Official Development Assistance

Official development assistance (ODA) is a term coined by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) to measure aid. The DAC first used the term in 1969. It is widely used as an indicator of international aid flow. It includes some loans.

Most ODA comes from the 28 members of the DAC, or about $135 billion in 2013. A further $15.9 billion came from the European Commission and non-DAC countries gave an additional $9.4 billion. Although development aid rose in 2013 to the highest level ever recorded, a trend of a falling share of aid going to the neediest sub-Saharan African countries continued.

The full definition of ODA is:

Flows of official financing administered with the promotion of the economic development and welfare of developing countries as the main objective, and which are concessional in character with a grant element of at least 25 percent (using a fixed 10 percent rate of discount). By convention, ODA flows comprise contributions of donor government agencies, at all levels, to developing countries (“bilateral ODA”) and to multilateral institutions. ODA receipts comprise disbursements by bilateral donors and multilateral institutions.

In other words, ODA needs to contain the three elements:
(a) undertaken by the official sector (official agencies, including state and local governments, or their executive agencies)[1]
(b) with promotion of economic development and welfare as the main objective; and
(c) at concessional financial terms (if a loan, having a grant element of at least 25 per cent).

This definition is used to exclude development aid from the two other categories of aid from DAC members:

Examples:
If a donor country accords a grant or a concessional loan to Afghanistan it is classified as ODA, because it is on the Part I list.
If a donor country accords a grant or a concessional loan to Bahrain it is classified as OA, because it is on the Part II list.
If a donor country gives military assistance to any other country or territory it is classified as OOF, because it is not aimed at development.

A recent OECD DAC Commique has seen the donor community update the definition of ODA to better reflect the Sustainable Development Goals.

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