The Emerging Role of the Gulf Countries as International Foreign Aid Donors
By Federico Mancuso
The emergence of Gulf Cooperation Countries (GCC) as donors dates back to the 1970s, when the Gulf states increased their commitment to providing aid to developing countries and tried to take the stage among the non-DAC donors (those countries not belonging to the Development Assistance Committee of the European Organisation for Cooperation and Development [OECD]). Of extraordinary importance was the creation of the Arab Coordination Group (ACG), which is still in operation and was established to promote development assistance and economic relations to recipient countries and strengthen coordination among the various Arab Development Funds. On 20 September 1975, the first meeting of the Group was held in Kuwait with the participation of the Kuwait Fund for Arab Economic Development, the Abu Dhabi Fund for Development, the Saudi Fund for Development, and the Arab Fund for Economic and Social Development. The latter institution was chosen to be responsible for the Coordination Secretariat.
After the establishment of the ACG, the Arab oil-producing states launched aid programmes totalling more than $20 billion (USD). At that time, the most generous foreign aid donors were the Gulf states, who outstripped — relative to their gross national income (GNI) — the aid provided by Western, more industrialised, states. The latter allocated, on average, only 0.39% of their GNI to foreign aid, while Saudi Arabia, the United Arab Emirates (UAE), and Qatar exceeded 5% of their GNI, largely surpassing the target of 0.7% of donor GNI established by the Pearson Commission in 1969. The initial approach was to provide aid to other developing Arab states. By the end of the 1970s however, they began to extend their support to non-Arab countries, which rapidly became the major recipients of aid from the Gulf. Allocated funds were both grants and soft loans, usually with interest rates of less than 0.5%, and a 50-years’ period for repayment. Moreover, in opposition to US foreign tied aid, which expected the recipients to buy and privilege the American businesses, the Arab aid allocations did not contain this prerequisite.
At present, the ACG involves eleven institutions, of which five are national and six are regional organisations, including the Islamic Development Bank (IsDB) and the Arab Gulf Programme for Development (AGFUND), the latter being a regional organisation established in 1980, partnering with the United Nations (UN) agencies and Arab NGOs. However, foreign aid of the GCC donors is not limited to the ACG, as Gulf states are also contributors to other international organisations, such as the UN and the International Monetary Fund (IMF).
For a more recent view, the latest OECD reports provide a more detailed description of some Gulf countries’ commitment in terms of foreign aid as Kuwait, Qatar, Saudi Arabia and the UAE are all participants of the OECD Development Assistance Committee.
Kuwait’s aid especially focuses on agriculture, electricity, irrigation, and throughout the years has helped the recipients to reach the Sustainable Development Goals (SDGs). The donor’s ODA accounted for $388 million in 2020, representing 0.28% of GNI. Noteworthy is that more than 90% was distributed as loans. Nearly 10% of its ODA was delivered through multilateral organisations — 86% was shared among the World Bank, the UN and UN funds and programmes. The geographic focus of Kuwait’s bilateral aid is Africa and the Middle East, with Egypt being by far its top recipient.
Qatar’s Official Development Assistance (ODA), mainly provided by the Qatar Fund for Development (QFFD), has grown to $591 million in 2020, representing 0.42% of the country’s GNI. Much like for the other GCC countries, the majority (91.6%) is provided bilaterally rather than through multilateral organisations (8.4%), and notably, the whole amount is in the form of grants. Concerning Qatar’s multilateral aid, 60.1% has been supplied to UN entities, 16.8% to the IMF, and the remaining has been shared out among other multilateral organisations. As shown in figure 1, Qatar’s top recipients are by far the West Bank and Gaza Strip, followed by Somalia and Syria.
Figure 1. Source: Qatar Development Co-operation Profile, OECD.
Saudi Arabia’s preliminary data for 2021 show that its ODA has grown to $2.1 billion, representing 0.3% of its GNI. Its development cooperation is decentralised, with the Saudi Fund for Development providing soft loans, and with the King Salman Humanitarian Aid and Relief Centre (KSRelief) providing humanitarian assistance. Bilateral and multilateral aid are managed by the Ministry of Finance and the Ministry of Foreign Affairs. In 2020, Saudi Arabia’s ODA was just under $1 billion, of which 33.4% was set as loans. Of gross bilateral ODA, which represents 85.6% of the total, 5.1% was allocated to civil society organisations to implement projects promoted by the country. Saudi Arabia’s 2020 top recipient was Yemen, followed by Egypt and Jordan. For what concerns multilateral aid, 80% of total contribution to multilateral organisations in 2020 was allocated to the UN (31.9%), UN funds and programmes (27.1%), and other multilateral organisations (21.2%), such as Gavi, the Vaccine Alliance.
