OECD DAC proposals to dramatically change ODA ('aid') rules to allow greater use of private sector instruments: Eurodad reaction

Added 07 Oct 2016

On Monday 10 October, arguably the biggest change to Overseas Development Assistance (ODA or 'aid') for over 40 years will be agreed at a meeting of donors in Paris. The OECD’s Development Assistance Committee (DAC) will be asked to approve reforms that will allow a wide variety of 'private sector instruments' to be used as vehicles for aid. This means an increase in the possible use of aid to invest in or give loans to private companies, or to underwrite their activities, through guarantees. 

This reform has been designed behind closed doors in just 7 months, and papers detailing it will only be made public on the day of the meeting. CSOs and representatives of the developing countries have effectively been excluded from the discussions. It is obviously worrying that such complex rules will be agreed without public scrutiny - the potential for mistakes and unintended consequences is significant.

Eurodad has obtained a copy of the proposed reforms (sent to us by several sources) – we will post a link as soon as the OECD publishes them. Each item is highly complex, but the rules will allow donors to significantly increase the aid they give to subsidise or support private finance. Critically, the rules will be implemented without the necessary safeguards being in place to stop the diversion of aid budgets - intended for the poorest - towards subsidising multinational corporations from donor companies.

Eurodad is calling on donors to spend more time examining proposals, accepting input from stakeholders, and not to agree any changes without also establishing a process to end tied aid (where aid is used to subsidise donor country companies) - both in policy, and in practice.

Read our full reaction to the proposals.