Official Development Assistance (ODA) for Health and Total Contributions -
Exploring the Results of a Detailed and Comprehensive Analysis

Glossary


Our: This research is based on a specific methodology that aims to produce a precise assessment of ODA contributions for human development and health promotion. It was originally developed by the Medical Mission Institute Wuerzburg (MI) for the alternative reports of Action against AIDS Germany in order to evaluate the dimensions and tendencies of the German HIV-relevant development assistance. Since 2010 Action for Global Health and MI worked in close partnership in order to use this methodological approach for the comprehensive analysis of the donor performance of the 17 European members to the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD). Our present research takes advantage of enhanced information sources and refined methodological procedures. For the most recent research MI worked in collaboration with Action for Global Health, Action against AIDS Germany and aidsfocus.ch


ODA: Official Development Assistance (ODA) is defined as those flows from governmental sources, including state and local governments, or their executive agencies, which are destined to developing countries or multilateral institutions and which meet the following criteria:

Gross ODA is the total outflow of ODA grants and loans. Net ODA is gross ODA minus loan repayments (not counting interest). Source: DAC/OECD


Disbursements: The release of funds to or the purchase of goods or services for a recipient; by extension, the amount thus spent. Disbursements record the actual international transfer of financial resources, or of goods or services valued at the cost to the donor. In the case of activities carried out in donor countries, such as training, administration or public awareness programmes, disbursement is taken to have occurred when the funds have been transferred to the service provider or the recipient. Source: DAC Except for activities carried out within the respective donor country, disbursements represent the amount of resources that are really transferred to the respective recipients, be these developing countries or multilateral agencies active in development assistance. These flows depict the real financial effort in making funding for development available and, thus, shall be used when measuring the performance of the governments of economically privileged countries against targets, obligations or promises. This applies also for the analysis of existing financing gaps.


Health ODA: Health funding needs include:

Source: UN Millennium Project


Projects or aid activities: Projects or aid activities include the following types of transactions:

Debt relief operations and administrative costs neither represent real transfers of financial or technical resources to developing countries nor are they allocated to specific sectors or purposes and, therefore, are not taken into account in the calculation of ODA contributions for health. Costs related to students from developing countries, who are studying in donor countries, are reported by some DAC countries as ODA contributions for the education sector, but do not constitute contributions to improve the education system in the supposed recipient countries.


Procedure: Due to differing sector definitions and reporting inaccuracies a number of aid activities classified as health projects or activities geared towards subsectors such as HIV control in the project-level information system are not congruent with the services and interventions described in the relevant estimates of financing needs for this essential areas of human development. On the other hand, we found that several projects, which were recorded in other sectors, in fact contribute to cover the health-specific resource requirements. Therefore our analysis starts with a systematic, project-by-project review of all aid activities financed by the before-mentioned donor countries or the relevant multilateral organizations that are categorized under the Health and Population Policies/Programmes and Reproductive Health sectors. In addition, we scrutinized all health-relevant projects identified through key word search in other sectors. This leads to the compilation of a complete and consolidated database of all programmes, projects and specific components thereof, which are designed to promote health as their main objective. For a correct classification we use not only the descriptions provided in the DAC system, but also information made available by donors and their implementing agencies through web-based sources or direct communication. Unfortunately, many donors present only fragmentary data to the public hampering the exact classification of aid flows. Thus, we are confident that our analysis produces a consistent approximation to the reality of aid, but it would still benefit from a higher degree of transparency.

In addition to project-type aid and other sector-specific assistance we also take into account health financing through general budget support. These contributions are calculated individually for each recipient country on the basis of the annual disbursements for budget support going to this country and the percentage share of health expenditure in relation to total government spending in the respective year.


