Official Development Assistance (ODA) is financial aid provided by governments and other official organizations to developing countries, with the primary goal of promoting economic development and reducing poverty. ODA is typically provided in the form of grants or low-interest loans and can be used for a wide range of purposes, including infrastructure development, healthcare and education initiatives, and disaster relief.
In 2022, ODA reached a total of $204 billion, marking a 13.6% increase from the previous year. The primary driver for this growth was the spending on processing and hosting refugees within donor countries, which rose to $29.3 billion, accounting for 14.4% of ODA. Excluding these “in-donor” refugee costs, 2022 ODA still experienced a 4.6% growth in real terms over 2021.
Another significant contributor to the increase in foreign aid was a substantial rise in aid to Ukraine following Russia’s invasion. In 2022, ODA to Ukraine totaled $16.1 billion, a significant increase from $918 million in 2021, which included $1.8 billion in humanitarian aid.
The United States was the largest donor of official development assistance in 2022, followed by Germany and the EU institutions. While the total ODA provided by DAC (Development Assistance Committee) member countries as a percentage of their GNI was 0.36% in 2022, only five countries hit the UN 0.7% aid spending target: Denmark, Germany, Luxembourg, Norway, and Sweden.
The 0.7% target, first adopted by the UN General Assembly in 1970, is a global commitment made by member countries of the United Nations to provide a certain level of financial aid to developing countries. Developed countries are encouraged to allocate a minimum of 0.7% of their Gross National Income (GNI) to ODA in order to promote economic development and reduce poverty in developing countries. This target is not legally binding, but it is widely endorsed by UN member countries and considered an important benchmark for measuring progress in development assistance.
The goal of the 0.7% target is to provide a minimum level of assistance needed to help developing countries achieve the United Nations’ Sustainable Development Goals (SDGs), which include goals such as ending extreme poverty, improving health and education, and protecting the environment. In order to meet the 0.7% target, many DAC countries would need to significantly increase their levels of ODA.