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UAE largest global aid donor in gross income terms

posted on 13/09/2010: 946 views

Gulf and other Arab oil producers have provided nearly US$272 billion in financial assistance to other developing nations and the UAE has emerged as the largest donor relative to its gross national income (GNI), the World Bank has said.

The bulk of the assistance was extended by Saudi Arabia, Kuwait and the UAE, the world's main oil producers which control in excess of 40 per cent of the total global recoverable crude deposits, the World Bank said in a study.

"Arab donors - predominantly Saudi Arabia, Kuwait and the UAE -have been among the most generous in the world, with official development assistance (ODA) averaging 1.5 per cent of their combined GNI during the period 1973-2008, more than twice the United Nations target of 0.7 per cent and five times the average of the OECD countries," the 40-page study said.

The figures showed financial aid by all Arab donors accounted for nearly 13 per cent of the total official aid provided by the OECD's Development Assistance Committee (DAC) on average and nearly three-quarters of non-DAC aid.

"The share of Arab official development assistance (ODA) in Arab GNI was exceptionally high in the 1970s and early 1980s, peaking at over 12 per cent for the UAE and at about 8.5 per cent for Kuwait and KSA in 1973," it said.

The report also showed that nearly one-third of all ODA during the 1970s was from Arab donors. Although the ratio has fallen over time, it still exceeds the average among OECD-DAC member countries, it said.

"Moreover, Arab aid is generally untied, and is offered without conditions or restrictions. Over time, Arab donors have expanded their reach-beyond Arab and predominantly Muslim countries in terms of recipient countries and beyond infrastructure in terms of sectors.

Their assistance has come to play a major role in total ODA flows to several developing countries," the report said.

The study noted that at present, the Arab official financial assistance covers a wide range of nations, especially poor countries in sub-Saharan Africa such as Mali, Mauritania, Senegal, Somalia, and Sudan; and in Asia such as Cambodia, Bangladesh, Nepal, Pakistan, Sri Lanka, Tajikistan, and Vietnam.

It said that until 2000, over two-thirds of Arab bilateral ODA was in the form of grants, adding that the share of grants has since that year dropped to about 40 per cent; most aid is provided in the form of soft loans.

"Arab financial institutions are well positioned to meet the challenges posed by the global financial and economic crisis.

Being well capitalised and financially conservative, these institutions may be able to help offset some of the slack that may be created by declining ODA from other sources," the World Bank said.

"Over the medium to long run, these growing and maturing institutions will be well placed to tap into capital markets to increase the scope of their operations.

Reporting practices among Arab ODA agencies are evolving."

The study noted that the establishment of a central agency to coordinate ODA in the UAE and efforts made to bolster the visibility of Saudi Arabia's aid programme "bode well" for the future development of Arab aid reporting systems.

A breakdown showed Saudi Arabia has provided around 64 per cent (US$174bn) of the total Arab development aid. From 1973 to 2008, Kuwait provided around US$ 44.3bn in ODA in 2007 prices. Nearly 90 per cent of the Kuwaiti assistance was provided between 1973 and 1989.

The UAE emerged as the third largest source of Arab aid, accounting for 12 per cent of the total Arab ODA.

Between 1973 and 2008, the country extended nearly US$ 31.4bn (in 2007 prices) in ODA, the bulk of which was provided in the late 1970s and 1980s. Qatar has also been providing ODA since it gained independence in 1971, at volumes that have fluctuated with oil prices. – Emirates 24|7


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