Sections:
Statistics on International Development 2006
Section 1
Understanding Aid Statistics
Introductory notes for users
1. This is the 41st edition of Statistics on International Development (SID), formerly known as British Aid Statistics, which is produced annually. It reports on the deployment of official UK financial resources to support international development, and shows how this funding is broken down by destination country or organisation, type of assistance and purpose.
2. As well as showing total development assistance from all official UK sources, SID reports in detail on the Department for International Development’s (DFID) aid programme – through which most UK funding for international development is channelled. It is important to understand the distinction between different UK and DFID figures and in this report, readers can see from the table titles whether figures are for the UK as a whole, or for DFID only. The section ‘What counts as aid?’ later in this chapter describes the various components of UK aid in detail and is followed by an explanation of when the use of different figures might be most appropriate.
3. The UK is a member of the Organisation for Economic Co-operation and Development’s (OECD) Development Assistance Committee (DAC) which is a forum for consultation among 22 donor countries and the European Commission. The DAC sets the definitions and classifications for reporting on aid financing internationally and produces a statistical report on international aid flows annually1 . As a DAC member, the UK is committed to transparent reporting of development assistance in a way that permits international comparisons. Thus while DFID (like other UK Government Departments) has moved to resource accounting, SID continues to be produced on a cash basis in line with international reporting practices. This, and the fact that SID excludes some DFID voted funds2 that are not counted as aid, includes some attributed funds from outside DFID’s vote and reports some debt relief on a ‘benefit to country’ basis3 , means that total figures in SID differ from those published in DFID’s departmental report. These differences are explained in the following section ‘What counts as aid?’
4. The data in SID can be reconciled to DFID’s formal resource accounts for 2005/06 as shown in the glossary item on ‘resource accounting’. This glossary entry also explains why the year 2001/02, when DFID changed to resource accounting, was a unique year, as is footnoted for many tables.
5. This edition incorporates new figures, mainly covering the 2005/06 financial year and 2005 calendar year. Tables showing data reported internationally to the OECD-DAC are prepared on a calendar year basis while most other statistics are presented on a UK financial year (April-March) basis.
What counts as aid?
6. Aid is a broad term and SID reports a number of different aggregations of development assistance, key ones being the
- DFID programme of aid;
- Gross Public Expenditure on development (GPEX) and
- Net UK official development assistance (ODA).
The components of each of these are described below.
7. The major part of the UK aid effort is money channelled through the DFID programme. This includes bilateral and multilateral aid4 from DFID funds voted by parliament including activities funded from the Africa Conflict Pool and Global Conflict Pool5 . Beyond DFID voted funds, the DFID programme also includes an attribution of EC budgetary spending (the UK’s contribution to the EC is paid directly by the Treasury and then attributed to different departments with DFID receiving the attribution of the development budget)6 . It should be noted that DFID debt relief reported within the DFID programme represents the annual benefit to recipient countries of debt relief that has been agreed. This is explained in ‘Classifications of DFID Bilateral Aid Types’ at the end of this section.
8. Gross Public Expenditure on Development (GPEX) shows development aid flows from all official UK sources. This includes the entire DFID programme, aid flows from other central government departments, investments and debt reorganisation from the UK government body that invests in the private sector in developing economies (CDC Group PLC or CDC) and debt reorganisation from the Export Credit and Guarantee department (ECGD). See the glossary at Annex 2 for more on CDC and ECGD.
9. The DFID programme and GPEX figures both report gross flows from the UK and are reported according to UK financial years. The other important aid classification reported is net ODA (also referred to as UK ODA) which is compiled according to an internationally agreed definition set by the DAC (see the glossary at Annex 2) and is thus comparable with figures for other donors. This is produced on a calendar year basis. As well as ODA, the DAC also requires international reporting of ‘Other Official Flows’ or OOF. These are official flows to developing countries and can either be non-concessional (according to DAC guidelines) or for non-developmental purposes or both. Prior to 2005, Official Aid (OA) was also reported. This was aid which met the same criteria as ODA but was administered to countries that were on Part II of the DAC list. The DAC renewed international definitions in 2005 and now has only one list which contains only those countries eligible for ODA and so reporting of OA ceased from 2005 (see glossary for definitions).
