Introduction
European Official Development Assistance (ODA) is in a critical condition. The ODA reported by the EU and its Member States still falls far short of commitments made half a century ago. Furthermore, not all reported ODA actually meets the official criteria. Given the pressure of multiple global crises, urgent action is needed to ensure ODA delivers on its potential to reduce poverty and inequalities.
Since 2005, CONCORD has provided information, analysis and recommendations on the quantity and quality of ODA provided by the EU and its Member States through the annual AidWatch report.
This year’s report builds on the new methodology introduced in AidWatch 2023, and explores:
The extent of inflated European ODA – that is, European ODA that does not meet the OECD’s own ODA definition and eligibility criteria.
How far European Member States are assuming their wider responsibility to maximise the impact of their ODA.
ODA: a crucial resource under threat
In 2023, ODA from the 27 EU Member States totaled EUR 82.45 billion, representing just 0.51% of their combined GNI. This marks a decline from 2022 when ODA reached 0.56% of GNI, and remains well below the 0.7% target first set out in 1970. The 2024 AidWatch report estimates that due to the cumulative shortfall in meeting this target, partner countries have missed out on more than EUR 1.2 trillion in ODA since the original deadline passed.
After a peak in 2022, the decrease in total ODA from the 27 EU Member States in 2023 is a trend in stark contrast with calls from the UN to increase ODA substantially.
Reporting vs Reality: the problem of inflated ODA
The report finds that over EUR 18.9 billion of the ODA reported by EU Member States in 2023 was inflated. This inflated ODA, which does not meet the OECD’s criteria for defining and measuring ODA, continues to obscure the true level of assistance being provided by the EU Member States. Twenty EU Member States decreased ODA as a percentage of GNI in 2023. ODA esources are also diverted away from where they are most needed.
In-donor refugee costs
In-donor refugee costs refer to ODA resources used to support refugees within donor countries, which do not directly benefit partner countries. These costs reached EUR 13.9 billion in 2023, accounting for 17% of the total reported ODA. In seven EU Member States, these costs represented over 25% of ODA, with Malta reporting 89%. Although allowed by OECD rules, these expenses do not align with the criteria set by the same OECD DAC – ODA is provided to countries and territories on the OEC DAC list of ODA recipients or to multilateral development institutions -, raising concerns about the coherence of the rules to report and measure ODA.
Imputed student costs
Imputed student costs are the expenses for students from low- and middle-income countries studying in donor countries. These costs, totaling an estimated EUR 2.9 billion in 2023, are reported as ODA, despite not benefiting partner countries directly. These figures have remained consistent, with a few Member States such as Austria, France, and Germany contributing the majority.
ODA Loans and Grant Equivalent
The OECD’s 2018 shift to reporting loans under a “grant equivalent” mechanism often inflates ODA figures. The methodology used to calculate concessionality exaggerates loans and EU Member States generosity. In 2023, inflated ODA from loans was forecasted at EUR 1.2 billion, highlighting the need for more accurate reporting.
Debt relief
Debt relief, while crucial, is considered inflated ODA. Debt relief often results in double counting or fails to meet ODA criteria. In 2023, debt relief added EUR 21.29 million in inflated ODA, a small yet significant figure compared to spending in other essential sectors. The amount reported by EU Member States in debt relief represented more than the total amount of ODA that EU Member States spend on early childhood education.
Private Sector Instruments (PSIs)
PSIs allow ODA to fund private sector actors in developing countries, but issues arise around overstated concessionality and low transparency. In 2023, EUR 915.9 million was reported as PSI ODA, raising concerns about its diversion from poverty and inequalities-reduction efforts.
While the share of inflated ODA decreased slightly from 2022, the report underscores the need for greater transparency and accountability in ODA reporting.
Whose Interest does ODA really serve?
