Methodological notes on the Development Co-operation Profiles 2019

General point: unless otherwise stated, and with the exception of data on official development assistance (ODA) allocation by sector, and ODA supporting gender equality and environment objectives (whose figures refer to commitments), all figures in the profiles refer to gross bilateral disbursements. The term DAC country average refers to weighted averages of Development Assistance Committee (DAC) countries for the specific allocation. Allocations by the European Union institutions are excluded from this calculation. All of the data presented in the profiles are publicly available at: www.oecd.org/dac/financing-sustainable-development and effectivecooperation.org.

This annex describes the methodology and sources for: ODA grant equivalent methodology, in-donor refugee costs, financial instruments, country programmable aid, bilateral ODA by channel of delivery, bilateral ODA unspecified/unallocated, ODA to least developed countries, support to fragile contexts, ODA committed to domestic resource mobilisation and aid for trade, the Gender Equality Policy Marker, the Environment markers, bilateral allocable aid, amounts mobilised from the private sector, ODA disbursed through government agencies, countries’ performance against commitments for effective development co-operation.

ODA Grant equivalent methodology

In 2014, members of the OECD’s DAC decided to modernise the reporting of concessional loans by assessing their concessionality based on discount rates differentiated by income group, and introducing a grant-equivalent system for calculating ODA figures. Instead of recording the actual flows of cash between a donor and recipient country, DAC members agreed that the headline figure for ODA would be based on the grant equivalents of aid loans, i.e. the “gift portion” of the loans, expressed as a monetary value. The grant equivalent methodology would provide a more realistic comparison of the effort involved in providing grants and loans and encourage the provision of grants and highly concessional (or soft) loans, especially to low-income countries.

In 2016, DAC members also decided to apply the grant equivalent measure to other non-grant instruments, such as equities and private sector instruments (PSI) to better reflect the donor effort involved. Whilst DAC members agreed on a methodology for counting the grant equivalent of official loans and loans to multilateral institutions, they have yet to reach agreement on how to calculate ODA grant equivalents for equities, PSI and debt relief. Pending an agreement, DAC members have decided on provisional reporting arrangements for PSI whereby either contributions to Development Finance Institutions (DFIs) and other PSI vehicles may be counted at face value (using an institutional approach), or loans and equities made directly to private sector entities may be counted on a cash-flow basis (using an instrument approach), with any equity sale proceeds capped at the value of the original investment. DAC members will continue to work with the support of the OECD Secretariat in 2019 to find an agreement, and make the reporting of PSIs and debt relief consistent with the new grant equivalent method.

This change in the ODA methodology takes effect in 2019 with the publication of preliminary 2018 ODA.

The implementation of the ODA grant equivalent methodology adds 2.5% to 2018 ODA levels for all DAC countries combined, with impacts on individual country figures ranging from 40.8 % for Japan, 14.2% for Portugal and 11.4% for Spain to -2.7% for Korea, -2.8% for France, -2.9% for Belgium, and -3.5% for Germany.

The new “grant equivalent” headline ODA figures are no longer comparable with the historical series on “cash basis”. In the cash basis, the net capital flow over the lifetime of a loan is nil because repayments of principal are deducted when made; interest payments are not taken into account. In the grant equivalent method, both principal and interest payments are taken into consideration, but discounted to the value they represent in today’s money.

In order to be fully transparent, the OECD will continue to also publish ODA data on a cash basis, but not as the headline ODA figure to measure donors’ performance in volume or as a percentage of gross national income (GNI).

In-donor refugee costs

A refugee is a person who is outside his/her home country because of a well-founded fear of persecution on account of his race, religion, nationality, social group or political opinion. Assistance to persons who have fled from their homes because of civil war or severe unrest may also be counted under this item.

Official sector expenditures for the sustenance of refugees in donor countries can be counted as ODA during the first twelve months of their stay. This includes payments for refugees’ transport to the host country and temporary sustenance (food, shelter and training); these expenditures should not be allocated geographically. However, this item also includes expenditures for voluntary resettlement of refugees in a developing country; these are allocated geographically according to the country of resettlement. Expenditures on deportation or other forcible measures to repatriate refugees should not be counted as ODA. Amounts spent to promote the integration of refugees into the economy of the donor country, or resettle them elsewhere than in a developing country, are also excluded.

For further information see here: https://one.oecd.org/document/DCD/DAC/ STAT(2018)9/FINAL/en/pdf.

Because in-donor refugee costs are not allocated geographically, the reporting of these costs can increase the share of bilateral ODA that is not specified by country.

Financial instruments

In DAC statistics, financial instruments classified as grants comprise: grants, capital subscriptions, debt forgiveness, interest subsidies and other subsidies. Financial instruments classified as non-grants comprise loans, reimbursable grants, debt rescheduling, debt securities (bonds and asset-backed securities), mezzanine finance instruments, equity and shares in collective investment vehicles.

Country programmable aid

Country programmable aid (CPA) is a subset of gross bilateral ODA that tracks the proportion of ODA over which recipient countries have, or could have, a significant say. It reflects the amount of aid that involves a cross-border flow and is subject to multi-year planning at country/regional level.

