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06/12/2016

OECD to redefine Official Development Assistance

Development Policy

OECD to redefine Official Development Assistance

Trees in Pakistan covered in cobwebs; an unforeseen side effect of flooding. [DFID - UK Department for International Development/Flickr httpbit.ly1Cl8E1P]

Several European countries are trying to have new types of expenditure defined as Official Development Assistance (ODA), which already includes various forms of “phantom” aid, such as hosting foreign students or receiving refugees. EurActiv France reports

Discussions are under way within the Development Assistance Committee (DAC) of the OECD, a forum of the world’s 29 leading aid donors, over whether to rewrite the definition of international aid funding.

The goal of dedicating 0.7% of GNI to international aid is no mean feat for the DAC’s 29 members, only a small number of whom, the United Kingdom and Luxembourg included, have so far managed to reach this target.

The inclusion of certain expenses in the calculations, like granting political asylum or paying student fees, makes the target more easily achievable.

“Phantom” spending

The NGO Concord has highlighted the common practice of “phantom” spending among European countries (counting aid that does not go directly to developing countries).

France and the United Kingdom have both used “phantom” spending to inflate their international aid figures: professional training in Wallis and Futuna, a French territory, and the pensions of former British colonial officers, are both counted in the countries’ efforts to fight poverty in the developing world.

 >> Read: FACTCHECKING: Does development aid go to developing countries? (in French)

European countries recorded 1.7 billion euros in expenditure linked to asylum applications in their ODA calculations for 2013, according to Concord’s Aidwatch Report.

Luxembourg is the only European country not to count these costs in its ODA calculations.

Peter Sörbom, from Concord Sweden, said “we are seeing a worrying trend where more and more countries like Sweden are financing migration costs with money from their aid budgets. It is a vital part of public spending, but should not be counted as official development assistance”.

The cost of hosting oversees students is also increasingly finding its way into international solidarity calculations. In 2013, Germany and France each recorded over 700 million euro of such spending as ODA.

The report also criticised debt relief and aid tied to the purchasing of goods and services from the donor country.

Common practice

“The ODA label has become a kind of catch-all. It should be restructured to exclusively take into account spending that directly benefits populations suffering from poverty. But the change appears to be heading in the wrong direction,” said Friederike Röder, director of ONE France.

The OECD is not taking this criticism lightly. One of the main objectives outlined in its 2014 Development Report was to “strengthen the credibility of the system to address growing criticism of the ODA measure over the past decade”.

 >> Read: Erik Solheim: ‘If the UK can commit 0.7% of GDP to development, so can France’

Erik Solheim, Chairman of the OECD’s Development Assistance Committee, told EurActiv France he thinks it likely that an agreement will be reached to count the subsidy element of a loan in Official Development Assistance calculations, but not the full loan.

Friederike Röder explained that “counting only the subsidy element is more realistic, but the general public seem to find it difficult to understand”.

Unanswered questions

The sensitive question of integrating the cost of peace-keeping operations remains unanswered.

“Some member states want to include additional military, peace and security expenses in the new definition of ODA,” Concord stated in its report, citing France, Belgium and Portugal among the main advocates.

Erik Solheim believes it would often be difficult to justify qualifying military spending as part of a country’s efforts in international solidarity.

Background

The rules concerning the recording of Public Development Aid are set by the Development Assistance Committee (DAC) of the OECD. This international forum of the 29 largest providers of aid decides which countries are eligible for development aid and what kind of spending constitutes international aid.

The OECD has begun the process of redefining Official Development Assistance (ODA), to go with the new post-2015 Sustainable Development Goals. 

Further Reading