Development aid rises again in 2016 but flows to poorest countries dip

11/04/2017 – Development aid reached a new peak of USD 142.6 billion in 2016, an increase of 8.9% from 2015 after adjusting for exchange rates and inflation. A rise in aid spent on refugees in donor countries boosted the total – but even stripping out refugee costs aid rose 7.1%, according to official data collected by the OECD Development Assistance Committee (DAC).


Despite this progress, the 2016 data show that bilateral (country to country) aid to the least-developed countries fell by 3.9% in real terms from 2015 and aid to Africa fell 0.5%, as some DAC members backtracked on a commitment to reverse past declines in flows to the poorest countries.

Official development assistance (ODA) from the 29 DAC member countries averaged 0.32% of gross national income (GNI), up from 0.30% in 2015, as aid volumes rose in most donor countries. Measured in real terms – correcting for inflation and currency fluctuations – ODA has doubled (up 102%) since 2000.


ODA spent on hosting refugees inside donor countries jumped by 27.5% in real terms from 2015 to reach USD 15.4 billion. That equates to 10.8% of total net ODA, up from 9.2% in 2015 and 4.8% in 2014. Many donor countries have seen unprecedented inflows of refugees in the last two years, and the DAC is working to clarify its ODA reporting rules to ensure that refugee costs do not eat into funding for development. Humanitarian aid rose by 8% in real terms in 2016 to USD 14.4 billion.


“While governments should be commended for sustaining investment in development during these difficult times, it is unacceptable that – once again – aid to the poorest countries is in decline. Recent signals from some donor countries on future aid levels add further cause for concern”, said OECD Secretary-General Angel Gurría. “Major donor nations have committed to refocus their efforts on the least developed countries. It is now time to turn these commitments into action. Together, we must pay close attention to where the money is going and what is being included in foreign aid.”


A 1988 DAC rule allows donor countries to count certain refugee expenses as ODA for the first year after their arrival. Australia, Japan, Korea and Luxembourg did not count any refugee costs as ODA in 2016 but 11 countries spent over 10% of their ODA on refugees. Among them, Austria, Germany, Greece and Italy used over 20% of ODA for refugee costs.

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Overall, total net ODA rose in 22 countries in 2016, with the biggest increases in the Czech Republic, Germany, Italy, Poland, Slovak Republic, Slovenia and Spain. For some the increases were due to higher refugee costs. ODA fell in seven countries, with the largest declines seen in Australia, Finland, the Netherlands and Sweden. Of the several non-DAC members who report their aid flows to the OECD body, the United Arab Emirates posted the highest ODA/GNI ratio in 2016 at 1.12%.

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* All data is net ODA which excludes loan repayments

2016 saw Germany join five other countries – Denmark, Luxembourg, Norway, Sweden and the United Kingdom – in meeting a United Nations target to keep ODA at or above 0.7% of GNI. The Netherlands slipped back below 0.7% to join 22 other donors under the threshold.


ODA makes up more than two thirds of external finance for least-developed countries and the DAC is pushing for it to be better used as a lever to generate private investment and domestic tax revenues in poor countries, and in turn to help achieve the Sustainable Development Goals by 2030.


“I am pleased to see DAC donors delivering another annual increase in development aid and I hope this rising trend will continue”, said DAC Chair Charlotte Petri Gornitzka. “At the same time, much of this latest increase is in humanitarian aid and spending on refugees in donor countries. While both of these are highly important, we must ensure that we also maintain financing of long-term development programmes, especially in the least developed nations.”


Within 2016 ODA, contributions by DAC donors to multilateral organisations rose by nearly 10% in real terms. The share of multilateral aid (aid provided via multilateral bodies) to bilateral aid (aid is provided directly by one country to another) is now roughly half to half.