CPA is defined through exclusions, by subtracting from total gross bilateral ODA activities that: 1) are inherently unpredictable (humanitarian aid and debt relief); 2) entail no cross-border flows (administrative costs, imputed student costs, promotion of development awareness, and costs related to research and refugees in donor countries); 3) do not form part of co-operation agreements between governments (food aid, aid from local governments, core funding to non-governmental organisations, ODA equity investments, aid through secondary agencies, and aid which is not allocable by country or region).

CPA is measured on a gross disbursement basis and does not net out loan repayments since these are not usually factored into country aid decisions. CPA is derived from the standard DAC and CRS databases.

Source: OECD (2019), “Country programmable aid (CPA)”, OECD International Development Statistics (database), http://stats.oecd.org/Index.aspx?DataSetCode=CPA.

For further information, see: www.oecd.org/development/effectiveness/country programmableaidcpafrequentlyaskedquestions.htm.

Bilateral ODA by channel of delivery

The channel of delivery tracks core funding channelled through multilateral organisations, NGOs, PPPs and other channels. It also distinguishes between public and private implementing partners. The channel of delivery is the first implementing partner. It is the entity that has implementing responsibility over the funds and is normally linked to the extending agency by a contract or other binding agreement, and is directly accountable to it. Where several levels of implementation are involved (e.g. when the extending agency hires a national implementer which in turn may hire a local implementer), the first level of implementation is reported as the channel of delivery. Where activities have several implementers, the principal implementer is reported (e.g. the entity receiving the most funding). In the case of loans, the borrower (i.e. the first entity outside the donor country that receives the funds) is reported.

Public sector institutions include central, state or local government departments (e.g. municipalities) and public corporations in donor or recipient countries. Public corporations refer to corporations over which the government exercises control by owning more than half of the voting equity securities or otherwise controlling more than half of the equity holders’ voting power; or through special legislation empowering the government to determine corporate policy or to appoint directors.

Private sector institutions include “for-profit” institutions, consultants and consultancy firms that do not meet the definition of a public sector institution (see above).

Bilateral ODA unspecified/unallocated

Some activities may benefit several recipient countries. Regional projects and programmes are reportable under the most specific available “regional/multi-country” category (e.g. South of Sahara), and are not attributed to a specific recipient country.

The category “bilateral, unallocated” is used if an activity benefits several regions. It is also used for a number of activities undertaken in donor countries such as administrative costs not included elsewhere.

ODA to least developed countries

ODA to least developed countries (LDCs) is presented in different manners. Bilateral flows reflect the funds that are provided directly by a donor country to an aid-recipient country.

However, when calculating a donor’s total ODA effort with regards to the UN target for LDCs, an estimate needs to be made to impute aid by multilateral organisations back to the funders of those bodies. For more information on imputed multilateral flows, see: http://www.oecd.org/dac/financing-sustainable-development/development-finance-standards/oecdmethodologyforcalculatingimputedmultilateraloda.htm.

Support to fragile contexts

Support to fragile contexts corresponds to gross bilateral ODA to fragile contexts identified using the multidimensional model in OECD States of Fragility 2018. For further information, see: http://www.oecd.org/development/states-of-fragility-2018-9789264302075-en.htm.

Domestic resource mobilisation

The figures on the amount of ODA that supports the mobilisation of domestic resources in developing countries come from the DAC’s CRS database. This database contains detailed information on individual aid activities, including the purpose of aid. In order to identify domestic resource mobilisation-related activities, a purpose code (CRS code 15114) is used. This code had previously been voluntary but was established as an official purpose code in 2016, and as a result the previous approach of complementing reporting under the voluntary code with a key-word search for tax-related activities has been abandoned.

Source: OECD (2018), “Creditor Reporting System: Aid activities”, OECD International Development Statistics (database), http://dx.doi.org/10.1787/data-00061-en.

Aid for trade

According to the World Trade Organization (WTO) Task Force on Aid for Trade, projects and programmes are part of aid for trade if these activities have been identified as trade-related development priorities in the partner country’s national development strategies. Furthermore, the WTO Task Force concluded that to measure aid-for-trade flows, the following categories should be included: technical assistance for trade policy and regulations, trade-related infrastructure, productive capacity building (including trade development), trade-related adjustment, other trade-related needs.

The DAC’s CRS database was recognised as the best available data source for tracking global aid-for-trade flows. It should be kept in mind that the CRS does not provide data that match exactly all of the above aid-for-trade categories. In fact, the CRS provides proxies under four headings: trade policy and regulations, economic infrastructure, building productive capacity, and trade-related adjustment. The CRS covers all ODA, but only those activities reported under the above four categories can be identified as aid for trade. It is not possible to distinguish activities in the context of “other trade-related needs”. To estimate the volume of such “other” activities, donors would need to examine aid projects in sectors other than those considered so far – for example in health and education – and indicate what share, if any, of these activities has an important trade component. A health programme, for instance, might permit increased trade from localities where the disease burden was previously a constraint on trade. Consequently, accurately monitoring aid for trade would require comparison of the CRS data with donor and partner countries’ self-assessments of their aid for trade.

