Official development assistance

Official Development Assistance (ODA) is a category of development aid. The term applies to aid from the members of Development Assistance Committee of the OECD to Part I List of Aid Recipients, that is to say, developing countries.

Definitions

The full definition of ODA is:

Flows of official financing administered with the promotion of the economic development and welfare of developing countries as the main objective, and which are concessional in character with a grant element of at least 25 percent (using a fixed 10 percent rate of discount). By convention, ODA flows comprise contributions of donor government agencies, at all levels, to developing countries (“bilateral ODA”) and to multilateral institutions. ODA receipts comprise disbursements by bilateral donors and multilateral institutions.

— OECD, Glossary of Statistical Terms

In other words, ODA needs to contain the three elements:
(a) undertaken by the official sector;
(b) with promotion of economic development and welfare as the main objective;
(c) at concessional financial terms [if a loan, having a Grant Element of at least 25 per cent.

This definition is used to exclude development aid from the two other categories of aid from DAC members:

• Official Aid (OA): Flows which meet conditions of eligibility for inclusion in Official Development Assistance (ODA), other than the fact that the recipients are on Part II of the Development Assistance Committee (DAC) List of Aid Recipients.
• Other Official Flows (OOF): Transactions by the official sector with countries on the List of Aid Recipients which do not meet the conditions for eligibility as Official Development Assistance or Official Aid, either because they are not primarily aimed at development, or because they have a Grant Element of less than 25 per cent.

Examples:
If a donor country accords a grant or a concessional loan to Afghanistan it is classified as ODA, because it is on the Part I list.
If a donor country accords a grant or a concessional loan to Bahrain it is classified as OA, because it is on the Part II list.
If a donor country gives military assistance to any other country or territory it is classified as OOF, because it is not aimed at development.

Uses

There are normally two ways of looking at the volume of ODA:

• In real terms - the amount transferred
• As percentage of GNP - aid burden-sharing

In real terms the United States is by far the largest donor. It is also the country that produces the greatest value of goods and services, i.e. GNP. However, the US federal government's budget is ~0.2% of its GNI, whereas Norway's is ~0.9%. (United = United Kingdom)

File:ODA current.png

ODA in USD million in 2004. Source: OECD

As percentage Norway is the largest donor among developed countries, and together with Denmark, Luxemburg, Sweden and the Netherlands, it meets the International Aid Target of dedicating 0.7 percent of GNP. As percentage of GDP, Arab states of the Persian Gulf are the most generous, with Kuwait contributing 8.2% of its gross national product and Saudi Arabia contributing 4% in 2002.

ODA measured in GNP in 2004. Grey line marks average country effort (.42 %). Source: OECD

Distribution

Official development assistance in 2005

World Bank reports that Iraq was the top receipient of development aid in 2005 followed by Nigeria.

External links

• History of ODA (pdf)
• OECD: Final ODA Data for 2004
• Arab Aid