While spending on foreign aid reached a record high in 2023, a lot of it isn’t actually going to the poorest countries. And not enough is going to basic services to help the poorest and reduce inequality.
Rich countries spent USD 223.7 billion on foreign aid in 2023, an all-time high. But it’s not enough. The Development Assistance Committee (DAC), an arm of the Organization for Economic Cooperation and Development (OECD), released its preliminary figures for foreign aid delivered by DAC countries to poor countries in 2023 on April 11th, 2024. Looking carefully at the data, you see why the picture isn’t so rosy, and why donors shouldn’t be congratulating themselves for their generosity. Much of the increase from the prior year was due to spending to support (mostly) Ukrainian refugees living in donor countries, and increased humanitarian costs due to the wars in Ukraine, Gaza, Sudan, and elsewhere. And only a small percentage of it is going to help provide basic needs like clean water, education, and food in poor countries. Let’s dive into the numbers.
The U.S.
In 2023, the US spent a whopping USD 66 billion on official development assistance (ODA) in 2023. This is a 5.2% increase over its ODA funding the year prior (USD 60.5 billion), and more than the total of the next two biggest donors combined (Germany and Japan, at USD 36.7 and USD 19.6 billion, respectively).
While USD 66 billion is a massive sum - 30% of the total amount (USD 223.7 billion) spent on ODA in 2023 – it still is only .24% (that’s correct - two tenths of one percent) of the United States’ Gross National Income. This is far less than the average .37% of Gross National Income (GNI) that DAC donors actually gave, which itself is just over half of the long-standing target of 0.7% GNI agreed to by many DAC countries. While the US has never signed onto the .7% pledge let’s look at what would happen if it agreed to and met that target: there would’ve been nearly USD 125 billion more in aid.[1] And that would still be just over 20 percent of US annual military spending.
Nearly a fifth of this USD 66 billion, (18% or USD 11.8 billion) went to Ukraine. This is both more money in absolute terms and a larger percentage of the total ODA amount than in 2022 (USD 9.2 billion and 15.3%, respectively).
Looking across the DAC
The good news? Total spending on ODA by the 32 members of the DAC also increased by 1.8% from last year across the DAC, from USD 210.6 billion in 2022 to a record USD 223.7 billion in 2023. Bilateral giving to the Least Developed Countries and Sub-Saharan Africa also saw an increase in bilateral giving (3% and 5%, respectively), reversing a worrying trend of greatly decreased assistance (6.2% and 7.8%) to these two groups in 2022. Importantly, though, ODA to both of these groups is still below 2020 levels.
The confusing news? The ODA’s own definition of ODA is “government aid that promotes and specifically targets the economic development and welfare of developing countries.” Yet, the DAC allows donors to claim the cost of supporting refugees within their own countries as ODA; 13.8% of total ODA (USD 31 billion) went to support Ukraine in 2023. While it is critically important to support humanitarian needs wherever they arise, Oxfam, along with many other international organizations, believes that it is disingenuous at best to count money staying in rich countries as ODA.
The bad news? The amount of aid delivered last year is nowhere near what’s required to deliver lifesaving humanitarian assistance; in 2023, 362.3 million people worldwide needed humanitarian aid – due to conflict and natural disasters - yet only 35% of the needed funding was actually delivered (or USD 20 billion of USD 57 billion).[2] Nor is it enough to support development programs that provide education, healthcare, and other programs designed to move billions out of poverty. The United Nations reports that there’s a USD 4.2 trillion gap annually between the funds needed to meet the UN’s Sustainable Development Goals and what donors are actually delivering. This is up from the estimated gap of USD 2.5 trillion before the pandemic, indicating that countries are still suffering from the effects of Covid, the Russian invasion of Ukraine, skyrocketing inflation, high interest rates, and debt.[3]
A briefing paper co-produced by Oxfam, AidWatch Canada, and Action Aid looking at the 2021 figures of Total Official Support for Sustainable Development (TOSSD), a comprehensive measure of official financial resources from all providers dedicated to meeting the SDGs, finds a troubling trend. Shockingly little of the total amounts of the money going to the SDGs is being directed to the so-called “Leave No one behind Goals;” essential needs that literally save the lives of the poorest. Both Clean Water and Sanitation (Goal 6), and Ending Hunger (Goal 2) only received 2% of total funding each (USD 4.7 and 5.0 billion, respectively), Decent Work (Goal 8) received 3% USD 5.9 billion), and Quality Education (Goal 4) received 4% (USD 7.9 billion).[4] By vastly underfunding these basic services, the world’s poorest will go deeper into poverty, and inequality will continue to grow as the sectors that are better funded; i.e., (infrastructure (12%) and energy (11.3%), disproportionately support the middle class and the wealthy.
Finally, many of the world’s poorest countries are drowning in debt; much of it to the countries and banks of the wealthiest countries. Much of the debt is related to investments to mitigate, adapt to or recover from climate-related disasters. Inflation and high interest rates have only exacerbated the debt crisis; debt servicing rose more than 50% between 2022 and 2023 (from USD 26 billion to USD 40 billion) and is around 12% of the revenues of the poorest countries. Governments are forced to implement austerity measures so that they can afford debt repayments, taking away from spending on health and education. Some 40% of the world’s population live in countries where the government spends more money on debt repayments than on health or education.
The poorest countries are in an impossible situation – mired in debt and facing increasing threats from climate change while aid spending is stagnating. The US – and the other rich donor countries – can no longer ignore these realities – they must increase their investments to the poorest countries, for humanitarian interventions and to spur economic growth, and debt relief. How could we do that? With a modest wealth tax alone, donor governments could raise over raise over USD 1.5 trillion dollars a year ―enough to meet their aid commitments three times over.
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[1] Based on the most recent data available (2022) from the World Bank: https://data.worldbank.org/indicator/NY.GNP.PCAP.PP.CD?year_high_desc=true
[2] https://humanitarianaction.info/document/global-humanitarian-overview-2024/article/response-plans-results-2023.
[3] https://www.un.org/sustainabledevelopment/blog/2024/04/press-release-fsdr-2024/
[4] https://aidwatchcanada.ca/wp-content/uploads/2024/03/Final-Briefing-Note-2-March-2024-TOSSD-and-SDGs-copy.pdf p.13. The difference between the OECD/DAC ODA figures and TOSSD is that TOSSD counts all forms of support, including from non-DAC countries.