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STRETCHING THE DEFINITION OF ODA TO THE BREAKING POINT

By Sam Ursu Mar 14, 2024
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The underlying assumption of Official Development Assistance (ODA) is that
money, goods, and other forms of assistance are sent from a wealthier nation
(the “donor”) to a less well-off country or region (the “beneficiary”) as part
of a larger effort to eradicate poverty, combat climate change, and increase the
overall standard of living for everyone on the planet. However, many of the
biggest donors of ODA are increasingly spending their budgets inside their own
countries on processing, sheltering, educating, training, providing healthcare,
and otherwise caring for refugees and asylum seekers, officially known as
“in-donor” hosting.

In 2022, the latest year for which statistics are available, the 31 OECD-DAC
donor nations spent a whopping 14.6% of their annual ODA on in-donor hosting of
refugees and asylum seekers. In dollar amounts, the 31 OECD-DAC donor nations
spent $31 billion on in-donor refugees and asylum seekers, a three-fold increase
from 2021. The Development Assistance Committee (DAC)’s Chair Carsten Staur has
called this issue “the elephant in the room” and has warned that current
development aid policies urgently need to rethink their priorities and focus.


SHIFTING PRIORITIES FOR ODA

With the outbreak of the COVID-19 pandemic, global perspectives on a number of
matters underwent a huge transformation, including spending priorities for
Official Development Assistance (ODA) budgets.

Whereas vaccination programs have always played a small but vital role in
development assistance, the recent pandemic resulted in donor nations spending
$6.4 billion in providing COVID-19 vaccines and $16.3 billion for other measures
taken to combat COVID-19 in 2021. All of this was ultimately able to be
classified as ODA thanks to an exemption issued by the OECD Secretariat which
expired at the end of 2022. But OECD donors struggled to agree on how to put a
financial value on donations of excess vaccine doses given to developing
countries or whether or not these vaccine donations should be classified as ODA
at all.

Nonetheless, the general consensus was that the COVID-19 pandemic was a one-time
global emergency, and disagreements about whether vaccine donations and other
measures should be counted as ODA or what priority the combating of infectious
diseases should have on long-term ODA policies soon faded from view after the
WHO declared an end to the state of global health emergency.


ALL EYES ON UKRAINE

But just as the headlines about COVID-19 started disappearing from view, in 2022
the war in Ukraine began, becoming an urgent priority for OECD-DAC members and
their ODA budgets.

During the peak of the refugee crisis a few years ago which saw approximately
1.3 million (non-Ukrainian) people arrive in Europe to request asylum, ODA
spending on in-donor refugee costs amounted to $16 billion or 11% of ODA spend
in 2015. In 2022, by contrast, 14.6% of ODA spend or $31 billion was on in-donor
refugee and asylum seekers, the vast majority of the recipients coming from
Ukraine.

Some individual European countries saw truly record-shattering increases in 2022
on in-donor refugee hosting costs, including Poland (+268%), Estonia (+225%),
the Czech Republic (+184%), Lithuania (+173%), and Ireland (+121%) compared to
2021.



Source: OECD

Furthermore, OECD-DAC donor nations also spent a total of $17.8 billion in ODA
for Ukraine, of which $2.4 billion was in the form of humanitarian aid. And
European Union institutions spent an additional $10.6 billion in ODA for Ukraine
in 2022. In total, Ukraine received $28.7 billion in ODA in 2022, making it the
largest recipient of development aid on the planet that year.

See also: Latest data on aid shows in-country spending by donors is rising


IN-DONOR COSTS RISE TO THE FOREFRONT

Since 1988, OECD-DAC rules have allowed donor nations to count in-donor refugee
costs as ODA. This was a common-sense measure as it reflected the on-the-ground
reality that most refugees and asylum seekers are, themselves, hosted in
developing countries.

Even today, the majority of refugees are in lower-income nations which receive
ODA from OECD-DAC members, including Turkey (3.7 million refugees, 98% of whom
are from Syria), Pakistan (1.5 million refugees, 99% of whom are from
Afghanistan), Uganda (1.4 million refugees, 1 million of whom are from South
Sudan), and Bangladesh (929,000 refugees, 99% of whom are stateless Rohingya
people from Myanmar), and there is little controversy over ODA funds being spent
on caring for these displaced populations.

By way of contrast, the rising costs of in-donor refugee and asylum seeker
hosting in wealthier nations such as Germany, Poland, and Britain have become a
politically sensitive issue. Spending on in-donor refugee costs is classified as
an “exceptional” item in ODA reporting, and such actions were never envisaged as
something that would constitute a major component of official development
assistance.

Britain spent nearly a third of its total ODA budget on in-donor refugee hosting
in 2022, which an independent report commissioned by the parliament determined
had a “serious [negative] impact on UK aid as a whole” and represented “poor
value for money for taxpayers.” Spain, meanwhile, allocated 24.4% of its ODA
budget on in-donor refugee assistance in 2022, spending these funds despite a
“lack of clear criteria, documentation, and transparency,” and some of that
money may actually have been ineligible to be counted as ODA.

Overall, the rapid change in priorities that saw a huge percentage of ODA
budgets spent on in-donor refugee hosting costs as well as vast sums of ODA
going to Ukraine starting in 2022 have shifted significant resources away from
initiatives to tackle poverty, address climate change, support early childhood
education, combat famines, and provide healthcare for the rest of the world’s
vulnerable populations.


OECD-DAC RULES AND IN-DONOR ODA ELIGIBILITY

A brief synopsis of which in-donor refugee and asylum-seeking costs can be
classified as Official Development Assistance (ODA) and which cannot as well as
recommendations from DAC Chair Carsten Staur:

 * Costs can only be counted as ODA for the first 12 months after the refugee
   arrives in the first country of asylum – moving to another country doesn’t
   “reset the clock” for that refugee or asylum seeker.
 * Only costs related to “temporary sustenance” for refugees can be counted as
   ODA. Food, shelter, primary education, and healthcare counts while vocational
   training, skills training, and secondary education does not count as ODA.
 * Money spent on asylum seekers who had their asylum application rejected
   cannot be counted as ODA.
 * Just because a cost can be reported as ODA does not necessarily mean that it
   should.
 * OECD-DAC members retain the ability to report in-donor refugee spending as
   additional costs to their planned ODA budgets so that those additional costs
   would not affect previously budgeted ODA projects and contributions.

Staur also reiterated that OECD-DAC member nations who welcomed in Ukrainian
refugees in 2022 should strictly limit their reporting of ODA spending on these
refugees to just the first 12 months of their presence in their country.

Therefore, since the majority of these Ukrainian refugees arrived in 2022, their
12-month ODA-eligible “clock” expired at some point in 2023. Since many of these
refugees continued to remain after this “clock” expired, OECD-DAC members need
to separate their ODA-eligible and ODA-ineligible spending on them for the 2023
reporting period as many of these refugees will have received a mix of both
ODA-eligible and ODA-ineligible benefits in the calendar year 2023.




Written by

Sam Ursu

Sam is a veteran writer who has published non-fictional travel bestsellers and
works as an independent journalist covering global affairs. Born and raised in
America, Sam now lives in Tiraspol with his family. In his free time, Sam works
in partnership with the United Nations to improve gender and cultural parity in
emerging applications of Artificial Intelligence.
View all articles
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