Funferal

Analysis of Overseas Development Aid figures

As I’ve reported previously the Irish government has abandoned its commitment to reach by 2007 the target for overseas development aid (ODA) of 0.7% of GNP. The Labour Party has, as I mentioned previously, launched a campaign to bring them to task.In the wake of this, however, and in light of the various articles now being published – the tsunami disaster seeming to act as a hook for many – about the inadequate levels of aid being made available globally, I decided to look for more detailed information, and to dice some of the numbers.First stop was a useful overview of the topic, focused on the United States, which (amongst much else) details the origin of the commitment at the 1992 Earth Summit, and pulls data from the OECD’s website to generate a ranking of the 22 members of the ‘Development Assistance Committee’ (DAC) who are meant to be meeting the 0.7% target.Most, of course do not. Four (Norway, Denmark, Netherlands, Luxembourg) exceed the commitment, Sweden meets it. Belgium ramped up heavily in 2003, to go from 0.43% to 0.61% (mainly due to forgiving Congolese debt). Ireland, since 2000 has gone from 11th position to 7th, where we are now staying quite static at 0.41%.[As a side note, the figures are reported in dollar terms, which doesn’t cause problems with calculating % GNP given in aid, since both aid and GNP are in the same units, presumably calculated at the same time, but can give strange results when you compare across years – such as having EURO member states appear to have year-on-year economic growth of over 20% in 2002-03.]So Ireland is ahead of the mid-point – somewhat positive, were it not for the fact that we had promised to be doing even better, and were not the performances of some countries particularly dismal. Notwithstanding Colin Powell’s defense of the United States’ aid contributions the US does worst in the table. Yes, it gives the largest dollar amount, but it is after all the largest country in the donor group – both in population and in GNP terms. The United States gives 0.14% of GNP in aid, limping in behind Italy (0.16%), Japan (0.2%) and Austria (0.2%). There are few admirable figures here. [As I write this, I’m watching Sky News’ coverage of the tsunami, and note that the US has just doubled its aid offer to $35m, or £15.5m, just ahead of the UK’s £15m – again, biggest dollar amount, but not proportionate to economy. Germany, at £1m according to Sky, is also below expectations – equaling Ireland’s contribution in currency, but then it is several tens of times as large as Ireland.]According to the OECD ODA from the DAC grew by 3.9% in real terms from 2002-03 (adjusting for inflation and exchange rate fluctuations). Assuming that this approximates an adjustment for the growth in GNP, and noting that the overall contribution is 0.25% of combined GNP/GNI, I calculate that at this rate it will take 27 years before the target is met. Several countries are listed by the OECD as having given commitments to reach the target by set dates: Belgium (by 2010), Ireland (by 2007 – but now, of course, abandoned), and France (by 2012, with an interim target of 0.5% in 2007). Interestingly, it appears that aid given as loans counts towards the target, with repayments by recipients being deducted from aid to give a net total.The OECD have much more information including individual graphs for each country, detailing the recipients of aid – by region, sector, and income level. Ireland targets sub-Saharan Africa far more than other countries, with 8 of its top ten recipients in Africa, and also ‘LDCs’ (Least Developed Countries). The United States in contrast gives the greatest proportion to ‘Lower Middle-Income’ countries, and the European Union gives just marginally more to LDCs than to Lower Middle-Income. Only 3 African countries enter the top ten for the DAC as a whole, only two of them (Congo and Mozambique) being in sub-Saharan Africa.Looking more closely at Ireland, there is a press release detailing the promised growth in aid from here to 2007. Aid is expected to reach €665m. One of the reasons given by government reps for why we won’t hit the 0.7% target is that economic growth has been faster than expected, meaning that increases in aid can’t keep up with the increase in the moving target. Given that Irish GNP in 1999 was €76.67bn, this implies (by my calculation, and assuming that aid was always expected to reach €665m by 2007) that Irish economic growth was expected to average 2.7% (compound) over the 8 year period. Remembering back to economic forecasts at the time that seems low, and the only conclusion can be that this excuse is disingenuous at best.So, what will the €665m be, in GNP terms? Well, GNP growth is projected by the ESRI at 5.1% in 2004 and 4.6% in 2005, but those are ‘real growth’ projections – that is growth in volume – and the increase in Euro terms will be greater. The government’s own projection is €153bn in 2007. That leaves €665m at 0.43%. Aid should really be something in the range of €1.1bn by then – that would require an increase of €200m or so per annum from Ireland between now and then, as opposed to the planned €60-65m.As a final note, Norway is aiming to hit 1% by 2005, and may make it. Now that’s an example to be proud of.