The DAC says it’s ready to change – but can self-review really lead to reform? – Eurodad

The State of Official Development Assistance and its Impact on the Sustainable Development Goals

An Existential Crisis in Development Aid

Official Development Assistance (ODA) is facing a significant crisis, threatening the achievement of the Sustainable Development Goals (SDGs). This situation is driven by several factors:

• Budgetary reductions in donor countries.
• The increasing use of remaining aid budgets to serve donor-country interests.
• A crisis of legitimacy, where ODA is perceived as a tool for geopolitical influence rather than development.

These challenges directly undermine the global effort to finance the 2030 Agenda, particularly impacting progress on SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities).

Governance and Legitimacy Challenges of the Development Assistance Committee (DAC)

The Call for Inclusive Governance in Alignment with SDG 16

The OECD’s Development Assistance Committee (DAC), the body of donor countries that sets ODA rules, faces criticism for its lack of inclusivity. Civil society organisations (CSOs) have long highlighted that countries from the Global South have no formal say in its discussions. This governance structure conflicts with the principles of SDG 16 (Peace, Justice and Strong Institutions), which calls for effective, accountable, and inclusive institutions at all levels. In response, a global movement is advocating for aid governance to be moved to the United Nations, a universally representative forum.

The DAC Review Process and Civil Society Engagement

The DAC has initiated an internal review of its governance and working methods, with a stated goal of becoming more inclusive. For this process to be credible and align with the spirit of SDG 17 (Partnerships for the Goals), it is imperative that CSOs, particularly those from the Global South, are able to engage effectively and in a sustained manner.

ODA Accounting Practices and the Integrity of SDG 17

The Inflation of ODA Statistics

The credibility of ODA data, a key indicator for SDG Target 17.2, is compromised by accounting practices that inflate reported aid levels. Key issues include:

1. In-donor Costs: A significant portion of ODA is spent within donor countries, such as on hosting refugees.
2. Inconsistent Reporting: There are inconsistencies between countries in how these expenses are accounted for.

A 2025 Concord AidWatch report indicates that inflated ODA constituted 21% of the total reported in 2024. This misrepresents the actual resources flowing to developing countries for SDG implementation.

The Role of Private Sector Instruments

A recent change to ODA rules allows for the inclusion of private sector instruments, such as non-concessional loans, guarantees, and equity. These instruments are intended to mobilise private capital, but their developmental impact is often unclear or questionable, further obscuring the true value of financial flows dedicated to achieving the SDGs.

Deterioration in Aid Quality and Accountability

Erosion of Aid Effectiveness Principles

Twenty years after the Paris Declaration on Aid Effectiveness, the quality of aid is deteriorating, hindering progress across all SDGs. Donor countries are failing to adhere to key principles:

• Untied Aid: Aid continues to be tied to donors’ national and commercial interests.
• Use of Country Systems: There is a persistent failure to use recipient countries’ own institutions and systems, such as public financial management and procurement, in favour of parallel systems.

Lack of Accountability Mechanisms

The current framework lacks effective mechanisms to hold donor countries accountable for the quality and effectiveness of their aid. This disregard for internationally agreed standards weakens the global partnership for sustainable development as envisioned in SDG 17 and raises questions about the DAC’s ability to safeguard its own agreements.

Conclusion and Path Forward

Realigning ODA with Core SDG Principles

The ongoing DAC review process, prompted by civil society advocacy, presents an opportunity to address these systemic issues. Key milestones include a progress report in November, a conference in Paris in February 2026, and the UN Financing for Development Forum in April 2026. It is critical that this process realigns ODA with its intended purpose: the eradication of poverty and the reduction of inequalities, in line with SDG 1 and SDG 10. The current trajectory raises serious doubts about whether the OECD-DAC is fit for this purpose.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article primarily addresses issues related to three Sustainable Development Goals (SDGs):

