Towfiqul Islam Khan and Kazi Golam Tashfiq
Global aid architecture has undergone significant changes over the past decades, amid shifts in dominant development ideas and new global realities. Such shifts have also influenced the types of instruments used, as well as the composition of Official Development Assistance (ODA) over time. After 2000, the ODA configuration was primarily shaped by the Millennium Development Goals (MDGs), debt relief and various humanitarian crises. Between 2005 to 2010, ODA concentrated on areas as equitable growth, empowerment, human rights, environment and transport. This article looks at how a higher flow of humanitarian assistance has influenced the development finance discourse.
The rise of humanitarian aid
In the post-2010 period, both in-donor refugee costs and humanitarian aid increased significantly. In 2017, according to the latest Global Humanitarian Assistance Report, over 201 million people in 134 countries needed humanitarian assistance. In response to the crises around the world, the United Nations appealed for a record high humanitarian help of USD 22.5 billion in 2018. This support has been critical for saving millions of lives around the world. At the same time, regrettably, fewer resources were available for development cooperation activities in developing countries.
How large is the impact?
In 2015, ODA hit its all-time high despite budgetary constraints in many countries of the Organisation for Economic Co-operation and Development (OECD). This brought hope, as the world was preparing to embrace an ambitious global development agenda in the form of the Sustainable Development Goals (SDGs). In parallel, the Addis Ababa Action Agenda (AAAA) recognised the need for concessional resources to finance the SDGs. It called on relevant actors to coordinate and mobilise more financial resources. Between 2015 and 2017, almost the entire increase in ODA was allocated to humanitarian aid. The need for humanitarian support receded to some extent in 2017. However, among the top 17 ODA providers, ODA excluding humanitarian assistance had fallen for 10 providers. Hence, ODA excluding humanitarian aid remained almost unchanged. In fact, for non-DAC providers, there was a sharp decline in ODA excluding humanitarian help.
Who took the hit?
With the sharp rise of humanitarian relief in total ODA, there is an increased concern regarding assistance allocable to development sectors (social sector, economic sector, production sector, multi-sector/cross-cutting sector) The sectoral composition of ODA reveals that incremental share of humanitarian support was almost 100% over the period 2015 to 2017. The cost of this overwhelming rise of humanitarian help was a fall of ODA in other sectors, such as:
- economic infrastructure and services,
- multi-sectors or cross-cutting sectors
- and commodity aid/general program assistance sector.
The share of ODA allocated to development sectors fell from 76% to 70% since 2010.
For Africa, the share of humanitarian support increased from 10% to 15.5%, over the period 2005 to 2016. During the same time, the percentage for Asia increased from 9.5% to 17.1%. A sharp rise in humanitarian aid in African countries like, e.g. Zimbabwe, South Sudan and Nigeria in 2016, resulted in a significant fall of ODA in the social infrastructure and services sector and economic infrastructure and services sector. The United Nations recognised this shift in aid composition. As a result, in its Inter-agency Task Force on Financing for Development Report (2018), it stated that development is the most effective way to be resilient. It emphasised that a longer-term approach to addressing humanitarian needs must include development investments in the drivers of fragility.
Is the ODA target for SDGs deceptive?
The Development Assistance Committee (DAC) members of the OECD accepted the target of raising ODA to 0.7% of providers’ gross national income (GNI) in 1969. This target was not achieved during the MDG era or, as it seems, for the SDGs era. In 2017, the share of gross national income, assistance for all DAC members combined fell to 0.31% from 0.32% in 2016. Only five DAC member countries met the target of 0.7%.
It is time to rethink the usefulness of ODA as a concept. Country Programmable Aid (CPA) has emerged as a more useful concept for measuring the financial resources received by the recipient developing countries. In terms of CPA, the DAC members provided only 0.1% of GNI (Figure 1). Moreover, a decreasing trend of CPA (as a share of ODA) to least developed countries and small island developing states raises further concern. The recent decline in CPA (from 49% to 47% in 2016) largely attributes to the substitution of in-donor refugee costs for ODA previously programmed at the country level by several DAC members.
What lies in the future?
It appears that humanitarian aid is definitely causing some diversion of assistance from development sectors. Besides, Africa and Asia, the continents in most need for concessional development finance, are the worst hit by this shift. It is urgent to reassess the metrics, as well as the targets, of ODA, given a changing global landscape of development finance. The OECD may want to consider CPA as an additional measure for development assistance in the context of financing the SDGs. If assistance for development sectors remains inadequate, developing countries will have limited negotiating ability for accessing other financial resources from emerging providers, e.g. South-South Cooperation. This may undermine global development outcomes in the medium term.
Reposted from Southern Voice Blog