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Effectiveness of Foreign Aid on Poverty Reduction in Kenya

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Name of the Asset | Effectiveness of Foreign Aid on Poverty Reduction in Kenya
Type of Asset | Working Paper
Authors | Jacob Oduor and Dickson Khainga (Kenya Institute for Public Policy Research and Analysis, Nairobi, Kenya)
Date |  November 2009
Country and/or Region | Kenya

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. 

Name of the Program | Institutional Capacity Strengthening of African Public Policy Institutes to Support Inclusive Growth and the MDGs
Funder(s) | The United Nations Development Programme’s (UNDP), Bureau for Development Policy (BDP) and Regional Bureau for Africa (RBA)
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