Does Oversees Development Assistance (ODA) – foreign aid in common parlance – reduce poverty? This study explores this question in the Kenyan context.
Applying a difference-in-difference model to data from 69 districts, the results generally show that ODA has significantly reduced poverty in Kenya. The impact has been higher for the ‘poorest of the poor’ and less on those just below the poverty line. This may indicate the need for a review of donor funding allocations to ensure that the impact of aid is felt more uniformly. The study proposes ways to overcome several bottlenecks to the implementation of aid programs including improved procurement processes, ensuring that aid money is not used for loan repayment, improving quality and monitoring, as well as harmonizing aid programs. It recommends greater accountability improvements in data systems.