European DAC countries: The OECD Development Assistance Committee (DAC) incorporates the world's main donors. At present, the following European countries are members of the DAC:

In addition the following Non-European countries belong to DAC:


International organizations: The following health-relevant multilateral organizations are reporting to CRS (for at least one year of the period under review 2007-2010):

In the case of WHO and WFP, which started reporting to CRS in the course of the investigation period, the shares of financing for the Response to HIV were calculated using budget information and data on beneficiaries respectively in order to assure comparability over the years.


CRS: The creditor reporting system (CRS) provides quantitative and descriptive information on (sub-)sectors, recipients, policy issues and financial volumes on a disaggregated level, i.e. for individual activities. The respective data come from donors, including the 23 member countries of the OECD's Development Assistance Committee, EU Institutions and other international organisations. The OECD estimates that its information system captures 95% of global ODA spending. However, it is important to note that the annual coverage of reported ODA disbursements in the CRS was below 60% before the year 2002, while it improved to around and over 90% in the following years and reached nearly 100% since 2007 flows. This means that the available data permit to analyze time series of ODA contributions over the investigation period of this research.


Components: In the case of programmes found to support several sectors, including health promotion, or concurrently tackling different health problems, the relevant parts of the total budget or components were classified separately.


Resource needs estimates: The main source of reference for identifying the aid activities that support health promotion as a whole is the Millennium Project, which clearly defines the range of interventions required for achieving the MDGs differentiated by sector. In order to single out aid activities that contribute to achieve the goal of universal access to HIV services, the research made use of the most detailed and complete inventory of recommended interventions published by UNAIDS.


Purpose: The analysis conducted up to now attempted to produce a comprehensive calculation of ODA flows in support of achieving universal access to HIV prevention, treatment, care and support. This needs to take into account the respective proportions of financing for the HIV response as part of sector programmes and reproductive health projects. Therefore, the aid activities that in fact contribute to health promotion were classified to one of the following purposes or analytical categories:

  1. Specific HIV interventions
  2. Projects of reproductive health
  3. General (sector-wide) health programmes
  4. Child health
  5. Immunisation
  6. Other health problems or subsectors (including TB and malaria)

Other international agencies: These health-relevant multilateral organizations include the following:

In these cases the funding for health and HIV services in relation to total disbursements was determined on the basis of specifications published in annual reports or institutional budgets. In order to quantify aid flows via multilateral organizations the sum of all activities found to support the health-specific interventions serves as numerator for calculating the share of financing for health in relation to the total disbursements. This proportion is multiplied with the annual core contribution to the respective multilateral organization in order to determine the ODA disbursements for health or a subsector thereof provided by an individual donor through this particular financing mechanism.


Items: Expenditure items and accounting entries such as debt relief, imputed costs for students from developing countries, costs for refugees in donor countries and administrative costs do not contribute to cover the need for external financial assistance to overcome poverty and improve health conditions in developing countries. Especially, the inclusion of debt relief in official ODA has the paradoxical effect to favour principally the donor appearance of those countries, which in the past were at the forefront in promoting export credits and development loans (instead of grants), which in many cases led to unsustainable debt levels that need to be reduced through cancellation. Furthermore, the current practice of counting the so-called net present value of debt service reduction in the year of reorganisation creates artificial "bubbles" in official ODA statistics with a highly volatile character. Imputed student costs are only reported as ODA by a minority of the DAC countries, which affects the comparability of ODA contributions among donor countries.


Lending: Some donors provide a considerable part of their ODA contributions in the forms of loans and equity investments, a practice that disregards fundamental principles of distributive justice and orientation towards needs. The countries most affected by poverty and ill health are not in a position to repay loans. When poor countries accept the so-called development loans, they will be confronted with an incalculable risk of indebtedness and resulting resource constraints, which hamper future development perspectives. Furthermore, a high proportion of these repayable funds is raised on the capital market and then mixed with budget resources in order to lower the interest rate to a level of concessionality that is required by OECD to qualify as ODA (grant element of at least 25 %). In conclusion, this modality of cooperation does not contribute to meet the basic needs, nor does it constitute a genuine financial effort.

