How emerging donors are transforming the foreign aid industry

How emerging donors are transforming the foreign aid industry

New players in development assistance

Despite signs of slowing growth, the scope and scale of emerging donor activity has increased markedly over the past few years. According to a study conducted by global development platform Devex, emerging donors could contribute close to 20 percent of total foreign aid by 2020, up from an estimated 7-10 percent in 2012.

How emerging donors are transforming the foreign aid industry

The rising dragon

With a 2013 foreign aid budget of $7.1 billion (5.93 billion euros), China is not only by far the biggest emerging donor, it's also the sixth-largest in the world. Reaching 121 countries, Beijing’s program has a clear Africa focus and is a key element of its diplomatic and economic push into the continent. Almost half of China’s overall foreign aid goes towards infrastructure projects.

How emerging donors are transforming the foreign aid industry

Sustained aid growth?

The Devex report, which surveyed nearly 1,000 development executives, says emerging donors will continue to boost their foreign aid spending over the next decade. "We are taking efforts to increase steadily the size of our ODA [Official Development Assistance] for several years," the deputy government director for ODA South Korea said in the report.

How emerging donors are transforming the foreign aid industry

United Arab Emirates on the rise

In 2013, the United Arab Emirates (UAE) recorded the largest jump in its development assistance among all donor governments — a staggering 435 percent increase. The bulk of UAE's foreign aid goes to majority-Muslim countries, particularly in the Middle East and North Africa. The Gulf State is also a major donor to humanitarian crises as far as the Philippines and the Central African Republic.

How emerging donors are transforming the foreign aid industry

Donor profiles: Russia and Turkey

Russia's re-emerging foreign aid program focuses on health and education and is considered a by-product of its familiarity with the medical and school systems of its development partners in the former Soviet Union. However, Western sanctions over Ukraine begin to take their toll. In Turkey, things look brighter: Ankara's ODA rose more than threefold to $3.4 billion between 2010 and 2014 alone.

How emerging donors are transforming the foreign aid industry

Changing of the guards?

The Devex report looked at funding strategies and priorities of eight emerging donors: the BRICS economies (Brazil, Russia, India, China and South Africa) as well as South Korea, the United Arab Emirates and Turkey. At the 2017 BRICS meeting last month in China, the emerging donors urged "developed countries to honor their Official Development Assistance commitments in time and in full."

How emerging donors are transforming the foreign aid industry

Focus close to home

Even as they contend that their foreign aid programs have global ambitions, emerging donors generally direct the vast majority of their funding toward neighboring regions. India, UAE and South Africa have a particularly sharp focus on their home regions. China, Russia and South Korea are the exceptions to this trend.

How emerging donors are transforming the foreign aid industry

Peace building, democracy and governance

Albeit having considerably lower aid flows than its peers, South Africa has been aggressively positioning itself as an emerging donor over the past decade, directing nearly all its budget to the continent — 70 percent alone goes towards the Southern part of Africa. According to the Devex report, priorities are peace building, democracy and governance as well as humanitarian assistance.

Since the global financial crisis, developed countries have been tightening their foreign aid spending. But BRICS countries and other rising economies are expanding the funding pie, a new report has found.

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