Foreign aid reached an all-time high during the crisis, but donors are still not living up to their commitments

Net ODA flows by member countries of the Development Assistance Committee of the Organization for Economic Cooperation and Development reached $161 billion in 2020, an increase of 7 per cent in real terms from 2019, driven by members’ support of an inclusive global recovery in light of the pandemic and an increase in bilateral sovereign lending by some loan-giving members. Net ODA flows represented 0.32 per cent of donors’ combined gross national income (GNI) in 2020, falling short of the 0.7 per cent target. Most members were able to maintain their planned ODA commitments, and some were able to rapidly mobilize additional funding. But more is needed to respond to the COVID-19 crisis.

Net bilateral flows to low-income countries were $25 billion, a decrease of 3.5 per cent in real terms compared with 2019. Net bilateral ODA increased by 6.9 per cent to lower-middle-income countries, and by 36.1 per cent to upper-middle-income countries, reaching $33 billion and $18 billion, respectively.

Foreign direct investment flows fell sharply in 2020, especially to poorer regions

In 2020, FDI fell by up to 40 per cent, dropping below $1 trillion (from $1.5 trillion in 2019) for the first time since 2005. Lockdown measures slowed existing investment projects, and the prospect of a deep recession led multinational enterprises to reassess new projects. Policy measures taken by Governments included new investment restrictions.

International private sector investment flows to developing and transition economies in sectors relevant to the SDGs fell by about one third in 2020. Except for renewable energy (where growth in new projects continued but was cut to one third of the pre-COVID level), investment activity fell sharply across all SDG sectors, with the fall more pronounced in poorer regions. Looking ahead, the projection for FDI is gloomy in 2021. Related risks include the latest wave of the pandemic, the slow pace of the vaccination roll-out and uncertainty about the global investment policy environment.

Remittance flows remained strong in 2020, despite the pandemic

Defying predictions, officially recorded remittance flows to low- and middle-income countries reached $540 billion in 2020, only 1.6 per cent below the 2019 level. Drivers included fiscal stimulus that resulted in better-than-expected economic conditions in host countries, a shift in flows from cash to digital and from informal to formal channels, and cyclical movements in oil prices and currency exchange rates. Remittance flows to low- and middle-income countries surpassed FDI for a second year. Remittances have become an important consumption-smoothing mechanism for recipient households. As such, they form an increasingly important (private) element of global social protection systems. Remittance flows rose by 6.5 per cent to Latin America and the Caribbean, by 5.2 per cent to Southern Asia, and by 2.3 per cent to the Middle East and Northern Africa. Flows to sub-Saharan Africa fell by 12.5 per cent, by 9.7 per cent to Europe and Central Asia, and by 7.9 per cent to Eastern Asia and the Pacific.

Between 2017 and 2019, the worldwide weighted tariff average remained stable at around 2 per cent. Moreover, exports of developing countries and LDCs have been given preferential treatment by developed countries. After reaching the lowest level ever of about 1.1 per cent in 2011, the average tariff applied by developed countries to imports from developing countries and LDCs has remained flat due to a lack of new commitments. Agriculture, a particular concern for developing countries, accounted for the highest tariff imposed by developed countries in 2019 (7.9 per cent).

The share of LDC exports in global merchandise trade remained constant in 2019 at 1 per cent. Over the last decade that share has stagnated, after significant improvements from 2000 to 2010, largely due to a commodities boom. The target of doubling the global share of LDC exports by 2020 from the 2011 level (increasing it to 2 per cent) is unlikely to have been achieved.

In 2019, 86 per cent of the population in Europe and Northern America were using the Internet, and most people in that region were able to work, shop and learn remotely during COVID-19 lockdowns. In Central and Southern Asia and sub-Saharan Africa, just over a quarter of the population were connected. The cost of Internet access and Internet-connected devices, and the lack of related skills, are the highest barriers to access for large parts of the world.

To ensure no one is left behind, continued collective efforts are needed to connect the remaining 49 per cent of the world’s population. A close collaboration among governments, policymakers and network operators is required to bring them fully online. Fixed broadband has a significant impact on the world economy. In LDCs, fixed networks are almost completely absent, with only 1.3 subscriptions per 100 inhabitants.

Since the adoption of the SDGs, funding for data and statistics has increased four years in a row. It grew from $591 million in 2015 to $693 million in 2018, with significant increases for SIDS, landlocked developing countries and LDCs. However, support was levelling off in 2019. Despite a surge in data demand to inform pandemic-related policymaking, development support to data and statistics has not risen commensurately. A recent survey found that 63 per cent of low-income and lower-middle-income countries are in need of additional financing for data and statistics to face the challenges posed by COVID-19.

In 2020, 132 countries and territories reported that they were implementing a national statistical plan, with 84 having plans that were fully funded. Only 4 out of the 46 LDCs reported having fully funded national statistical plans that year. Countries could face more difficulties in implementing and funding such plans due to costly and labour-intensive activities (such as censuses and household surveys) that were moved to 2021 due to the pandemic.