10. UK ODA is largely equivalent to GPEX in terms of definition, although there are five key differences (shown below), that do result in notably different figures:
- ODA is reported on a calendar year basis, while GPEX is reported on a financial year basis.
- ODA includes only aid to countries on the DAC list of ODA Recipients while GPEX includes aid to ODA eligible countries plus a small number of other countries for development purposes.
- While GPEX shows gross flows, ODA is reported as a net figure, taking account of any loans repaid or grants recovered.
- Promissory notes for the World Bank and Regional Development Banks are counted as ODA at the time they are deposited but reported against GPEX at the time they are drawn down (encashed).
- Lump sums of debt relief are reported as ODA, but in GPEX some ‘DFID debt relief’ is reported as the benefit to the country7 (most debt relief is treated in the same way in both GPEX and ODA).
When to use DFID figures, GPEX and UK ODA figures
11. If readers are interested in making international comparisons, UK ODA figures which follow international reporting practices should be used. Although UK figures for 2005 have just been finalised, for some analyses including data for other donors, 2004 figures are the latest available.
12. An important United Nations target to which all donors signed up in 1970,
states that each donor should spend 0.7percent of its gross national income as ODA.
Progress against this target for the UK and other donors is reported in SID
in Table 6
(22 kb).
13. Readers interested in wider aid spend (not just ODA) have the choice of looking at the DFID programme or GPEX figures (or at figures reported to the DAC on ODA, OOF and private flows8).
14. Those interested in DFID in particular, will want to focus on DFID programme figures. For some analyses figures are only available for the DFID programme and so these must be used – for example the breakdown of spend by MDGs shown in Section 4. To be able to fully understand DFID programme figures, readers may wish to consult the Aid Types table at the end of this section which summarises what counts as different types of aid. Definitions of all the classifications used in tables appear in the glossary at annex 2.
15. Section 5 explains debt relief in detail and where different figures on debt relief are located in SID.
16. Indicators of development progress in developing countries using ‘Millennium Development Goal’ (MDG) statistics is not provided in SID as readers can access up to date information which is widely accessible elsewhere. Readers can refer to a summary on sources of MDG information at Annex 3.
Revisions
17. This edition of SID also includes updates to a number of tables to incorporate the reporting of the statistical information specified in the recently passed legislation, the International Development (Reporting and Transparency) Act 2006. The purpose of the Act is to increase transparency in the way that aid is provided, reported on and in the way it is used. A schedule is included in Annex 4 which sets out where information specified in the Act can be found within SID. Further reporting requirements of the Act will be met in the DFID Departmental Report for 2007.
18. In response to consultation and additional requirements, some tables have been extended and others are new. If readers find SID is not reporting information they require, they should contact DFID’s Statistical Reporting and Support Group (SRSG) to discuss their requirements. Most of the tables cover a 3-5 year period, however longer series are available for many tables on request.
19. In this year’s SID the headings under which the bilateral programme is reported have been revised to reflect the evolving nature of the aid programme. Key changes include a split of Poverty Reduction Budget Support (PRBS) into General Budget Support (GBS) and Sector Budget Support (SBS) within DFID bilateral expenditure.
20. A separate table showing the breakdown of key elements of expenditure on
technical cooperation has been reinstated in this version of SID and is shown in
Table 3.2.
(18 kb)
21. Official Aid has only been reported on in previous years. This refers to aid to countries on the DAC Part II list of countries which ceased to exist from 2005. While Official Aid is now no longer reported, the UK also provide aid to countries that do not qualify as either ODA or OOF and this is still reported in GPEX.
22. Multilateral Debt Relief Initiative (MDRI) is a new form of debt relief included within this edition. The proposal was agreed by the G8 in 2005 to cancel 100% of the remaining debts of HIPCs to the concessional lending arms of the World Bank (IDA), IMF and African Development Bank (AfDB), see section 5.
