Latest data on aid shows in-country spending by donors is rising

ByDaniil Filipenco

Latest data on aid shows in-country spending by donors is rising

The full breakdown of Official Development Assistance (ODA) disbursements in 2022, including crucial information about the beneficiary countries, has recently been released by the OECD Development Assistance Committee (DAC).

The data indicates that although the overall announced ODA from DAC member countries reached a record high of US$211 billion in 2022, a significantly growing share of aid was allocated by donor nations to themselves and spent in-country.

Spending of bilateral ODA concentrated on the nation providing it

The share of overall ODA allocated within the donor countries in the period 2021-2022 registered an increase from 14% to 19%. For the most part, this surge was the result of contributions to meet host-country costs for refugees from several donors including the United Kingdom, the United States, Germany, Poland, Ireland, Italy, Switzerland, and Spain.

“Not only is there little to celebrate in today’s final 2022 ODA figures, it is hugely problematic that donor countries are continuing to turn inwards and become recipients of their own aid”, outlined María José Romero, Policy and Advocacy Manager for Development Finance at Eurodad.

She added that US$31 billion of ODA allocated for in-country donor refugees evidences that a large amount of development assistance was never transferred out of donor nations, leading to artificially inflated aid. Ultimately, many people in the global south received much less aid than that required.

Less ODA allocated to least-developed countries

The financial data regarding the share of ODA in 2022 shows that very little attention has been paid to the least-developed countries (LDCs).

In 2022, gross ODA allocations from multilateral organizations and DAC donors reached an all-time high of US$269 billion, up 24% from US$217 billion in 2021 but the cost of housing refugees in donor nations and the assistance provided to Ukraine following the invasion by Russia accounted for almost all of this rise.

Government aid increased by 27% and reached US$183.3 billion. ODA disbursements from multilateral organizations rose by 17% to reach US$86.1 billion. However, if assistance to Ukraine and in-country donor refugee costs are not included, the growth figures show just 2.9% and 3.4% respectively.

Ukraine’s assistance surpasses ODA benchmarks

With US$29.2 billion, Ukraine was the number one ODA beneficiary in 2022 surpassing the next five aid beneficiaries altogether and the highest sum ever received by a country beneficiary in history. Ukraine received the greatest financial assistance in a single year than any other nation.

Just 24% of ODA was given to nations classified as least developed, which is 7 percentage points lower than in 2021 (31%). The reason for this is an increased volume of development assistance to Ukraine and refugees in donor nations.

Source: Development Initiatives

The largest ODA beneficiary for 2021, India, received the second-highest amount, US$7.1 billion, in 2022 while Bangladesh was third with US$7.0 billion followed by Ethiopia (US$5.1 billion) and Nigeria (US$5.0 billion).

Afghanistan, the Democratic Republic of the Congo, Pakistan, and Kenya, which rank sixth through tenth among the 2022 ODA recipients, all saw a decrease in 2022 compared to 2021. On the other hand, Tanzania, the tenth-largest beneficiary for 2022, showed an increase in ODA.

Final word

One obvious tendency is that ODA is becoming less generous as nations move further away from grant financing and loans become more costly, while armed conflicts have a significant impact on the patterns of aid distribution and its purpose and consume a larger amount of aid.