Official development assistance trends in times of crisis

Anthony Kiernan
OECD Development Co-operation Directorate
Lou Turroques
OECD Development Co-operation Directorate
Yasmin Ahmad
OECD Development Co-operation Directorate

This chapter was prepared under the direction of Pilar Garrido, Director, Development Co-operation Directorate, Rahul Malhotra, Head of Division, Development Co-operation Directorate, and Ida Mc Donnell, Head of the Development Co-operation Research Unit. Editing and proofreading was by Susan Sachs.

The authors are also grateful for contributions and feedback from: Cyprien Fabre, Henri-Bernard Solignac Lecomte, Joelle Bassoul and Rachel Sberro-Kessler.

  1. 1. Official development assistance (ODA) volume reached a new high of USD 224 billion in 2023 for the fifth consecutive year, primarily driven by increased aid for Ukraine and humanitarian assistance but only five Development Assistance Committee (DAC) countries met their commitment to provide 0.7% of GNI as ODA.

  2. 2. Preliminary data for DAC member countries show that ODA allocations increased in 14 countries and fell in 17.

  3. 3. Between 2019 to 2022 humanitarian aid and in-donor refugee costs from DAC countries increased by 37% and 184% respectively.

  4. 4. ODA appears to be responsive to crises and conflicts in developing countries, as shown most recently in Ukraine, although such responsiveness is not consistent: conflict and crises affected countries such as Haiti, Sudan, Syria or Yemen receive less ODA.

For the fifth consecutive year, official development assistance (ODA)1 provided by Development Assistance Committee (DAC) member countries hit a new high in 2023, totalling USD 223.7 billion and representing 0.37% of their combined gross national income (GNI). This was also an increase of 1.8% in real terms compared with 2022, due primarily to aid for Ukraine, humanitarian aid and contributions to international organisations.

In 2023, preliminary data show that ODA allocations increased in 14 DAC member countries and fell in 17 others, for some due to lower in-donor refugee costs or lower levels of concessional lending (Percentage change in Development Assistance Committee countries’ ODA, 2022-23). Among DAC member countries, the United States continued to be the largest provider of ODA (USD 66.0 billion), accounting for 30% of total DAC ODA, followed by Germany (USD 36.7 billion), Japan (USD 19.6 billion), the United Kingdom (USD 19.1 billion) and France (USD 15.4 billion). The following countries exceeded the United Nations (UN) spending target of 0.70% of GNI to ODA: Denmark (0.74%), Germany (0.79%), Luxembourg (0.99%), Norway (1.09%) and Sweden (0.91%).2

Humanitarian aid by DAC members increased by 4.7% in 2023 and amounted to USD 29.2 billion. In 2022, DAC members provided USD 26.9 billion in humanitarian aid. The United States was the largest provider at USD 12.3 billion, representing 24% of its total bilateral ODA (DAC members’ humanitarian aid, 2022). DAC members’ humanitarian aid to Ukraine reached USD 2.6 billion in 2022 up from USD 138 million in 2021. The main providers for humanitarian aid to Ukraine in 2022 were the United States (USD 346 million), the United Kingdom (USD 257 million), Canada (USD 216 million) and Germany (USD 209 million).

Excluding in-donor refugee costs, total ODA by DAC countries rose by 3.2% over 2022 in real terms. These costs fell by 6.2%, to USD 31 billion in 2023. For seven DAC countries,3 in-donor refugee costs represented more than a quarter of their total ODA in 2023. To understand DAC members’ methodologies for accounting for in-donor refugee costs for Ukrainian refugees, the OECD conducted a special survey in 2023.4 Most countries responding to the survey indicated that the funds allocated to refugees of Ukrainian origin were additional to their planned development co-operation or ODA budgets. Some respondents indicated that mitigation measures were put in place to protect the development funds.

In 2021, in-donor refugee costs represented 6.9% of DAC countries’ total ODA. In 2022, the share jumped to 14.7%, due in part to the influx of refugees from Ukraine, and in 2023, these costs declined to 13.8% of the total. The fact that in-donor refugee costs made up a higher share of total ODA in 2022 and 2023 could mean that the shares of other types of ODA decreased from 2021 to 2022 even if absolute volumes of ODA did not.

Preliminary data for 2023 show that bilateral net ODA to Ukraine from all DAC countries rose to USD 20 billion, a 9% increase in real terms over 2022, representing 9% of total net ODA. The same year, net ODA from European Union (EU) institutions amounted to USD 20.5 billion. Thus, EU institutions and the United States accounted for 79% of total DAC members’ flows to Ukraine; support from EU institutions was mainly in the form of highly concessional lending to support macro-financial stability in Ukraine (DAC members’ net bilateral ODA to Ukraine, 2022-23). Final data for 2022 show that DAC member countries provided USD 17.8 billion for Ukraine as net bilateral ODA which was 19 times higher than net bilateral ODA in 2021 (USD 918 million). The EU institutions provided an additional USD 10.6 billion, making Ukraine the largest DAC aid recipient in 2022 which also drove up the share of ODA to Europe as a region (DAC members’ net bilateral ODA by region and unspecified by country, 2013-22 and DAC members’ net bilateral ODA by region, 2013-22).