Considering the fact that a number of donors also provide part of their bilateral health assistance in the form of loans or equity investments we attempt to calculate the imputable repayments resulting from lending in this area. In the absence of sector-specific data we use the health share of all ODA commitments made on a repayable basis during the previous years for which this information is available (from 1995 onward). Multiplying this percentage with the total amounts received by the donor country from ODA recipients in the respective year we obtain the approximate volume of repayments accruing from lending for health investments. By deducting this figure from gross disbursements we can determine the net ODA contribution for health and the ratio in relation to GNI, which represents the main indicator for evaluating the financial effort in support of health promotion.


ODA flows: In order to facilitate a more differentiated understanding our research computes the ODA disbursements on the following levels: official OECD figures; real resource transfers (after deducting debt relief, imputed costs for students from developing countries, costs for refugees in donor countries and administrative costs) and real grant transfers (after deducting loans). The computation of the latter flows accounts for eventual recoveries of grants as well as the balance of lending. Therefore, real ODA grants are calculated from the gross volumes of grants, less recoveries and subtracting the balance of loans if it is negative, i.e. repayments of loans exceeded the amount of gross lending in the respective year. The main reason for the procedure applied to define the amounts of grants is that DAC member countries predominantly extend loans to middle income countries and, as a consequence of past patterns of lending, they receive repayments mainly from this group of economically somewhat better-off countries. Low income countries, generally, are not in a position to repay loans and depend strongly on grants to foster human development. In 2011 this income group (least developed countries and other low income countries) accounted for less than 5% of all allocable repayments received by the DAC members taken together. Roughly 8% of gross ODA loans that were provided bilaterally by DAC members and were allocated by income went to low income countries in that same year. However, some DAC members make a more extensive use of loans in their bilateral cooperation. (click here to see a presentation with a more differentiated picture of ODA flows in the form of grants and loans by income group) But for the majority of donor countries the ODA flows related to lending tend to concentrate in the cooperation with middle income countries. Considering this tendency we assume that amounts repaid are mainly used to finance ODA loan disbursements to the category of recipients, which made the repayments. In the case of a negative balance of lending, however, the remaining part of the amounts received obviously is available to refinance ODA grants and this part does not represent an own financial effort. The volume of grants calculated this way approximately represents the amount of financial resources that in principle are available for covering the most urgent needs and which are actually financed from the donor’s government revenue.


Net transfers: the real financial efforts are to be measured as net transfers of development assistance from an economically privileged country to a disadvantaged country accounting for any transfers in the opposite direction. In view of the lack of data on repayments within specific sectors the analysis includes an estimate of the amounts received due to repayments of ODA loans or sales of equity investments in the area of health promotion. Recently, the study attempts to calculate the repayments of interest on loans, whereas ODA flows reported by DAC/OECD only take into account the amortization of principal of loans. Any interest repayments reported for actions related to debt are excluded here, as the analysis does not count debt relief operations as real transfers of resources.


Investigation period: At present our research on total ODA comprises the period 2005-2012, taking into account preliminary figures for the last year, while using final data for all previous years. It is of note that OECD figures for 2011 ODA disbursements changed considerably when comparing final data with preliminary numbers. (click here to see a systematic comparison of preliminary and final data for important ODA components) The analysis of health ODA was completed for the period 2007 to 2010 and research on development assistance for health promotion provided in 2011 has started as data became available.


Preliminary data: The preliminary data published by DAC/OECD for 2012 do not provide figures for imputed student costs and costs for refugees, thus these indicators were calculated for all DAC members using data of previous years in the respective national currencies and applying the exchange rates corresponding to 2012. When data were lacking for other indicators in the case of single donor countries a similar procedure was applied. This refers to transfers in the form of loans for France and administrative costs for Switzerland. It is important to note that reported figures may change considerably when final data become available, as the experience for the year 2011 demonstrated.