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Slight increase in aid only a drop in the ocean to combat the Covid-19 crisis

Figures published today by the OECD show that development aid has slightly increased in 2020. While this rise provides a lifeline for millions of people living in poverty around the world, it’s simply not enough. With extreme poverty skyrocketing for the first time in over twenty years and increasing economic and gender inequality exacerbated by the Covid-19 crisis, rich countries are facing and failing the biggest test the aid system has seen since its creation 50 years ago, said Oxfam. 

Reacting to the news, Oxfam’s global aid policy expert, Julie Seghers, said: 

“In 2020, rich countries spent 0.32 percent of their gross national income on aid, up from 0.30 percent in 2019. This increase is welcome, but is partly due to declining national incomes, and still fails to fulfil 50-year-old promises of 0.7 percent of GNI. If rich countries had kept their promise, aid budgets would have been boosted by an additional $190 billion in 2020 alone – more than enough for low- and lower-middle income countries to vaccinate their entire population and guarantee basic education for all. 

“Rich countries have taken exceptional measures to respond to the crisis domestically deploying trillions of dollars to fund their Covid-19 relief and recovery plans. The same urgency must guide their international response. This means ramping up aid budgets, reallocating their Special Drawing Rights and acting urgently on debt cancellation. 

“Rich countries are giving more and more ‘aid’ through loans. This paradoxical action is piling on even more debt at a time when poorer countries are struggling to keep afloat and seeing their own revenues drop dramatically. Now is the time for grants, not loans. Investing in hospitals and schools, and providing cash grants to help people weather this crisis-induced storm is needed, not the further shrinking of countries’ fiscal space. 

“Increasing aid is vital to provide Covid-19 vaccines, tests and treatments to developing countries, and to shore up their health systems and capacity to manufacture vaccines. But this is a drop in the ocean compared to needs and should under no circumstances replace international commitments to share patents. 

“We know there is a high chance of aid cuts to come next year due to the lagged impact of the recession. But this is a policy choice. Rich countries should instead choose to show international solidarity at a time when it’s most needed.” 

 

Notes to editors

Oxfam aid expert Julie Seghers is available for interviews in English and French. 

The 2020 aid figures are available on the OECD website. 

In a statement released today, 76 civil society organisations across the world, including Oxfam, called for increased levels of aid in the wake of the Covid-19 pandemic and related crises, and called on DAC members to fulfil and exceed the 0.7% aid target and the 0.15% to 0.2% target for Least Developed Countries (LDCs), prioritising unconditional grants and technical support. 

Slight increase in development aid 

OECD data shows that overall aid spending from 29 OECD donor countries totalled USD 161.2 billion in 2020. This was a 3.5 percent increase from 2019. 

Rich countries only committed 0.32 percent of their gross national income (GNI) to development aid. This is up from 0.30 percent in 2019, but still well below the 0.7 percent they promised to deliver in 1970.  

In 2020, just 6 countries – Sweden, Norway, Luxembourg, Denmark, Germany and the UK – lived up to their 1970 promise of 0.7 percent. Germany reached the 0.7 percent club thanks to additional funding in response to Covid-19 and a decrease in GNI due to the crisis. The UK cut its aid but still reached 0.7 percent in 2020, although it will fall below the target in 2021 with the announcement of future cuts.  

Commitment to spend 0.7 percent of GNI in aid 

Rich countries first committed to increase their international aid to 0.7 percent of their Gross National Income (GNI) in a 1970 UN General Assembly Resolution, and have repeatedly re-endorsed this commitment since then, apart from the US and Switzerland. 

Oxfam has calculated that in the 50 years since the 0.7 percent promise was made, rich countries have failed to deliver a total of $5.7 trillion in aid. Essentially, this shortfall means that the world’s richest countries owe a $5.7 trillion debt to the world’s poorest people. In 2020 alone, if rich countries had reached the 0.7 percent target, the current aid budget of $161.2 billion would have been boosted by about $190 billion. 

Needs of low-income countries 

New IMF research shows that low-income countries will have to deploy some $200 billion over five years to fight the pandemic and an additional $250 billion to return to their original path of catching up to higher income levels. 

Oxfam’s recommendations to help low-income countries face and recover from the Covid-19 crisis Rich countries and international institutions need to take four actions:  

  • Cancel debt immediately  

  • Create Special Drawing Rights – new international reserves by the IMF)  

  • Adopt emergency solidarity taxes  

  • Undertake a massive injection of international aid — a powerful tool of global solidarity that has proven time and time again to save lives.  

This Oxfam report lays out a vision for aid in response to the crisis.  

Costs of vaccinating the entire population of low- and lower-middle income countries  

Oxfam estimated the cost of delivering a COVID-19 vaccine based on data from the Access to COVID-19 Tools (ACT) Accelerator, which states $18.1 billion is needed in 2020–21 for end-to-end production of two billion doses of vaccines globally. This includes research and development, manufacturing, procurement, distribution and delivery. This means that the amount needed for the production of one dose is $9.05, and $18.10 for two doses. 3,581,000,000 people live in low-income countries and lower-middle income countries, so the cost to vaccinate them with two doses each is $64,816,100,000. 

Cost of getting children and youth back to school in low-and lower-middle income countries 

According to the latest UNESCO estimates, 51.2 million children of primary school age and 51.9 million adolescents of lower secondary school age are out of school in low- and lower-middle income countries. Using UNESCO estimates of expenditure per student for one year of schooling in low and lower-middle income countries ($403 for primary school and $536 for lower secondary), we calculate that the cost of getting children and adolescents back to school and finishing primary and lower secondary education (i.e., ‘basic education’) is $48 billion. 

Projections on future aid trends 

ODA projections are uncertain, as ultimately, it’s a political decision to cut or increase aid budgets. However, the Overseas Development Institute anticipates that, if the relation between ODA/GDP growth evolves in the same way as it did between 2000-18, then ODA could fall by 9.5% between 2019 and 2021.

Media Contact:

Jo Spratt | Communications and Advocacy Director | Wellington, New Zealand | Joanna.spratt@oxfam.org.nz | 0210664210

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