McLeod Group blog by Stephen Brown, April 17, 2023
Foreign aid figures for 2022 are out and they show a large increase in disbursements. But you might want to wait before popping the bubbly. Unpack the data a bit, and you won’t find much to celebrate.
The so-called good news
The OECD trumpets that official development assistance (ODA) set a record high in 2022 for the fourth year in a row, according to preliminary data. Total development assistance from members of the OECD’s Development Assistance Committee, which brings together traditional donor countries, rose by a seemingly generous 13.6% compared to 2021, reaching a total of US$204 billion. That was one of the largest year-on-year increases in ODA ever.
As the OECD proudly points out, almost all DAC countries increased their aid between 2021 and 2022. A few stand out for the size of their increases: The Czech Republic and Ireland more than doubled their ODA and Poland more than tripled its assistance in just one year, which sounds extremely impressive.
Canada’s increase may not be as dramatic as some of its European counterparts, but its 19% bump is noteworthy. In just one year, its ODA went from 0.32% to 0.37% of GNI. You’d have to go back to 1995, almost 30 years ago, to find that level of spending. In real terms, Canadian ODA increased by Cdn$1.6 billion in 2022 when compared to 2021. Many development actors have long called on the Canadian government to make such annual increases, so normally that would be something to celebrate. But not so fast…
Curb your enthusiasm
The across-the-board increases in ODA appear impressive, but only when read superficially. Looking beyond the totals reveals facts and trends that are less encouraging and even worrying.
As the OECD recognizes, most of the increase in ODA in 2022 was due to what it calls “in-donor refugee costs”. By a perverse manipulation of the accounting rules, member countries can count money they spend at home on resettling refugees – for instance, on financial assistance, housing, health and education – as development assistance, even though none of that money actually goes to developing countries. Instead, it bolsters donors’ own economies. Oxfam has called it “obscene” to divert foreign aid funds for those purposes.
A large proportion of the additional funds were spent on hosting Ukrainians who fled their country after Russia invaded in February 2022. These accounting rules help explain why Czech and Polish ODA increased astronomically in just one year. A worthy cause, but not really foreign aid.
In 2022, DAC members spent US$29 billion on hosting refugees in the donor countries, representing 14.4% of total ODA. If you don’t count those expenses, the actual increase in ODA over 2021 was not 13.6%, but a far more modest 4.6%.
In parallel, aid to Ukraine increased dramatically in 2022. Again, a much-needed contribution, but at a great cost to other countries. Year-on-year comparisons reveal a drop of almost 8% in 2022 in ODA to Sub-Saharan Africa, underplayed by the OECD, but representing a shameful cut in assistance to a region whose urgent needs have long gone unmet. Moreover, despite a growing debt crisis in the Global South that is crippling countries’ abilities to meet their citizens’ basic needs, DAC members contributed a miserly US$62 million to debt relief.
Canada follows those broad trends. The OECD notes that Canada’s large increase in 2022 was “mainly due to support to Ukraine (some in the form of humanitarian assistance), increased costs for in-donor refugees as well as higher contributions to international organisations”. Over 12% of what the Canadian government reported as ODA in 2022 went to hosting refugees in Canada, and a whopping 26.4% of Canadian ODA was allocated to a single country, Ukraine. The latter is clearly a country that requires much assistance, but as the Auditor General recently reported, much of that assistance came from funds previously allocated to other countries, which hampers Canada’s ability to meets its development assistance commitments. The disproportionate prioritization of an overwhelmingly white, European country in Canada’s ODA spending at the expense of other regions shows the primacy of donors’ own geostrategic considerations in international assistance, as well as a racial bias.
Despite the significant increase in Canadian ODA in 2022, the country is still a below-average donor: It ranks 16th out of 30 DAC members for ODA as a percentage of GNI. Moreover, Canada’s 0.37% is barely halfway to the 0.7% target to which it committed itself way back in 1970.
A careful reading of the most recent federal budget reveals that the Canadian government plans to spend Cdn$1.3 billion less in international assistance in 2023 than in 2022, a drop of 15%. It will thus break its promise to increase aid spending every year. The dramatic 2022 increase will be just a statistical blip, to be significantly clawed back in 2023.
Of course, increasing the quantity of aid is just one element of what is required to achieve greater results in the Global South. Improving the quality of aid is a much more difficult task. A deeper reform of the aid and development systems is also urgently needed. But Global Affairs Canada is in crisis and poorly equipped to take the bold steps that are required to meet urgent global challenges. Unfortunately, we will need to keep the champagne on ice for a while longer.
Stephen Brown is Professor of Political Science at the University of Ottawa and currently an International Fellow at the Bayreuth Academy of Advanced African Studies, University of Bayreuth, Germany. Photo: Myriam Zilles on Unsplash.