Importance of ODA among the different sources of financing to reach the MDGs
Increasing investments in the water sector is a prerequisite for achieving the Millennium Development Goals (MDGs).
Among the various sources of available funding, official development assistance (ODA) plays an important role, for the initiation of new projects and leveraging other financial flows. Its importance is clearly recognized by donor countries, who committed in the last few years to increase the amount of ODA and improve its effectiveness. ODA to the water sector should benefit from this increase, as many reports have recommended.
Political commitments related to ODA for water
Donor countries have demonstrated their will to increase and improve the effectiveness of their ODA for water, in line with the proposals made by the Camdessus Panel on ODA for water and the G8 action plan for water.
What is ODA?
The term ODA for water here refers to the DAC official definition. The DAC defines aid to water supply and sanitation as including water resources policy, planning and programmes, water legislation and management, water resources development, water resources protection, water supply and use, sanitation (including solid waste management) and education and training in water supply and sanitation.
Official Development Assistance (ODA): Grants or Loans to countries and territories on Part I of the DAC List of Aid Recipients (developing countries) which are:
(a) undertaken by the official sector;
(b) with promotion of economic development and welfare as the main objective;
(c) at concessional financial terms [if a loan, having a Grant Element (q.v.) of at least 25 per cent].
In addition to financial flows, Technical Co-operation (q.v.) is included in aid.
A commitment is a firm written obligation by a government or official agency, backed by the appropriation or availability of the necessary funds, to provide resources of a specified amount under specified financial terms and conditions and for specified purposes for the benefit of a recipient country or a multilateral agency.
Commitments design donors' intention regardless the year of disbursements and thereby are useful to assess whether political commitments translate into action. But commitments may be cancelled or decreased; unexpected delays in execution of aid activities are also common. Disbursement data are required, therefore, to examine the contribution of these actions in achieving the goals and to better describe aid flows from a recipient’s point of view.
A disbursement is the placement of resources at the disposal of the recipient country. Disbursements show the realization of donors' intention and the implementation of policies, allowing donors’ performance to be assessed.