Aid to least developed countries

Elena Bernaldo de Quirós

Statistics and Monitoring Division, OECD DAC

ECOSOC, Geneva, 19 July 2007

Aid to LDCs has risen since 2000

Seven countries receive about half of the aid to LDCs in 2005

0

5

10

15

20

25

30

2000 2001 2002 2003 2004 2005

Co

ns

tan

t 20

05

US

D b

illio

ns

Other LDCs

Mozambique

Bangladesh

Tanzania

Congo, Dem. Rep.Sudan

Ethiopia

Afghanistan

LDCs received almost a quarter of all aid in 2005

24%

17%

37%

3%

19%Least Developed Countries

Other Low Income

Lower Middle Income

Upper Middle Income

Unspecified Income Group

2005

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

The United States has been the most generous bilateral donor since 2002

IDA and the EC have been the key multilateral donors

But smaller donors do more effort towards LDCs

2003 2004 20053-year

average

1 Portugal 175 847 157 393 94%2 Ireland 262 280 288 277 78%3 Belgium 1104 469 351 641 65%4 Denmark 517 507 553 526 58%5 Norway 727 700 713 713 55%6 Sweden 675 584 639 632 53%7 Netherlands 1105 1073 1076 1085 52%8 Luxembourg 66 74 82 74 50%

LDCs as % of total country allocable ODA

Constant 2005 USD millions 2003-2005

Only seven DAC countries met the 0.15% of GNI target for aid to LDCs in 2005

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

Per

cen

t of d

on

or'

s G

NI

20002005

Aid goes mainly to social sectors (education, health, water supply).

2004-05 average

Sectoral emphasis varies widely

2004-05 average

In the social sector aid is largely for basic services in …

Education Health

Water

2004-05 average

Basic social services

2004-05 average

The quality of aid

• In 2005, all DAC members met the 1978 DAC Terms Recommendation, by giving at least 86% of their aid to LDCs (or 90% of their aid to each LDC over the preceding three years) as grants.

• In 2001, the DAC agreed a Recommendation on Untying Aid to the Least Developed Countries, which is being carefully monitored. In 2005, indicators of effort show progress compared to the baseline 1999-2001. ODA volume has not been affected by the recommendation.

• Paris Declaration represents the first time donors and partner countries are committed to targets for monitoring aid effectiveness. The 2006 baseline survey on Monitoring the Paris declaration (19 LDCs participated) shows that progress is to be done on the three basic conditions required to make aid effective: aid has to be predictable, accountable and cost-effective. More info on this survey: www.oecd.org/dac/effectiveness/monitoring

… but focus on scaling up should not diminish

Warning signs for aid to LDCs

• Several major aid donors still well short of meeting aid targets, and likely to miss them for 2006.

• G8 and Millennium Summit pledges to double aid to Africa – where most LDCs are located – by 2010 are still a challenge.

• Governance and security concerns impeding aid to many LDCs.

Positive signs for aid to LDCs

• Non-DAC Donors

Three major initiatives, all health related: IFFIm, AMC and air tickets levies

Relatively modest, but significant addition to health-related ODA flows

Although non-DAC donors have increased their ODA contributions, DAC countries still account for 99% of ODA to LDCs.

• Innovative Finance

• Global fund targeting HIV/AIDS, tuberculosis and malaria

End remarks

• More efforts need to be made if DAC countries want to meet 0.15 % of GNI target.

• These efforts need to target real problems of developing countries (hunger, disease and lack of freedom and opportunity)

• Results on the improvement of life conditions in these countries will be the real test of the effectiveness of aid.

Thank you for your attention.

For more information on aid flows, visit the DAC website at

www.oecd.org/dac/stats