Fin4 dev develTHE RESTRUCTURING OFFICIAL DEVELOPMENT ASSISTANCE (ODA) CRITERA AND APPLICATION TO LOW INCOME COUNTRIES FOR SUSTAINABLE DEVELOPMENT

FINANCE FOR DEVELOPMENT Billions to Trillions to Actions

VINCENT MOOLA, AFRICAN UNION

DEVELOPMENT FINANCE IMPACT PROJECT –DIGITAL ARTIFACT ON –

THE RESTRUCTURING OFFICIAL DEVELOPMENT ASSISTANCE (ODA) CRITERA AND APPLICATION TO LOW INCOME COUNTRIES FOR

SUSTAINABLE DEVELOPMENT

RESTRUCTURING OF OFFICIAL DEVELOPMENT ASSISTANCE (ODA) CRITERIA AND APPLICATION TO LOW INCOME DEVELOPMENT COUNTRIES FOR SUSTAINABLE DEVELOPMENT

CONTENTS

a) Introduction of ODA

b) The Importance & Usage of ODA

c) Current Status

d) Why it’s not ideal

e) Future Direction of ODA FOR Consideration

f) Impact of the solutions

RESTRUCTURING OF OFFICIAL DEVELOPMENT ASSISTANCE (ODA) CRITERIA AND APPLICATION TO LOW INCOME COUNTRIES FOR SUSTAINABLE DEVELOPMENT

1) INTRODUCTION TO ODA

- Official development assistance (ODA) is a term coined by the development

Assistance Committee (DAC) of Organisation for Economic Cooperation &

Development (OECD) to measure aid, (OECD website)

- ODA is defined as the flows of official financing administered with the

promotion of the economic development and welfare of developing countries,

(OECD)

- ODA is one of the reliable Financial Instruments used by multilateral

Development Banks (MDBs) & institutions to finance aid, through Grants and

Loans to Low Income Developing Countries (LIDCs).

- ODA has improved since 2000 although declined to $135.2 Billion in 2014

going to developing countries, (OECD statistics).

RESTRUCTURING OF OFFICIAL DEVELOPMENT ASSISTANCE

(ODA) CRITERIA AND APPLICATION TO LOW INCOME COUNTRIES FOR SUSTAINABLE DEVELOPMENT

1) Introduction to ODA

- The Development Assistance Committee (DAC) has about 29 full

participating members, (OECD website)

Australia• European

Union• Ireland• Norway• Spain• Austria• Finland• Ita

ly• Poland• Sweden• Belgium• France• Japan• Portu

gal• Switzerland• Canada• Germany• Luxembourg• Slov

akia• United Kingdom• Czech

Republic• Greece• Netherlands• Slovenia• United

States• Denmark• Iceland• New Zealand• South Korea

RESTRUCTURING OF OFFICIAL DEVELOPMENT ASSISTANCE

(ODA) CRITERIA AND APPLICATION TO LOW INCOME COUNTRIES FOR SUSTAINABLE DEVELOPMENT

Donor countries by percentage

of Gross National Income (GNI)

As per target of 0.7% in 2013

1) Norway – 1.07%

2) Sweden – 1.02%

3) Luxembourg – 1.00%

4) Denmark – 0.85%

5) United Kingdom – 0.72%

6) Netherlands – 0.67%

7) Finland – 0.55%

8) Switzerland – 0.47%

9) Belgium – 0.45%

10) Ireland – 0.45%

Source of data OECD website

Top 10 Governments and EU by

Development Aid

1) European Union – $86.66 billion

2) United States – $31.55 billion

3) United Kingdom $17.88 billion

4) Germany – $14.06 billion

5) Japan – $11.79 billion

6) France – $11.38 billion

7) Sweden – $5.83 billion

8) Norway – $5.58 billion

9) Netherlands – $5.44 billion

10) Canada – $4.91 billion

11) Australia – $4.85 billion

RESTRUCTURING OF OFFICIAL DEVELOPMENT ASSISTANCE (ODA) CRITERIA FOR APPLICATION OF LOW INCOME COUNTRIES FOR SUSTAINABLE DEVELOPMENT

2) The Importance ODA

ODA is important because its impacts can go beyond source of finance by

leveraging private Finance, (Okonjo – Iwela., 2015).

