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What is multilateral aid?

Multilateral aid is delivered though international institutions such as the various agencies in the United Nations, World Bank and Asian Development Bank.

A multilateral organisation is an international organisation whose membership is made up of member governments, who collectively govern the organisation and are its primary source of funds. The OECD estimates that in 2008 around 40% of ODA or nearly US$50 billion from DAC countries was channelled through multilateral institutions and funds.[1]

There are a number of reasons why donor countries such as Australia give aid through multilateral institutions:

  • multilateral aid is generally seen as a less political form of aid than bilateral aid, encouraging international cooperation rather than strategic and commercial interests of respective donor countries;
  • multilateral aid pools resources enabling the implementation of large-scale programs that are beyond the capacity of individual donor countries through bilateral aid;
  • multilateral aid can help coordinate donors to address issues at regional and global levels and harmonise their efforts, thereby reducing donor burden in recipient countries. 

One of the biggest problems with multilateral aid is the lack of accountability to the people aid is intended to assist. Furthermore many donor countries favour certain multilateral organisations and funds over others. For example, Australia gives more money to multilateral development banks such as the World Bank and the Asian Development Bank, where voting is weighted according to financial contributions,[2] and less to the United Nations agencies where voting is equal and less of the money is returned to the donor countries.

 

 

 

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Last updated: 12 November 2010


[1] OECD DAC (2010) DAC 2010 Report on Multilateral Aid, p.11. http://www.oecd.org/dataoecd/23/17/45828572.pdf

[2] Voting rights are tied to capital subscriptions or shareholdings, which do not necessarily come out of the aid budget. The recent capital increase to the ADB (estimated US$197.6 million over 10 years from 2010-11) did come out of the aid budget, see: 2009-10 aid budget, p. 66. http://www.budget.gov.au/2009-10/content/ministerial_statements/ausaid/download/ms_ausaid.pdf 

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