In 2022, 90% of net ODA from DAC members to Ukraine was developmental in nature and the remaining 10% was humanitarian which is a defining feature of the response. By comparison, in the first years of violent conflict in Syria (2012) and Yemen (2015), humanitarian aid amounted to 82% and 66% of total ODA, respectively.

The increase in the volume of ODA to Ukraine in 2022 meant that regions other than Europe received lower shares of ODA. Excluding amounts that are not allocated by country or region, net ODA to Europe jumped from 3.9% of total bilateral ODA in 2021 to 22.5% in 2022, the share of net ODA fell from 45.2% of bilateral ODA in 2021 to 36.2% in 2022 to Africa, from 10.7% to 8.7% to the Americas, from 37.4% to 30.5% to Asia and from 3.4% to 2.1% to Oceania.

ODA flows classified as unallocated by country or by geographic region, which include the costs for refugees within donor countries, also increased sharply in 2022 after rising only gradually from 2014 through 2021. Also in 2022, DAC members’ net bilateral ODA unspecified by country reached its highest recorded level, totalling USD 73.3 billion (DAC members’ net bilateral ODA by region and unspecified by country, 2013-22).

The volume of net bilateral ODA for Europe amounted to USD 33.6 billion in 2022, an increase of 362.6% in real terms compared with 2021, driven by ODA flows to Ukraine. All regions other than Europe received lower volumes of net bilateral ODA in 2022 relative to 2021.

Excluding amounts that are not allocated by region, Africa remains the main recipient of net bilateral ODA flows from DAC members, receiving USD 39.7 billion in 2022. This was a decrease of 11.4% in real terms over 2021, which was due in part to lower spending on activities related to COVID-19 (DAC members' net bilateral ODA by region, 2013-22).

Allocations and the overall decline in net bilateral ODA from DAC members in Africa varied across sub-regions. Sub-Saharan Africa overall received USD 29.7 billion in DAC members’ net bilateral ODA in 2022, a decrease of 8.9% in real terms compared with 2021. While Eastern Africa received the highest volume of net bilateral ODA flows from DAC countries between 2014 and 2022, flows decreased from USD 17.9 billion in 2021 to USD 16.2 billion in 2022, reflecting the overall decline net bilateral ODA to Africa and driven by a decrease in aid from the United States, the largest donor in the region (Top 10 DAC members’ net bilateral ODA in terms of volume by region in 2021-22).

A significant decrease in net bilateral ODA to Western Africa was also observed, again due to reduced flows from the United States as well as from EU institutions, Germany and the United Kingdom. By contrast, France increased its net ODA flows to Western Africa in 2022, although this increase did not compensate for cuts by other donors. The decline in aid mainly affected Ghana, Mali and Nigeria. ODA flows to Côte d'Ivoire, on the other hand, increased significantly in 2022 due to a major debt relief operation and development programmes undertaken by France and a loan provided by Japan (Top ten sub-Saharan African countries receiving DAC members' net bilateral ODA, 2013-22 and Top 10 DAC members' net bilateral ODA to Sub-Saharan Africa in terms of volume, 2013-2022).

Preliminary ODA data for 2023 suggest that bilateral ODA to sub-Saharan Africa may be turning a corner thanks to an increase of 5% in real terms over 2022 to reach USD 36 billion. This a positive development after the drop in aid between 2021 and 2022 and is a higher volume of aid than in 2019, when net ODA to sub-Saharan Africa totalled USD 29.2 billion.

Overall, net bilateral ODA has been quite responsive in times of crises and to conflicts in developing countries, most recently in Ukraine where ODA jumped from USD 918 million in 2021 to USD 17.8 billion in 2022. The sharp increase reflects the political significance of ODA. At the same time other crises – such as the 2010 earthquake in Haiti, the ongoing crisis in Sudan, the Syria crisis now in its 13th year or the decade-long war in Yemen, for instance – received lower volume of ODA, primarily in the form of humanitarian assistance. Preliminary estimates show that net bilateral ODA for the West Bank and Gaza Strip stood at USD 1.4 billion in 2023, an increase of 12% compared to 2022 (DAC members responses to crises and conflicts in developing countries).

Just like the earlier point about the rise of ODA unallocated by country or by geographic region, bilateral ODA not allocated by countries within income groups (e.g. regional aid, aid unspecified by country or in-donor refugee costs) increased from 31% of the total in 2000 to 46% in 2022 and stood at USD 87.4 billion in 2022 compared with USD 18.3 billion in 2000 (DAC members' net bilateral ODA by country income group, 2000-22 and Net bilateral ODA by income group and by top 10 DAC countries in terms of volume, 2022). Net bilateral ODA flows from DAC members to LMICs amounted to USD 49.5 billion (including the USD 28.4 billion for Ukraine). This represented 26% of the total, an increase from the 17% share to LMICs in 2021.