Source: OECD (2018), “Creditor Reporting System: Aid activities”, OECD International Development Statistics (database), http://dx.doi.org/10.1787/data-00061-en.

Gender Equality Policy marker

The DAC Gender Equality Policy marker is a statistical instrument to measure aid that is focused on achieving gender equality and women’s empowerment. Activities are classified as “principal” when gender equality is a primary objective, “significant” when gender equality is an important but secondary objective, or “not targeted”. In the profiles of DAC members, the basis of calculation is bilateral allocable, screened aid.

Source: OECD (2019), “Aid projects targeting gender equality and women’s empowerment (CRS)”, OECD International Development Statistics (database), http://stats.oecd.org/Index.aspx?DataSetCode=GENDER.

Environment markers

The figure “Bilateral allocable ODA in support of climate and other environment objectives by sector, 2017, commitments” presented in each DAC member profile nets out the overlaps between Rio and environment markers: it shows climate-related aid as a sub-category of total environmental aid; biodiversity and desertification are also included (either overlapping with climate-related aid or as additional – other – environmental aid) but not separately identified for the sake of readability of the figure. One activity can address several policy objectives at the same time. This reflects the fact that the three Rio conventions (targeting global environmental objectives) and local environmental objectives are mutually reinforcing. The same activity can, for example, be marked for climate change mitigation and biodiversity, or for biodiversity and desertification.

“Climate-related aid” covers both aid to climate mitigation and to adaptation. In the profiles of DAC members, the basis of calculation is bilateral allocable ODA. More details are available at: http://www.oecd.org/dac/environment-development/rioconventions.htm.

Source: OECD (2019), “Aid activities targeting global environmental objectives”, OECD International Development Statistics (database), http://stats.oecd.org/Index.aspx? DataSetCode=RIOMARKERS.

Bilateral allocable aid

Bilateral allocable aid is the basis of calculation used for all markers (gender equality and environmental markers). It covers bilateral ODA with types of aid A02 (sector budget support), B01 (core support to NGOs), B03 (specific funds managed by international organisation), B04 (pooled funding), C01 (projects), D01 (donor country personnel), D02 (other technical assistance) and E01 (scholarships).

Amounts mobilised from the private sector

In the OECD DAC statistics, mobilisation means the stimulation by specific financial mechanisms/interventions of additional resource flows for development. The methodologies for reporting on amounts mobilised are defined instrument by instrument (see Annex 6 of DCD/DAC/STAT(2018)9/ADD1/FINAL), but overall they reflect the principles of causality between private finance made available for a specific project and an official intervention, as well as pro-rated attribution as to avoid double counting in cases where more than one official provider is involved in a project mobilising private finance. The amounts mobilised from the private sector cover all private finance mobilised by official development finance interventions regardless of the origin of the private funds (provider country, recipient country, third country). The objective of data collection by the OECD DAC on amounts mobilised from the private sector is two-fold: i) to improve data on the volume of resources made available to developing countries (recipient perspective); and ii) to valorise the use by the official sector of mechanisms with a mobilisation effect (provider perspective). Data are collected through the regular CRS data collection for the following financial instruments: syndicated loans, guarantees, shares in collective investment vehicles, direct investment in companies / project finance special purpose vehicles and credit lines. Work is ongoing to expand the scope of the measure to also include simple co-financing arrangements, including in the form of technical assistance.

ODA disbursed through government agencies

The extending agency is the government entity (central, state or local government agency or department) financing the activity from its own budget. It is the budget holder, controlling the activity on its own account.

Countries’ performance against commitments for effective development co-operation (Results of the 2018 Global Partnership monitoring round)

The source of the data is the Global Partnership monitoring rounds, and refers to the latest available data at the time of each round. Some specifications worth noting:

  • Untied ODA: 2018 round includes 2017 data, and 2016 round includes 2015 data. Data is from the OECD-DAC Creditor Reporting System;

  • OECD CRS: 2018 round refers to assessment on reporting to CRS in 2017, and 2016 round refers to assessment on reporting to CRS in 2014;

  • OECD FSS: 2018 round refers to 2018 survey, and 2016 round refers to 2015 survey;

  • Publishing to IATI: 2018 round refers to scores extracted in December 2018, and 2016 round refers to scores extracted in May 2016.

Methodologies for all indicators can be consulted at http://effectivecooperation.org/pdf/2018_Monitoring_Guide_National_Coordinator.pdf.

Private Development Finance

Private Development Finance (PDF) includes cross-border transactions from the private sector having the promotion of the economic development and welfare of countries and territories included in the DAC List of ODA Recipients as their main objective, and which originate from foundations or other private organisations’ own resources, notably endowment, donations from corporations and individuals (including high net worth individuals and crowdfunding), legacies, bequests, as well as income from royalties, investments (including government securities), dividends, lotteries and similar. More information can be found at http://www.oecd.org/development/financing-sustainable-development/development-finance-standards/beyond-oda-foundations.htm.

Methodological notes on the Development Co-operation Profiles 2019