Photo: EC/ECHO/Martin Karimi/CC BY-SA 2.0

OECD redefines aid

25 February 2016

A new definition of aid has been agreed which allows some military and increased private sector spending to be included. Charities have voiced concerns that the change will mean that funds are diverted from poverty alleviation.

The changes to the definition concluded a four-year process within the Organisation for Economic Co-operation and Development's Development Assistance Committee (OECD DAC) to ensure that the concept of aid is still fit for purpose in the current political context. Some countries, including the UK, wanted spending in support of military and security forces in fragile states to count towards their official development assistance (ODA) commitments, provided it still contributed to development.

The updated aid rules mean that some peace and security spending can now be counted as ODA, if it is directly linked to performing development services or providing humanitarian aid.

There have also been changes to widen the inclusion of private sector activities in ODA. The broader rules might increase the temptation for donors to subsidise large private companies with aid money, which is not necessarily the way to achieve the best results for development. Donors have also initiated a process to consider whether to expand options to include refugees costs in donor countries in the definition of ODA.

Supporters of the new definition argue that it is legitimate to include as ODA spending to support  military or security forces in fragile states or war zones, if it contributes to development goals.  However, the changes have been criticised by charities concerned that the poorest countries will receive less money as a result.

Ahead of the meeting, a coalition of European civil society organisations, including Bond, Oxfam, Save the Children and ONE, called on European leaders to ensure that aid remains focused on alleviating poverty and achieveing susatinable development. Over 100,000 people have signed the coalition's joint petition asking negotiators to "ensure that aid is focused on fighting extreme poverty, prioritising the countries and people that have the least."

Although the changes are mainly technical and the OECD's intention appears to be to ensure aid primarily focuses on the economic welfare of developing countries, Bond will be paying close attention to how the new rules are applied, to ensure the poorest people do not lose out.