• SDG 17: Partnerships for the Goals: This is the most central SDG in the article. The text revolves around the governance, effectiveness, and accountability of Official Development Assistance (ODA), which is a key component of the global partnership for development. It discusses the role of the OECD’s Development Assistance Committee (DAC), the call for a more inclusive governance structure under the UN, and the importance of multi-stakeholder dialogues involving civil society organizations (CSOs). The entire critique of the DAC as a “club of wealthy countries” and the campaign for “democratising the governance of aid” fall directly under this goal.
• SDG 1: No Poverty: The article explicitly states that the intended purpose of ODA is “poverty eradication.” The discussion about aid cuts, inflated aid statistics, and the deteriorating quality of aid directly impacts the resources available to developing countries to implement poverty reduction programs. The final sentence reinforces this by stating, “the needs of the world’s poorest countries must be the central consideration.”
• SDG 10: Reduced Inequalities: Alongside poverty eradication, the article mentions that ODA should be used for “fighting inequalities.” The critique that rich countries use aid to “serve their own interests” and the lack of say for countries from the “Global South” in aid governance are issues of global inequality. The call for aid to be aligned with “local and national needs” is a call to address inequalities in power and resource allocation.

2. What specific targets under those SDGs can be identified based on the article’s content?

Several specific targets can be identified based on the article’s discussion:

• Target 17.2: “Developed countries to implement fully their official development assistance commitments…” The article directly addresses this target by discussing “shocking aid cuts” and the OECD’s prediction of a “drop in net ODA of up to 17 per cent for 2025.” The entire debate around how ODA is counted and the problem of “inflated ODA” relates to the transparency and fulfillment of these commitments.
• Target 17.15: “Respect each country’s policy space and leadership to establish and implement policies for poverty eradication and sustainable development.” The article highlights a failure to meet this target by noting that rich countries “continue to largely not use country systems.” The criticism of the DAC as a paternalistic institution where “countries from the Global South have no say” also points to a lack of respect for national leadership and ownership.
• Target 17.16: “Enhance the Global Partnership for Sustainable Development, complemented by multi-stakeholder partnerships…” The article’s focus on the DAC’s governance review, the dialogue with civil society, and the call to move aid governance to the “UN – a space where everyone has a seat at the table” are all directly related to reforming and enhancing the global partnership to make it more inclusive and effective.
• Target 1.a: “Ensure significant mobilization of resources from a variety of sources, including through enhanced development cooperation, to provide adequate and predictable means for developing countries… to implement programmes and policies to end poverty…” The article’s concern over “shocking aid cuts that have had seismic effects on the aid landscape” speaks to the lack of predictable means for development cooperation, which is essential for achieving this target.
• Target 10.b: “Encourage official development assistance and financial flows… to States where the need is greatest…” The article’s concluding statement that “the needs of the world’s poorest countries must be the central consideration” directly aligns with the principle of this target, which is to direct financial flows to where they are most needed to reduce inequality.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, the article mentions and implies several indicators:

• Indicator 17.2.1: Net official development assistance… as a proportion of the… donors’ gross national income (GNI). The article is replete with references to this indicator. It discusses the “drop in net ODA,” how “inflated ODA accounted for 21 per cent of the ODA reported,” and the overall statistics on aid commitments monitored by the DAC. The entire discussion is about the quantity and integrity of the financial flows measured by this indicator.
• Indicator 17.15.1: Extent of use of country-owned results frameworks and planning tools by providers of development cooperation. This is directly referenced when the article states that a key principle of aid effectiveness is “Using a country’s own institutions and systems, like public financial management, procurement, and accounting systems,” and criticizes rich countries because they “continue to largely not use country systems.” This is a direct measure of the behavior this indicator tracks.
• Implied Indicator: Donor (budgetary) effort. The article explicitly states, “ODA needs to measure ‘donor (budgetary) effort’.” This suggests a call for a new or refined metric to measure the real cost and commitment of donor countries, distinct from the current ODA figures which are seen as inflated by including costs like “hosting refugees” and non-concessional “private sector instruments.”

4. Table of SDGs, Targets, and Indicators

Source: eurodad.org