3) Usage of ODA

- Catalytic source of Finance in low income countries

- For Mitigating risks to improve private sector Finance

- Enhance social and economic development


3) ODA CURRENT STATUS - CRITERIA

The current status of ODA is that CRITERIA takes 3 forms as per OECD below;

a) Its undertaken to public entities mainly Governments, Agencies etc.

b) Its promoted for economic development and social welfare

c) At concessional financial terms (for loans, having a grant element of at least

25%.).


3) ODA CURRENT STATUS – APPLICATION

The current status of ODA is that it is utilized more on less important sectors within the

economic and social sectors which as seen on Aidflows.org website from 2000 to 2014;

a) No form of proper criteria or tools used to analyse the critical economical potential

and production sectors of LIDCs to determine areas where ODA can be applied.

b) ODA is applied on Less impacts sectors on sustainability.


3) ODA CURRENT STATUS – APPLICATION

The current status of ODA is that it is utilized more on less important sectors within the

economic and social sectors which as seen on Aidflows.org website from 2000 to 2014;

c) The sectors’ rate of return is too low.

d) Long term or non potential economical benefits and productive

e) ODA neither aligned nor focused on achieving MDGs established in the year 2000.


4) WHY IT’S NOT IDEAL

The current status criteria and application of ODA is not ideal for the

implementation of sustainable development due to the following factors;

a) The Criteria for assessing & Application of ODA does not promote short

term economical benefits and Productive Sectors.

b) The Assessment and Criteria of ODA Application does not take into

account the analysis of potential sectors in the countries which drive

the economic potential benefits.


4) WHY IT’S NOT IDEAL

The current status criteria and application of ODA is not ideal for the

implementation of sustainable development due to the following factors;

c) It does not balance social & economical requirements of low income developing

countries.

d) It is not suitable for the SDGs because it goes beyond economic and social

benefits of LIDCs and this calls for change of Criteria.

e) The element of sustainable development can not be achieved with current set up

of ODA


5) FUTURE DIRECTION OF ODA FOR CONSIDERATION ON CRITERIA & APPLICATION

The future criteria and application of ODA which the DAC members may wish to implement

for sustainable development should consider the following factors;

a) The Criteria for assessing & Application of ODA should promote short term

economical benefits for sustainability development.

b) The Assessment and Criteria of ODA Application should take into account the analysis

of potential sectors in the countries which drive the economical potential benefits and

Production orientated sectors.



The future criteria and application of ODA which the DAC members may wish to implement

for sustainable development should consider the following factors;

c) It should apply more than 60-70% of country ODA to economical potential benefits and

productive sectors.

d) mitigating Risks for the private sector improvements to leverage finance.



The future criteria and application of ODA which the DAC members may wish to

implement for sustainable development should consider the following factors;

e) This calls for the change in Criteria and application to be inline with the 17 SDGs

which add value to the development of economic benefits although the social

sector is also important.

f) The element of sustainable development can not be achieved.


6) IMPACTS OF THE SOLUTIONS

The future criteria and application of ODA can have a major impact on the LIDCs

especially on sustainability development as follows;

I. As a catalytic Source of finance

II. As a means of mitigating risks

III. As a potential economic development for sustainability

IV. Leveraging the private Finance

V. While balancing the Social welfare of the LIDCs for long term benefits.

FINANCE FOR DEVELOPMENT Billions to Trillions to Actions

THE END

Economy & Finance

Fin4 dev develTHE RESTRUCTURING OFFICIAL DEVELOPMENT ASSISTANCE (ODA) CRITERA AND APPLICATION TO LOW INCOME COUNTRIES FOR SUSTAINABLE DEVELOPMENT