Since the adoption of a five-year ‘demand-driven’ foreign assistance policy, the UAE ranks among the largest donors relative to its GNI, providing some US$1.7 billion of ODA in 2020, mainly as grants. The UAE’s bilateral ODA, which accounts for 98.7% of the total ODA, largely focused on Africa and the Middle East. Sudan is by far the largest recipient of the UAE’s allocations, having received more than $1 billion in 2020. The UAE’s multilateral ODA has seen a decrease of 72.9% from 2019, which was mainly allocated to the World Bank (39.4%), followed by UN entities (30.9%) and other multilateral organisations (22.3%). Nevertheless, preliminary data of ODA for 2021 shows that UAE provided about $1.5 billion of ODA, representing 0.4% of its GNI (see figure 2) and a decrease of 24.1% in volume from the previous year.
Figure 2. Source: UAE Development Co-Operation Profile, OECD
The aforementioned Gulf states are also prominent donors of humanitarian assistance. In 2021, the UAE and Saudi Arabia fell among the 15 largest public donors of humanitarian assistance, ranking 9th and 14th, respectively, on the list. Considering the volumes in terms of GNI, their position remarkably improves, placing the UAE the first among the global public donors of humanitarian assistance (0.21% of GNI), and Saudi Arabia at the seventh place (0.08% of GNI).
Figure 3. Source: Global Humanitarian Assistance Report 2022, Development Initiatives.
Overall, in terms of total development aid, Saudi Arabia and the UAE rank 19th and 22nd, respectively, in the global list of donors. Limiting the geographical area to the Arabian Gulf, Saudi Arabia is the leading donor, followed by the UAE, Qatar, and Kuwait. The COVID-19 pandemic has had a significant impact on the GCC countries’ foreign aid, changing the forms of aid provided and creating tougher loan terms for the recipient countries. Despite that, the GCC donors remain an important point of reference for many developing countries in Africa and in the Middle East.
7 September 2022
References
Saudi Aramco, ‘Arab Aid: An Introduction,’ Aramco World Magazine, Volume 30, Number 6, November/December, 1979, pp 2-3.
https://archive.aramcoworld.com/issue/197906/arab.aid-an.introduction.htm.
Espen Villanger, ‘Arab foreign aid: Disbursement patterns, aid policies and motives,’ Forum for Development Studies, 2007.
https://www.cmi.no/publications/2615-arab-foreign-aid-disbursement-patterns.
Michele Dunne, ‘As Gulf Donors Shift Priorities, Arab States Search for Aid,’ Carnegie Endowment for International Peace, 9 June 2020.
OECD, ‘Qatar,’ in Development Co-operation Profiles, OECD Publishing, Paris, 2022,
https://doi.org/10.1787/32d62def-en.
OECD, ‘Saudi Arabia,’ in Development Co-operation Profiles, OECD Publishing, Paris, 2022,
https://doi.org/10.1787/b2156c99-en.
OECD, Development Co-operation Profiles, OECD Publishing, Paris, 2022,
https://doi.org/10.1787/2dcf1367-en.
OECD, ‘United Arab Emirates,’ in Development Co-operation Profiles, OECD Publishing, Paris, 2022, https://doi.org/10.1787/153f7558-en.
OECD, ‘Kuwait,’ in Development Co-operation Profiles, OECD Publishing, Paris, 2022,
https://doi.org/10.1787/d8c2b749-en.
OECD, ‘Detailed aid statistics: Total official flows,’ OECD International Development Statistics (database),
https://doi.org/10.1787/data-00074-en.
Magdalena Szmigiera, Largest development aid donors, Statista, April 20, 2022, Statista.
https://www.statista.com/statistics/263287/ranking-of-the-largest-development-aid-donors/.
Kerry Smith, Non-DAC donors: Arab donors’ humanitarian aid contributions, Global Humanitarian Assistance, July 28, 2011.
Angus Urquhart, Fran Girling, Suzanna Nelson-Pollard, Erica Mason, Global Humanitarian Assistance Report 2022, Chapter 3, Donors of humanitarian and wider crisis financing, Development Initiatives, July 12, 2022.
.png)