The Development Assistance Committee of the OECD

The Development Assistance Committee of the OECD

Aid to the least developed countries Presentation by Simon Scott, OECD/DAC United Nations, New York, 18 November 2008 Aid to LDCs has risen sharply since 2000 Constant 2006 USD Billions 45 40 Other LDCs 35 Congo, Dem. Rep. 30 Bangladesh 25 Uganda 20 Mozambique

Sudan 15 Ethiopia 10 Tanzania Afghanistan 5 0 2000 2001 2002 2003 2004 2005 2006 2007

led by steep rises in aid from the United States 7 Constant 2006 USD Billions 6 USA 5 UK 4 Germany 3 France 2 Japan Canada

1 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 as well as from IDA and the EC Constant 2006 USD Billions 5 4 IDA 3 EC 2 AfDF 1 Global Fund AsDF 0

But smaller donors give higher shares of their aid to LDCs 3-year LDCs as % of total average country allocable ODA Constant 2006 USD millions 2005-2007 2005 1 2 3 4 5 6 7 8 Ireland Norway Denmark Portugal Luxembourg Finland Belgium

Sweden 1,155 2,869 2,112 377 305 520 1,455 2,487 2006 1,394 2,944 2,195 383 343 599 1,952 2,735 2007 1,617 3,231 2,403

374 401 700 1,817 2,549 1,389 3,015 2,237 378 350 606 1,741 2,590 83% 68% 63% 61% 59% 58% 58% 57% Nine donor countries met the 0.15% of GNI target for aid to LDCs in 2007 Percent of donor's GNI

0.40 0.35 0.30 0.25 Target 0.15 0.20 0.15 0.10 0.05 0.00 2000 2007 LDCs received almost a third of all aid in 2007 Least Developed Countries 23% 33% Other Low Income Lower Middle Income

4% Upper Middle Income Unspecified Income Group 24% 16% Per capita aid to LDCs is far higher than to other income groups Constant 2006 USD per capita 60 50 LDCs 40 LMICs 30 Other LICs 20

UMICs 10 0 2000 2001 2002 2003 2004 2005 2006 2007 The quality of aid to LDCs has improved In 2007, all DAC members met the 1978 DAC Terms Recommendation, by giving the bulk of their aid to LDCs as grants (at least 90% annually or 86% of their aid to each LDC over the preceding three years grant-equivalent). In 2001, the DAC agreed a Recommendation on Untying Aid

to the Least Developed Countries, which is being carefully monitored. This means that practically all aid to LDCs is now in the form of grants which can be used to buy goods and services at the lowest prices available. Aid goes mainly to social sectors (education, health, water supply) and debt relief 38% 0% 10% Social Multisector Emergency 20% 16% 30%

40% 9% 50% 7% 60% Economic General Programme Aid Others 5% 70% 9% 80% Production Debt 7%

90% 10% 100% Sectoral emphasis varies widely Tanzania 54 Mozambique 29 Ethiopia 5 3 32 5 2 4 Congo DR

13 0% 20% 2 11 3 25 38 31 40% 17 58 52 Afghanistan

16 58 3 2 46 Bangladesh 4 3 20 5 2 5 5 60% 12 6 10 13 80%

Social Economic Production Multisector Gen. Prog. Aid Debt Humanitarian aid Other 100% Aid to education is mainly for tertiary studies in donors or basic education in recipients Education policy training/research 20% Basic education

44% Secondary education 26% 10% Post-secondary education In health, aid goes largely to HIV/AIDS programmes, and basic health 14% Health general Basic health 54% 32% Population policies incl. HIV/AIDS control Water aid goes to both policy development and installation 3% Water resources policies

22% 39% Large water supply & sanitation systems Basic drinking water Rivers/Waste/Education 36% Further rises in ODA are projected to 2010 Hopeful signs for aid to LDCs 2005 G8 and Millennium Summit promised to double aid to Africa where most LDCs are located by 2010 Aid to LDCs has risen noticeably in real terms since 1999 16 LDCs have received massive debt relief under MDRI totalling $29 billion (2006) Global funds retargeting aid to health systems and neglected diseases Warning signs for aid to LDCs Several major aid donors still well short of

meeting aid targets, and likely to miss them for 2010 Recession may cut donor budgets in 2009 Obama/Biden promised to double total US ODA to $50 billion by 2012, but have pulled back since financial crisis Governance and security concerns impeding aid to some LDCs, especially fragile states Importance of aid quality Paris Declaration (2005) set targets for monitoring aid quality Accra Agenda for Action (2008) commits donors to use partner systems and disclose planned aid levels Avoid pushing hobby horses through earmarking, conditionality and vertical funds Concentrate aid on real problems of hunger, disease and lack of freedom and opportunity. Thank you for your attention. For more information on aid flows, visit the DAC website at www.oecd.org/dac/stats

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