Reversing development aid’s downward trend

Aid from the top 15 global donors - all from the Organisation for Economic Co-operation and Development’s (OECD) Development Assistance Committee (DAC) - is estimated to reach US$127 billion by the end of 2013, reversing the aid declines of the last two years, according to projections from the Australian National University’s Development Policy Centre.

This represents a less than 1 percent increase over 2012, and is mainly due to some donors pursuing the commitment to give 0.7 percent of national income to development aid by 2015, a promise made by 15 European governments in 2005. The UK has promised to stick to this commitment, agreeing to raise aid from 0.56 percent to 0.7 percent of GNI, representing an increase of $3.7 billion.

“One can only speculate [as to why], but… the predominate theory is that [UK Prime Minister] David Cameron’s commitment to overseas aid is part and parcel of fashioning a new, compassionate brand of conservatism,” said Robin Davies, associate director of the Development Policy Centre and co-author of the report. “There is, at present, no reason to doubt that they [the UK] will meet its spending target,” he continued, “but programming an additional $3.7 billion in a single year is no mean feat.”

Without this hike from the UK, global aid would probably have fallen by 3 percent over the course of 2013, as most DAC donors reduced their aid, with a few exceptions, including Switzerland, Sweden and Italy.

The US, for example, is expected to have reduced its global aid spending by $1.7 billion in 2013, and the Netherlands by $1.23 billion, following austerity cuts at the end of 2012.

Researchers based their aid predictions on what the 15 largest DAC donors have pledged to spend this year, compared to their spending intentions at the same time last year. These top donors account for around 95 percent of official development assistance.

Non-DAC buffer

Even if the UK does not reach its global aid goal, Davies said the overall drop in global aid would be quite small. It is likely an increase in aid from non-DAC emerging donors and NGOs, as well as contributions from multilateral sources, which often take a while to “filter through the system,” would all act as a buffer against any drastic decreases in global aid.

Aid from non-DAC sources, including emerging donors and NGOs, has risen by several billions of dollars each year on average, reaching $43 billion in 2011 (compared to $133.9 billion from DAC donors). However, these figures are just estimates - many emerging or private donors do not officially report their aid.

Between 2000 and 2010, the amount of global aid from all DAC donors grew by more than 60 percent. According to Davies, this was linked to the adoption of the Millennium Development Goals (MDGs), which led to “a much more effective narrative about the aims and achievements of aid." This growth was also linked to the relative prosperity that prevailed in most of the OECD countries prior to the global financial crisis, which provided fertile ground for effective social campaigns in favour of aid, and to the terrorist attacks of September 11, which “led to a renewed focus on the geostrategic importance of aid", he said.

As for the future, however, the Development Policy Centre says that it normally takes up to a decade for a country to recover from an economic crisis. This means that it is doubtful that the world will see another increase in global in the next few years.

“It appears likely aid will resume its downward trend in 2014, falling by perhaps a few percent per annum for several years,” Davies said.

Aid is not expected to return to its 2010 peak level until well after 2014.

If this happens, it is likely the level of funding allocated for short-term, discretionary purposes, such as emergency response, will fall, Davies said.

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