The survey suggests donors to continue their focus on middle-income countries including Brazil, China, Chile, Georgia, India, Mexico, and Pakistan. Aid to these countries would likely be in the form of soft loans, the OECD said.