Global aid falls in 2018: The world should be stepping up, not walking away

Global aid has fallen for the second year in a row, according to new data released by the Organisation for Economic Co-operation and Development’s Development Assistance Committee (OECD DAC), who published preliminary Official Development Assistance (ODA) figures for 2018.

Overall ODA was $153 billion [USD], under the new ‘grant equivalent’ methodology (1). However, when comparing total ODA using the previous ‘cash-flow’ methodology, total ODA represents $149 billion [USD], a fall of 2.7% in real terms compared to last year (2,3).

Particularly worrying is the drop in ODA to the world’s poorest countries, the least developed countries (LDCs), for which aid fell by almost 3% in real terms, and countries in Africa, which received $29.7 billion [USD] in bilateral aid, a drop of 4% in real terms. With more than half of the world’s extreme poor living in Africa, this means the world is off track to achieve the Sustainable Development Goals (SDGs) by 2030 if current funding trends continue.

Sara Harcourt, Director of Development Finance Policy, said: “The fall in global aid is alarming. Now is the time we should be stepping up, not walking away.

“In particular, the drop in ODA going to countries with the greatest need and those in Africa, which require the most support for development, is worrying.

“We are a decade away from reaching the point where the world committed to defeat extreme poverty and preventable disease for good, and this won’t be achieved unless these funding trends are reversed. We will be watching to see what leaders do at the G7 Summit and the Global Fund (4) replenishment later this year – a first step to righting this course is for leaders to make bold pledges at these meetings.”

The OECD and Official Development Assistance: The Development Assistance Committee (DAC) of the Organisation for Economic Cooperation and Development (OECD) defines development aid and monitors its flows to developing countries. The committee has measured resource aid flows since 1961.

1) The headline ODA figures for 2018 released by the OECD are not directly comparable to 2017 figures, as they are based on different accounting methodologies. Therefore, all comparisons to previous years use the cash-flow methodology, used for ODA data up to 2017.

2) Following a 2014 decision by members of the OECD Development Assistance Committee, a new methodology for calculating the headline ODA figures was introduced in 2018. This new methodology, called the “grant equivalent system”, registers grants and the ‘grant equivalents’ of aid loans. Grants are essentially a ‘gift’, provided free of interest and requiring no repayment. Aid loans must be repaid with interest, but their terms are significantly better than those provided by commercial banks. Grant equivalents represent the value of aid loans that is provided as a ‘gift’ thanks to more concessional terms than other finance. According to the DAC, applying the grant equivalent system to ODA loans provides a more accurate picture of donors’ effort.

3) The drop is partly due to a decrease in aid being spent at home to support refugees (In-Donor Refugee Costs), due to fewer refugee arrivals and tighter rules on the reporting of these costs.

4) Founded in 2002, The Global Fund is a partnership between governments, civil society, the private sector and people affected by AIDS, tuberculosis and malaria, designed to accelerate the end of these epidemic diseases. The Global Fund raises and invests nearly US$4 billion a year to support programs run by local experts in countries and communities most in need. The Global Fund has helped slash deaths from AIDS, TB and malaria by a third, but each day, 7,000 victims still die from these deadly killers, with women and girls often hardest hit.