The OECD Development Assistance Committee (DAC) is committed to supporting countries in need, particularly towards their achievement of sustainable development practices. Certain countries are considered more vulnerable based on their economic, geographic, political, and societal hurdles. The DAC has categorised countries by the following: Least Developed Countries (LDCs), Landlocked Developing Countries (LLDCs), Small Island Developing States (SIDS), and Fragile contexts (FCs).
Countries and territories most in need: Fragile contexts, LDCs, LLDCs and SIDS
The DAC List of ODA Recipients shows all countries and territories eligible to receive official development assistance (ODA). The list also includes all of the Least Developed Countries (LDCs) as defined by the United Nations (UN).
ODF to Fragile contexts (FCs) has shown impressive growth: +5% on average per year over the period 2014-21. However, almost one-third is concentrated in only five countries (out of 60) – that is, Bangladesh, Egypt, Pakistan, Nigeria and Ethiopia.
Health assistance leads ODF spending in Fragile contexts (18% in 2014-21), mainly because of the significant increase of ODA focusing this sector during the COVID-19 crisis (2020-21). Humanitarian assistance (emergency/reconstruction/disaster prevention) and energy followed, representing 14% and 8.3% of total ODF to FCs over the period, respectively.
Remittances represented almost half of the total external financing mix reaching FCs in 2020 (USD 115 billion or 46% of the total).
Guarantees and direct investment where the leveraging mechanisms privileged to mobilise private flows to fragile contexts in 2014-21 (USD 64.5 billion or 72% of the total).
This category contains 46 developing countries, representing 13% of the world’s population and 38% of the world’s extreme poor.
In 1978, DAC members agreed that the average grant element in official development assistance (ODA) to Least Developed Countries should be either 90% of a given donor’s annual commitment, or at least 86% of the donors’ commitments to each individual country.
In 1981, DAC donors committed to providing between 0.15% and 0.20% of donor gross national income (GNI) in the form of official development assistance to Least Developed Countries.
In 2014, DAC members reached a new agreement to modernise reporting practices regarding ODA loans, thus creating incentives for providing highly subsidised loans to Least Developed Countries.
ODF commitments to LDCs totaled USD 82.9 billion in 2021, showing a rate of growth of +5.8% on average per year over the period 2014-21.
Over 2014-21, ODF commitments to LDCs has mainly targeted health spending.
The external financing mix in LDCs has historically been dominated by ODF flows (mainly concessional), and its share is gaining even more prominence in recent years (reaching 50% of the total external mix in 2020 vis à vis 46% in 2013).
LDCs face significant challenges in attracting external private financing, which has decreased, both in absolute and relative terms: FDIs represented 22% of total foreign inflows in 2013 and 15% in 2020.
Direct investment was the leveraging mechanism privileged to mobilise private flows to LDCs in 2014-21 (USD 15 billion or 46% of the total). It was followed by guarantees (USD 11.8 billion or 36% of the total).
This category is a grouping of 32 developing countries facing particular challenges related to their lack of direct access to the sea, which leads to geographical isolation from international markets.
Import and export of goods and services need to transit through other countries, generating high trade costs and major logistical and infrastructure challenges. Currently, high transport costs erode the competitiveness of Landlocked Developing Countries. They spend almost twice as much of their export earnings on transport and insurance services than the average for developing countries.
In 2003, a programme of action was adopted by the United Nations General Assembly at the United Nations Global Conference in Kazakhstan, focusing on transport infrastructure and maintenance, transit policies and trade facilitation measures.
Over the period 2014-21, ODF commitments to LLDCs have shown a rate of growth of +3.4% on average per year.
The largest providers of ODF commitments to LLDCs are, in decreasing order, the International Development Association (IDA), the United States and the Asian Development Bank (representing respectively 17%, 16% and 8% of total ODF to LLDCs in 2014-21).
Total external flows to LLDCs show a slight increasing trend over the period 2013-20; also, its composition has been changing as follows: remittances held a prominent role in 2013 (representing 38% of the total external mix, followed by ODF with 34% and FDIs with 28%). In 2020 it was ODF who led LLDCs’ external mix with 45%, followed by remittances with 35% and finally FDIs with 20%.
Guarantees, direct investments and syndicated loans where the leveraging mechanisms privileged to mobilise private flows to LLDCs in 2014-21 (representing 35%, 29% and 17% respectively, over the total amount mobilised in the period, that is USD 24.8 billion).