Foreign Aid and Poverty Dynamics in Africa

Description

– Foreign Aid and Poverty Dynamics in Africa –

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Abstract

The study focuses on foreign aid and poverty dynamics in Africa. Specifically, the study addressed two objectives ;(1) the relationship between poverty and aid and (2) the relationship between mortality rate and aid.

Following these objectives, the study used fixed effects estimation techniques for the two objectives, the choice of which was determined empirically using Hausman test.

Based on this technique, the following results were arrived at:(1) that the coefficient of official development assistance was significantly positive, suggesting that higher poverty attracts more official development assistance

(2) that the coefficient of expenditure on education is positive, hence high rate of poverty attracts more expenditure on education,

(3) that official development assistance rises as a result of increase in the mortality rate ,(4) that higher mortality rate attracts more expenditure on education and

(5)that expenditure on health appears not significant in the two models and this implies that expenditure on health does not respond to changes in both the poverty level and the mortality rate.

The study therefore recommends for the scaling up of aid to African countries in accordance to the agreements of Monterrey of 2002 and Gleneagles of 2005.

Introduction

1.1 Background of the Study

In Nigeria, the problem of poverty has for a long time been a cause for concern to the government. Initial attention focused on rural development and town and country planning as a practical means of dealing with the problem.

Thus, the second and fourth national development plans contain both direct and indirect allusions to, as well as objectives of, policies and programmes aimed at  minimizing the causes of poverty.

These various causes of poverty, which include low productivity, market imperfections, structural shifts in the economy, inadequate commitment to programme implementation, political instability, etc., are complex and the consequences often reinforce the causes, further impoverishing the people.

In a fairly recent survey, Nigeria’s festering poverty profile was described as “widespread and severe” CBN. (1999).

The report of comparative analysis of welfare ranked Nigeria below Kenya, Ghana and Zambia and expressed concern over the dwindling purchasing power of the people and the

increasing income inequality in Nigeria, which have made life unbearable for the citizenry despite improved inflation rates. Whether measured in absolute or relative

terms, poverty is generally more prevalent in the rural communities of Nigeria. Although the population of urban dwellers in the total population has increased from 19.0% in 1963 to about 25.0% in 1990,

Both urban and rural areas share similar poverty characteristics even as certain peculiar features arise from either the relative intensity of socioeconomic deprivation in the rural areas or the problems of rapid urbanization Aigbokhan, B.E. (1998).

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