The 0.7 percent club


Bad news: The Organization for Economic Cooperation and Development said major donors’ official development assistance fell 3 percent in 2011.

Seventeen countries committed to spend 0.7 percent of their gross national income on aid by 2015. This positioning of aid targets stemmed from an idea by the World Council of Churches in 1958, when the first goal was set to 1 percent of donor countries’ GNI. Due to several technical issues, the target was scaled down to 0.75 percent — a goal several developed countries refused to accept.

And so in 1969, the Pearson Commission set the target at 0.7 percent. The deadline was supposed to be in 1975, but as donors regarded the target as a long-term objective, the compliance date was moved to 2015.

Of the 17 countries, only five have reached the target as of 2011: Sweden, Norway, Luxembourg, Denmark and the Netherlands. The five met and exceeded the target even before the start of the new millennium — and remain the only countries to do so in the past year. Although Finland, according to a OECD Development Assistance Committee journal published in 2002, met the target once in 1991.

Leading the donors club with an aid ratio of 1.02 percent of GNI, Sweden is the first country to meet the target in 1974, followed by the Netherlands in 1975. Norway, which currently comes in second with a 1 percent aid-GNI ratio, reached the target in 1976. Denmark followed in 1978.

Luxembourg was able to reach the target in 2000 — and has been the last to do so over the past 11 years. The current ODA as percentage of GNI of Luxembourg, Denmark and the Netherlands is 0.99 percent, 0.86 percent and 0.75 percent, respectively.

The 0.7 percent target was agreed upon by several OECD-DAC members and included in the U.N. General Assembly resolution on Oct. 4, 1970. But it was only in 2005 that several countries, particularly the 15 EU member states, started setting a timetable to reach the target by 2015. It will take a miracle for several of them, however, to meet the goal. Greece and Italy posted the lowest ODA levels at 0.11 percent and 0.19 percent, respectively, in 2011.

Australia, Canada, Japan, Switzerland and the United States did not commit and set a timetable to reach the target. But Canada, Japan and the United States committed to doubling aid to Africa. Among DAC member countries, the United States was the largest donor to the region with $30.7 billion net ODA in 2011.

In 2007, then-Prime Minister Kevin Rudd committed to boost spending and increase Australia’s foreign aid to 8 billion dollars ($7.8 billion) or 0.5 percent of GNI by 2015. At present, however, there are fears that the Australian government, now headed by Julia Gillard, might push back the deadline to 2017.

The U.N. Millennium Project noted in 2005 that to achieve the U.N. Millennium Development Goals, aid from developed countries should reach 0.54 percent of GNI by 2015. But the project encouraged donors to raise their commitments to 0.7 percent to address ODA needs outside of the MDGs, including infrastructure, climate change and post-conflict reconstruction. Even the lower aid target, however, is not likely to be met by 2015.

The average net ODA from all OECD-DAC member countries has been below 0.5 percent since the 1970 U.N. resolution. In fact, the average net ODA in 2011 is just 0.31 percent, .02 percentage points lower than in 1970. In 2002 — the year donors reconfirmed their commitment to the 0.7 percent target at the U.N. International Conference on Financing for Development — average net ODA was only 0.23 percent.

The quality of ODA has also often been questioned. Italy’s aid spending increased in 2011, but that was largely due to debt relief. And while many among DAC members increased their development assistance spending in the past year, aid for bilateral projects and programs fell 4.5 percent. Aid flows to the least developed countries also dropped 8.9 percent.

Many point to the global financial crisis as the reason for the declining ODA levels. But OECD Secretary-General Angel Gurría said the “crisis” should not be used as an excuse by countries to reduce their contributions.

By Jenny Lei Ravelo on 12 April 2012, Courtesy: Devex

The 0.7 percent club

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