The volume of bilateral ODA to least developed countries (LDCs) fell in 2022, due in part to reduced ODA for COVID-19-related activities in all developing countries. Such aid amounted to USD 14.4 billion in 2022, a 36% decline from 2021. In LDCs in particular, ODA for such activities fell from USD 3.2 billion in 2021 to USD 2.5 billion in 2022. DAC members' net bilateral ODA to LDCs in 2022 amounted to USD 34.4 billion, a 6.2% drop from 2021 - the United States, Germany, Japan, France and Canada were the top providers (Net bilateral ODA by income group and by top 10 DAC countries in terms of volume, 2022).

Preliminary data for 2023 show that net bilateral aid flows from DAC members to LDCs totalled USD 37 billion, an increase of 3% in real terms over 2022: this increase is driven largely by a 20% increase in bilateral ODA to LDCs from the United States.5 The total net bilateral ODA from DAC members to LDCs in 2023 also was higher than in 2019, when it totalled USD 33.9 billion.

To respond to the COVID-19 pandemic, DAC members increased their ODA to the health sector by 85% between 2019 and 2021. The tide may be turning, however. Although ODA to the health sector over the four-year period of 2019-22 increased by 35% it declined in 2022 by 27% over 2021. It appears that ODA in response to the war in Ukraine is currently driving increases in other sectors, notably for activities supporting civil society and good governance (ODA commitments by sector from DAC members). Education has seen the biggest comparative loss since the pandemic with the share going to education being lower in 2022 than in 2019.

Among DAC members, the United States provides the most aid to the health sector. In 2019, its commitments to the health sector accounted for 50% of DAC members’ total ODA. In 2020, the United States increased its ODA to the health sector in developing countries by nearly 60% in response to the COVID-19 pandemic, raising its share of total aid to the sector to 51%. In 2021, the United States committed almost five times more (USD 12.2 billion) than the next largest donor, Germany (USD 3.3 billion). The United States’ commitments to the health sector declined significantly in 2022 to USD 7.6 billion and Germany’s dropped to USD 2.4 billion. Collectively, then, these two donors accounted for 53% of the total DAC members’ health ODA in 2022.

The costs for refugees in donor countries is driving up ODA that is not allocated by sector, which increased nearly threefold from USD 9.4 billion in 2021 to USD 28.5 billion in 2022.

Preliminary 2023 figures show that bilateral sovereign loans on a grant equivalent basis by DAC countries amounted to USD 13.4 billion, representing 8% of bilateral ODA. Since 2019, the volume of bilateral ODA loans on a grant equivalent basis has increased overall by 53% due to some exceptional loans in support of the COVID-19 pandemic as well as loans to Ukraine in 2022.

Loan commitments increased from USD 31.4 billion in 2021 to USD 46.34 billion in 2022, partly driven by an increase in lending to Ukraine (Bilateral ODA loan commitments by recipient country from DAC members). In 2022, lending to Ukraine also increased the total volume and share of bilateral ODA loans. Bilateral ODA loans to Ukraine increased from USD 1.06 billion in 2021 to USD 12.15 billion in 2022, and loans to all other recipients increased from USD 30.34 billion in 2021 to USD 34.19 billion in 2022. Among DAC members, EU institutions were the largest providers of loans to Ukraine in 2022 (USD 8.95 billion) followed by Canada (USD 1.88 billion).

The terms of loans to Ukraine from DAC members have changed significantly in recent years. The average interest rate increased from 0.06% in 2019 to 2.24% in 2022. The average maturity for ODA loans also dropped from 36 years in 2019 to 20 years in 2022. This shift has decimated the average grant element of loans in general from 75% in 2019 and to 43% for 2022. It should be noted that between 2009 and 2022, the grant element of loans for Ukraine was 50% on average, their maturity on average was 21.58 years and the average interest rate was 1.01%.

Notes

← 1. This chapter focuses on bilateral flows only – flows that providers control and have the most influence over – since the available preliminary 2023 ODA figures reflect only data for DAC members and some non-DAC providers that have reported their data to the OECD. Nonetheless, flows from multilateral organisations are equally important and, especially through new instruments, can crucially leverage other resources.

← 2. Not all DAC members have set a domestic target for ODA as a share of GNI.

← 3. These seven countries are Czech Republic, Estonia, Ireland, Italy, Poland, Switzerland and the United Kingdom.

← 4. An analysis of the survey results is available at [DCD/DAC/STAT(2024)5/REV1].

← 5. The OECD Global Outlook on Financing for Sustainable Development 2023 discusses bottlenecks to Sustainable Development Goal finance in LDCs.

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