The underlying assumption of Official Development Assistance (ODA) is that money, goods, and other forms of assistance are sent from a wealthier nation (the “donor”) to a less well-off country or region (the “beneficiary”) as part of a larger effort to eradicate poverty, combat climate change, and increase the overall standard of living for everyone on the planet. However, many of the biggest donors of ODA are increasingly spending their budgets inside their own countries on processing, sheltering, educating, training, providing healthcare, and otherwise caring for refugees and asylum seekers, officially known as “in-donor” hosting.
In 2022, the latest year for which statistics are available, the 31 OECD-DAC donor nations spent a whopping 14.6% of their annual ODA on in-donor hosting of refugees and asylum seekers. In dollar amounts, the 31 OECD-DAC donor nations spent $31 billion on in-donor refugees and asylum seekers, a three-fold increase from 2021. The Development Assistance Committee (DAC)’s Chair Carsten Staur has called this issue “the elephant in the room” and has warned that current development aid policies urgently need to rethink their priorities and focus.
Shifting priorities for ODA
With the outbreak of the COVID-19 pandemic, global perspectives on a number of matters underwent a huge transformation, including spending priorities for Official Development Assistance (ODA) budgets.
Whereas vaccination programs have always played a small but vital role in development assistance, the recent pandemic resulted in donor nations spending $6.4 billion in providing COVID-19 vaccines and $16.3 billion for other measures taken to combat COVID-19 in 2021. All of this was ultimately able to be classified as ODA thanks to an exemption issued by the OECD Secretariat which expired at the end of 2022. But OECD donors struggled to agree on how to put a financial value on donations of excess vaccine doses given to developing countries or whether or not these vaccine donations should be classified as ODA at all.
Nonetheless, the general consensus was that the COVID-19 pandemic was a one-time global emergency, and disagreements about whether vaccine donations and other measures should be counted as ODA or what priority the combating of infectious diseases should have on long-term ODA policies soon faded from view after the WHO declared an end to the state of global health emergency.
All eyes on Ukraine
But just as the headlines about COVID-19 started disappearing from view, in 2022 the war in Ukraine began, becoming an urgent priority for OECD-DAC members and their ODA budgets.
During the peak of the refugee crisis a few years ago which saw approximately 1.3 million (non-Ukrainian) people arrive in Europe to request asylum, ODA spending on in-donor refugee costs amounted to $16 billion or 11% of ODA spend in 2015. In 2022, by contrast, 14.6% of ODA spend or $31 billion was on in-donor refugee and asylum seekers, the vast majority of the recipients coming from Ukraine.
Some individual European countries saw truly record-shattering increases in 2022 on in-donor refugee hosting costs, including Poland (+268%), Estonia (+225%), the Czech Republic (+184%), Lithuania (+173%), and Ireland (+121%) compared to 2021.
Source: OECD
Furthermore, OECD-DAC donor nations also spent a total of $17.8 billion in ODA for Ukraine, of which $2.4 billion was in the form of humanitarian aid. And European Union institutions spent an additional $10.6 billion in ODA for Ukraine in 2022. In total, Ukraine received $28.7 billion in ODA in 2022, making it the largest recipient of development aid on the planet that year.
See also: Latest data on aid shows in-country spending by donors is rising
In-donor costs rise to the forefront
Since 1988, OECD-DAC rules have allowed donor nations to count in-donor refugee costs as ODA. This was a common-sense measure as it reflected the on-the-ground reality that most refugees and asylum seekers are, themselves, hosted in developing countries.
Even today, the majority of refugees are in lower-income nations which receive ODA from OECD-DAC members, including Turkey (3.7 million refugees, 98% of whom are from Syria), Pakistan (1.5 million refugees, 99% of whom are from Afghanistan), Uganda (1.4 million refugees, 1 million of whom are from South Sudan), and Bangladesh (929,000 refugees, 99% of whom are stateless Rohingya people from Myanmar), and there is little controversy over ODA funds being spent on caring for these displaced populations.
By way of contrast, the rising costs of in-donor refugee and asylum seeker hosting in wealthier nations such as Germany, Poland, and Britain have become a politically sensitive issue. Spending on in-donor refugee costs is classified as an “exceptional” item in ODA reporting, and such actions were never envisaged as something that would constitute a major component of official development assistance.
Britain spent nearly a third of its total ODA budget on in-donor refugee hosting in 2022, which an independent report commissioned by the parliament determined had a “serious [negative] impact on UK aid as a whole” and represented “poor value for money for taxpayers.” Spain, meanwhile, allocated 24.4% of its ODA budget on in-donor refugee assistance in 2022, spending these funds despite a “lack of clear criteria, documentation, and transparency,” and some of that money may actually have been ineligible to be counted as ODA.
Overall, the rapid change in priorities that saw a huge percentage of ODA budgets spent on in-donor refugee hosting costs as well as vast sums of ODA going to Ukraine starting in 2022 have shifted significant resources away from initiatives to tackle poverty, address climate change, support early childhood education, combat famines, and provide healthcare for the rest of the world’s vulnerable populations.
OECD-DAC rules and in-donor ODA eligibility
A brief synopsis of which in-donor refugee and asylum-seeking costs can be classified as Official Development Assistance (ODA) and which cannot as well as recommendations from DAC Chair Carsten Staur:
- Costs can only be counted as ODA for the first 12 months after the refugee arrives in the first country of asylum – moving to another country doesn’t “reset the clock” for that refugee or asylum seeker.
- Only costs related to “temporary sustenance” for refugees can be counted as ODA. Food, shelter, primary education, and healthcare counts while vocational training, skills training, and secondary education does not count as ODA.
- Money spent on asylum seekers who had their asylum application rejected cannot be counted as ODA.
- Just because a cost can be reported as ODA does not necessarily mean that it should.
- OECD-DAC members retain the ability to report in-donor refugee spending as additional costs to their planned ODA budgets so that those additional costs would not affect previously budgeted ODA projects and contributions.
Staur also reiterated that OECD-DAC member nations who welcomed in Ukrainian refugees in 2022 should strictly limit their reporting of ODA spending on these refugees to just the first 12 months of their presence in their country.
Therefore, since the majority of these Ukrainian refugees arrived in 2022, their 12-month ODA-eligible “clock” expired at some point in 2023. Since many of these refugees continued to remain after this “clock” expired, OECD-DAC members need to separate their ODA-eligible and ODA-ineligible spending on them for the 2023 reporting period as many of these refugees will have received a mix of both ODA-eligible and ODA-ineligible benefits in the calendar year 2023.