The OECD’s fourth criterion for Official Development Assistance (ODA) states that assistance must prioritise the economic development and welfare of partner countries, not the donor countries’ self-interests. AidWatch raises concerns about some EU-reported ODA that may not meet this criterion, especially in areas like tied aid, migration, and security-related projects, where EU member states may prioritise their own political or economic goals.
Tied and partially tied ODA
Assistance is conditioned on the purchase of goods or services from the donor country, benefiting their domestic economy. In 2022, EUR 4.4 billion (6.5% of total bilateral ODA) was tied aid. Recent policy developments do not inspire confidence that EU Member States and other DAC members are committed to reducing tied ODA in future years. Concerns have already been raised that the Global Gateway could lead to more tied ODA. Forecast from AidWatch foreseen an increase in the reporting of tied aid.
EU Member States’ fully tiend and partially ODA, 2019-2023
(EUR million in constant 2022 prices)
Please note figures 2023 are forecasts based on past based trends.
EU Member States’ ODA for facilitation safe, regular and responsible migration and mobility. 2019-2022
(EUR million in constant 2022 prices)
Migration management
EUR 381 million (0.5% of bilateral ODA) was allocated to migration-related projects, raising concerns that these funds are serving EU interests rather than human development goals.
Security system reform and peacekeeping
In 2022, the year with latest data available, EUR 114 million (0.2% of bilateral ODA) was allocated to security projects, where EU countries might prioritise their security interests.
In total, EUR 5.2 billion of ODA is estimated to be at risk of serving donor interests rather than partner country welfare in 2022. Further research is needed to assess the extent of this issue, particularly in these sensitive areas.
EU Member States’ ODA for security systems management and reform or participation in international peacekeeping operations, 2019-2022
(EUR million in constant 2022 prices)
Beyond ODA Inflation – Improving ODA Quality
The AidWatch report looks beyond inflated ODA, focusing on how well ODA addresses poverty and inequality. It assesses the quality of ODA in two ways:
Equality and ODA:
Equality between partner countries: ODA tends to favor countries with higher Human Development Index (HDI) scores, with 46% of bilateral ODA in 2022 going to countries with high HDI scores, and only 17% to those with the lowest scores.
Equality for marginalized groups: Despite policy markers for gender and disability inclusion, only 4% of ODA in 2022 targeted gender equality as the main objective, and less than 3% included disability objectives.
Climate finance: ODA for climate change reached EUR 18.3 billion (25% of total bilateral ODA) in 2022, but concerns remain over the adequacy of funds, especially for climate adaptation, and the reliance on loans rather than grants.
Our analysis reveals that ODA flows are not targeting countries with lower HDI scores. In fact, ODA tends to be concentrated in countries with the highest HDI scores. As the figure below shows, in 2022, 46% of bilateral ODA was allocated to countries with HDI scores ranging from 0.7125 to 0.855. In contrast, just 17% of bilateral ODA was allocated to countries with the lowest HDI scores, ranging from 0.38 to 0.5225.
Percentage of bilateral ODA allocations from the 27 EU Member States to countries with the lowest and hightest HDI scores in 2022
Factors undercutting ODA impacts:
Illicit financial flows (IFFs): Partner countries lose an estimated EUR 45 billion annually due to cross-border tax abuse, eroding funds for sustainable development.
Debt servicing: High debt burdens, absorbing an average of 54% of government revenue in Africa, undercut the benefits of ODA. A UN proposal for resolving debt crises has not gained EU support, highlighting a lack of policy coherence. A substantial share of debt service payments flows to EU Member States. This includes repayments on ODA loans.
Recommendations to the EU
Despite these bleak findings, there are some reasons to be hopeful: recent conclusions from the Council of the European Union emphasise the importance of meeting the 0.7% ODA commitment, and the Fourth International Conference on Financing for Development in 2025 offers opportunities to reset ambitions on ODA and other economic justice issues.
Nonetheless, urgent action is needed if European ODA is to deliver on its longstanding promises to people experiencing poverty and inequalities. AidWatch calls on EU Member States and the European Union to:
