Aid to the least developed countries Presentation by Simon Scott, OECD/DAC United Nations, New York, 18 November 2008.

Aid to the least developed countriesPresentation by Simon Scott, OECD/DACUnited Nations, New York, 18 November 2008

Aid to LDCs has risen sharply since 2000

0

5

10

15

20

25

30

35

40

45

2000 2001 2002 2003 2004 2005 2006 2007

Cons

tant

200

6 U

SD B

illio

ns Other LDCs

Congo, Dem. Rep.

Bangladesh

Uganda

Mozambique

Sudan

Ethiopia

Tanzania

Afghanistan

…led by steep rises in aid from the United States

0

1

2

3

4

5

6

7

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Cons

tant

200

6 U

SD B

illio

ns

USA

UK

Germany

France

Japan

Canada

…as well as from IDA and the EC

0

1

2

3

4

5

Cons

tant

200

6 U

SD B

illio

ns

IDA

EC

AfDF

Global Fund

AsDF

But smaller donors give higher shares of their aid to LDCs

2005 2006 20073-year

averageLDCs as % of total

country allocable ODA

2005-2007

1 Ireland 1,155 1,394 1,617 1,389 83%2 Norway 2,869 2,944 3,231 3,015 68%3 Denmark 2,112 2,195 2,403 2,237 63%4 Portugal 377 383 374 378 61%5 Luxembourg 305 343 401 350 59%6 Finland 520 599 700 606 58%7 Belgium 1,455 1,952 1,817 1,741 58%8 Sweden 2,487 2,735 2,549 2,590 57%

Constant 2006 USD millions

Nine donor countries met the 0.15% of GNI target for aid to LDCs in 2007

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

Perc

ent o

f don

or's

GN

I

2000

2007

Target 0.15

LDCs received almost a third of all aid in 2007

33%

16%24%

4%

23% Least Developed Countries

Other Low Income

Lower Middle Income

Upper Middle Income

Unspecified Income Group

Per capita aid to LDCs is far higher than to other income groups

0

10

20

30

40

50

60

2000 2001 2002 2003 2004 2005 2006 2007

Cons

tant

200

6 U

SD p

er c

apita

LDCs

LMICs

Other LICs

UMICs

The quality of aid to LDCs has improved• In 2007, all DAC members met the 1978 DAC Terms

Recommendation, by giving the bulk of their aid to LDCs as grants (at least 90% annually – or 86% of their aid to each LDC over the preceding three years – grant-equivalent).

• In 2001, the DAC agreed a Recommendation on Untying Aid to the Least Developed Countries, which is being carefully monitored.

• This means that practically all aid to LDCs is now in the form of grants which can be used to buy goods and services at the lowest prices available.

Aid goes mainly to social sectors (education, health, water supply) and debt relief

38% 16% 9% 7% 5% 9% 7% 10%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Social Economic ProductionMultisector General Programme Aid DebtEmergency Others

Sectoral emphasis varies widely

38

52

46

32

29

54

31

25

13

4

3

5

5

5

11

5

4

12

2

3

3

2

3

5

20

2

58

16

6

13

10

58

2

17

0% 20% 40% 60% 80% 100%

Afghanistan

Bangladesh

Congo DR

Ethiopia

Mozambique

Tanzania

Social Economic Production Multisector

Gen. Prog. Aid Debt Humanitarian aid Other

Aid to education is mainly for tertiary studies in donors or basic education in recipients…

20%

26%

10%

44%

Education policy training/research

Basic education

Secondary education

Post-secondary education

In health, aid goes largely to HIV/AIDS programmes, and basic health

14%

32%54%

Health general

Basic health

Population policies incl. HIV/AIDS control

Water aid goes to both policy development and installation

39%

36%

22%

3%

Water resources policies

Large water supply & sanitation systems

Basic drinking water

Rivers/Waste/Education

Further rises in ODA are projected to 2010

Hopeful signs for aid to LDCs

• 2005 G8 and Millennium Summit promised to double aid to Africa – where most LDCs are located – by 2010

• Aid to LDCs has risen noticeably in real terms since 1999

• 16 LDCs have received massive debt relief under MDRI – totalling $29 billion (2006)

• Global funds retargeting aid to health systems and neglected diseases

Warning signs for aid to LDCs

• Several major aid donors still well short of meeting aid targets, and likely to miss them for 2010

• Recession may cut donor budgets in 2009• Obama/Biden promised to double total US

ODA to $50 billion by 2012, but have pulled back since financial crisis

• Governance and security concerns impeding aid to some LDCs, especially fragile states

Importance of aid quality

• Paris Declaration (2005) set targets for monitoring aid quality

• Accra Agenda for Action (2008) commits donors to use partner systems and disclose planned aid levels

• Avoid pushing “hobby horses” through earmarking, conditionality and vertical funds

• Concentrate aid on real problems of hunger, disease and lack of freedom and opportunity.

Thank you for your attention.

For more information on aid flows, visit the DAC website at www.oecd.org/dac/stats