Definition of aid. Takeaways from OECD donor gathering in Paris
At a ministerial meeting in Paris 30 donors agreed on new common rules for reporting domestic refugee costs as Official Development Assistance (ODA) and paved the way for some Caribbean island states hit by Hurricane Irma to become aid eligible again.
According to the new rules, donors are permitted to report as ODA direct expenses for temporary sustenance, like food, shelter and training. This includes primary and secondary education for children, but not vocational training. A range of other costs are also eligible, but the idea is that they must have a temporary nature.
According to a spokesperson at the Foreign Ministry in Oslo, the changes will be incorporated in Norway’s aid budget for 2019.
In 2016, donors had agreed on principles regarding private sector aid. The purpose of the new guidelines was to encourage donors to use aid strategically to stimulate more private sector investments in line with the SDG agenda. However, implementation was put on hold due to strong disagreements about how to calculate support to private sector actors as ODA. Some donors, including Sweden, feared that a new regime could erode the poverty focus of aid.
Modéer says donors must eventually reach an agreement about private sector aid which represents an increasing share of total ODA. She says that Sweden believes aid can be used to mobilise private capital. “But for us basic principles like the focus on poverty eradication, untied and effective aid and transparency are extremely important,” she tells Development Today.
International NGOs have been critical. Oxfam International Executive Director Winnie Byanyima, who attended the meeting, says she is “worried that governments are diluting the fight against poverty.” She recognises that business has a vital role to play in ending poverty, but adds that “we need rich countries to put rules and safeguards in place to ensure that companies fully respect human rights and environmental standards. Development aid should never be used to promote rich countries’ own commercial interests at the expense of poor people’s lives,” she says.
The key questions are how to calculate such private sector instruments as ODA and to prevent PSIs from inflating aid.
This double reporting system expires at the end of the year. Prior to the Paris meeting, the DAC Secretariat had sent a letter to donors that use the institutional method, informing them that such reporting would not be approved as ODA from next year.
However, in Paris, the ministers agreed to continue the double reporting system, and this time no expiry date was set. This means there is no deadline for a new agreement about private sector aid.
The United Kingdom has been a key player in the DAC negotiations and has hinted that it might abandon the ODA reporting regime in OECD. A few days before the negotiations in Paris, however, British Development Minister Priti Patel backed down on this threat.
In the wake of Hurricane Irma, the United Kingdom wanted to open for some of its overseas territories like Anguilla, Caicos and British Virgin Islands to become eligible for receiving ODA even though they have graduated from the DAC list of countries and territories eligible for ODA.
The high-level DAC meeting recognised that such countries, hit by natural disasters or humanitarian crises, face unique vulnerabilities, but there currently exists no mechanism to allow them to receive aid. The members accepted that such countries require tailored development financing and agreed that the secretariat in Paris should develop new mechanisms for reinstating ODA eligibility for countries and territories in such circumstances.
Participants at the meeting Development Today has spoken to conclude that the DAC has strengthened its role as the key forum for defining ODA during the gathering. The members, which include 29 countries and the EU, agreed to endorse a new mandate for the DAC to ensure it is fit for purpose in the era of the 2030 Agenda. “The DAC will continue to define and measure development co-operation [and] be the guardian of the ODA definition and monitor its flows,” according to a statement from the meeting.