Foreign aid to Africa after the global financial crisis: A consideration in retrospect

Abstract

Several projections were made during and after the Global financial crises of 2007-2009 about the continuity of foreign aid to Africa.Some opined that the financial crises will reach Sub Saharan Africa via the decline of foreign aid as well as other financial transfers such as remittances and Foreign Direct Investment. It is on this premise that this study examined the flow of foreign aid to Africa in an effort to appreciate the trend before, during and after the Global financial crisis. The study used trend charts and the Bai-Perron multiple structural break test as well as the Chow test to analyse data sourced from the World Bank Indicators. The results show that, though Overall ODA dropped in 2007, it consistently increased up to 2013 by 25%. The structural break test shows that the trend of ODA has not significantly changed as a result of the Global financial crisis for; low, lower middle, higher middle and Sub Saharan countries as a whole. The result further shows that ODA to low income countries were higher than those of lower middle income countries which was equally higher than higher middle income countries. ODA to the agricultural, educational and economic infrastructural sector all increased after 2009. It is only ODA to the health sector that dropped significantly. The study concludes that Foreign aid to Africa has not declined, but rather improved in most cases. It therefore commends the efforts of aid donors and emphasizes the complementing role of foreign aid to Africa.