Official Development Assistance (ODA) accounts for over two-thirds of all external financial support given to least-developed countries by rich nations. With such a central role in shaping the funding priorities of development efforts worldwide, it is important to keep up with ODA trends to anticipate funding shifts and align with donor priorities. In this article, we explore the evolution of ODA per economic sector from 2020 to 2023 to help you to make better informed decisions regarding your strategy.
See also: What is development aid and why is it important?
Key takeaways
- Between 2020 and 2023, ODA increased by 15%, but then dropped by 7.1% in 2024.
- Social infrastructure and services was the sector that received the most aid, accounting for 32% of all ODA in 2023.
- Commodity aid and general program assistance is the sector that has grown the most (in %) since 2020, with a 71% funding increase.
- Activities relating to debt has experienced the largest reduction (in %) in the last few years, with a 94% cut in attributed ODA.
- ODA is defined as the financial support provided by governments from DAC members to low- and middle-income countries and consists mainly of grants and “soft” loans.
This article looks at the latest available data categorized by sector from the OECD database — the only official source of ODA statistics.
ODA evolution by sector: an overview
From 2020 to 2023, ODA increased by 15%. In this timeframe, social infrastructure and services led the sector chart, accounting for 32% of all official aid commitments in 2023. Economic infrastructure or services and humanitarian aid completed the podium, representing 16% and 13% of total financial support, respectively.
Despite the overall increase in ODA, the trends varied across sectors. Commodity aid and general program assistance, for example, experienced the biggest percentual increase (+71%), while action relating to debt received the greatest funding slash (-94%). See graphic.
ODA commitment evolution by sector
Social infrastructure and services
Despite being the leading sector, the ODA committed to social infrastructure and services has decreased by 5% since 2020. Within this sector, there are six major areas, which we have ranked based on the amount of funds allocated in 2023:
1️⃣ Government and civil society, US$34.9B
Government and civil society take the largest slice of social aid and the allocated budget has increased ~20% since 2020.
2️⃣ Health, US$18.7B
Health is the second largest social commitment, but the funding to this area has decreased by 17%. In 2023, most health aid — 64% to be precise — was destined for basic health improvement.
3️⃣ Education, US$17.7B
Education received nearly as much financial support as health, and the level has remained fairly stable over the last few years, with only a 0.5% decrease compared to 2020.
4️⃣ Population policies/ programs and reproductive health, US$9.4B
Population and reproductive health faced the largest cut within the social sector, with a reduction of 25% in ODA commitments.
5️⃣ Water supply and sanitation, US$8.5B
Water and sanitation-related funding sat at the bottom of ODA priorities in 2023. Nevertheless, the amount allocated to this area has remained more or less stable since 2020.
6️⃣ Other social infrastructure and services, US$8.1B
All other social commitments received smaller amounts and were therefore grouped into this single category. The aid attributed to these other areas diminished by 33% since 2020.
Economic infrastructure and services
Economy has been the second priority sector for ODA commitments. This sector’s budget saw a sharp decline in 2021, but recovered the very next year. In 2023, its funding was 1% higher than that in 2020.
This sector has five main areas that receive significant amounts of financial support:
1️⃣ Transport and storage, US$22.9B
In 2023, most economy-related funds were allocated to the transport and storage of goods. This has grown substantially since 2020 with aid increasing by 38% over this period.
2️⃣ Energy, US$15.7B
Energy represents a significant slice of economy-related support, and the value increased by 17% compared to the funds received in 2020.
3️⃣ Banking and financial services, US$3.7B
The aid allocated to banking and financial services has significantly reduced since 2020, with a 68% cut over this period.
4️⃣ Communications, US$2.5B
The assistance provided for communications has been increasing over the last few years, but it remains one of the least funded economy-related areas.
5️⃣ Business and other services, US$2.48B
Business and other services received only a small fraction of the overall funding for the economic sector, and the amount has decreased by 16% since 2020.
Humanitarian aid
Humanitarian aid ranks third in the ODA charts, and funds seem to be following an upward trajectory, with the allocated support increasing to 12% since 2020.
Over 80% of the humanitarian aid is devoted to emergency responses. Prevention, preparedness, reconstruction, and rehabilitation receive the remaining cut, but they are clearly not an ODA priority.
Commodity aid/General program assistance
The funding towards commodity aid and general program assistance almost doubled since 2020, making it the fourth largest recipient of ODA in 2023, with US$30.79B.
Multi-sector/Cross-cutting
A big chunk of ODA goes to multi-sector projects and initiatives. Environment protection is included in this sector and receives 36% of the total funds. Plus, the multi-sector relevance as a whole is rising, with a budget increase of 20% since 2020.
Production sectors
This sector has seen ups and downs over recent years. However, the latest disclosed ODA commitments are 6% lower than those in 2020. This category is very diverse, encompassing all production, from agriculture and fishing to mining. For further analysis, this sector can be divided into four key areas:
1️⃣ Agriculture, forestry, and fishing, US$12.1B
The ODA commitments allocated to these production areas decreased by 12% compared to 2020. This reduction is a reflection of a slash in farming-related funds whereas the budget for forestry and fishing increased in the period 2020 – 2023.
2️⃣ Industry, mining, and construction, US$4.8B
This production area is gaining traction, with ODA growing 18% since 2020. Mineral resources and mining, specifically, almost tripled the allocated funds during this timeframe, from US$568M in 2020 to US$1.5B in 2023.
3️⃣ Trade policies and regulations, US$1.3B committed in 2023
The financial support attributed to trade policies and regulations has seen a declining trend since 2020, with ODA in 2023 14% lower than the 2020 level.
4️⃣ Tourism, US$251M
Tourism is the least funded area within the production sector, although aid increased by 13% compared to 2020.
Action relating to debt
In 2023, action relating to debt reached an all-time low in ODA support, with US$112M. The ODA records go back to 1967 and show that the funding given to this sector has never been so low.
Conclusions and predictions
ODA has a central role in shaping the funding priorities of development efforts carried out around the globe. For international development decision-makers and other stakeholders, it is important to remain up to date with ODA trends to better anticipate funding shifts and properly align future proposals with donor priorities.
Mircea Chiriac, DevelopmentAid Lead Data Analyst:
The projected decline in ODA is due to announced reductions from the four principal providers. Notably, 2024 constituted the first instance in nearly three decades whereby France, Germany, the United Kingdom, and the United States all concurrently decreased their ODA, leading to a 7.1% drop in aid commitments. Should these nations proceed with their announced 2025 reductions, this would represent an unparalleled historical event, being the first time all four have simultaneously curtailed ODA for two consecutive years.
If aid providers maintain their aid allocation cuts, least developed countries, sub-Saharan African nations, and the health sector face particular exposure to reductions in official concessional financing. However, this projected outcome is not inevitable.
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