23. The statistics given here for 2004/5 and earlier years may differ slightly from the previously published figures due to revisions to coding of projects which have been applied retrospectively. These changes are not regarded as "corrections" to "errors" in the previous edition but as revisions. The tables and charts in the previous edition had been prepared correctly from the underlying data as they stood at that time.
Classification of Bilateral and Multilateral Aid
Bilateral assistance is provided directly to partner countries while multilateral assistance is provided through international organisations. While much DFID expenditure is clearly identifiable as bilateral or multilateral in nature, there are some anomalies. Funds can only be classified as multilateral if they are channelled through an organisation on a list in the DAC Statistical Reporting Directives which identifies all multilateral organisations. This list also indicates some bodies that might appear to be multilateral but are actually bilateral (in particular this latter category includes some international non-governmental organisations such as the International Committee of the Red Cross and some Public-Private Partnerships such as the Global Alliance for Vaccines and Immunisation and the Global Fund to Fight Aids, Tuberculosis and Malaria). The DAC list of multilaterals is updated annually based on members nominations; organisations must be engaged in development work to be classified as multilateral aid channels.9 While core funding to multilateral organisations is always classified as multilateral expenditure, additional funding channelled through multilaterals is often classified as bilateral expenditure. This would be the case in circumstances where a DFID country office transfers some money to a multilateral organisation (eg. A UN agency) for a particular piece of work in that country (or region). That is where DFID has control over what the money is being spent on and/or where it is being spent. Likewise, if DFID responds to an emergency appeal from an agency for a particular country or area, the funds will be allocated as bilateral spend to that country or region. As a result, some organisations, such as UN agencies have some of their DFID funding classified as bilateral and some as multilateral. |
Classification of DFID Bilateral Aid Types10
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Financial Aid – Poverty Reduction Budget Support (PRBS) – Funds provided to developing countries for them to spend in support of a government policy and their expenditure programmes whose long-term objective is to reduce poverty; funds are spent using the overseas governments’ own financial management, procurement and accountability systems to increase ownership and long term sustainability. PRBS can take the form of a general contribution to the overall budget - general budget support - or support with a more restricted focus which is earmarked for a specific sector - sector budget support. Other Financial Aid – Funding of projects and programmes such as Sector Wide Programmes not classified as PRBS. Financial aid in its broader sense covers all bilateral aid other than technical cooperation and administrative costs but in SID we separately categorise ‘Grants and Other Aid in Kind’, Humanitarian Assistance and DFID Debt Relief. Aid and Trade Provision which was previously identified in SID has now been merged into ‘other financial aid’ as it is a rapidly declining flow. |
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Technical Cooperation - Activities designed to enhance the knowledge, intellectual skills, technical expertise or the productive capability of people in recipient countries. It also covers funding of services which contribute to the design or implementation of development projects and programmes. This assistance is mainly delivered through research and development, the use of consultants, training (generally overseas partners visiting the UK or elsewhere for a training programme) and employment of ‘other Personnel’ (non-DFID experts on fixed term contracts). This latter category is becoming less significant over time as existing contracted staff reach the end of their assignments. |
Grants and Other Aid in Kind - This category comprises support to the development work of UK and international Civil Society Organisations, (increasingly through partnership agreements with Civil Society Organisations) and grants to the British Council. It also covers equipment and supplies that the UK might provide (e.g. medical supplies) and funding under a Small Grant Scheme intended to allow Heads of Mission in a number of partner countries to fund eligible small projects of developmental value. |
Humanitarian Assistance - Provides food aid and other humanitarian assistance including shelter, medical care and advice in emergency situations and their aftermath. Work of the conflict pools is also included. |
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DFID Debt Relief - This includes sums for debt relief on old DFID aid loans and cancellation of debt under the Commonwealth Debt Initiative (CDI). The non-CDI DFID debt relief is reported on the basis of the ‘benefit to the recipient country’. This means that figures shown represent the money available to the country in the year in question that would otherwise have been spent on debt servicing. The CDI debt cancellation is reported on a ‘lump sum’ basis where all outstanding amounts on a loan are shown at the time the agreement to cancel is made. See Section 5 for more details on debt relief. |