Aid and Reform in Africa

Since the early 1980s, virtually every African country has received large amounts of aid aimed at stimulating policy reform. The results have varied enormously. Ghana and Uganda were successful reformers that grew rapidly and reduced poverty. In other countries policies changed little or even got worse. The paper synthesizes the findings from 10 case studies that investigate whether, when, and how foreign aid has affected economic policy in Africa. The main findings from the case studies are that:

• Policy formation is primarily driven by domestic political economy. Most major reforms have been preceded by economic and political crises.
• Large amounts of aid to countries with bad policy sustain those poor policies.
• In general donors have not discriminated effectively among different countries and different phases of the reform process. Donors tend to provide the same package of assistance everywhere and at all times.
• Aid played a significant and positive role in the two sustained reformers (Ghana, Uganda). It helped with ideas in the initial phase. Financial assistance grew as policy improved and increased the benefits of reform, helping sustain political support.
• The composition of aid is important. In the pre-reform period, technical assistance is most appropriate. During periods of rapid reform, policy dialogue is important, as is finance. This is the phase in which conditional loans tend to be useful and effective. At a later stage of reform, conditionality is no longer useful, while finance remains important

In summary, aid in some cases has been effective in supporting policy reform, and by building on the lessons from these case studies assistance could be more systematically effective in this way. [author]

The draft summary paper is available at http://www.worldbank.org/research/aid/africa/draftsum.pdf

Separate country case studies are also available:

• Aid and Reform in the Côte d'Ivoire, Elliot Berg Patrick Guillaumont, Jacques Pegatienan, with Jacky Amprou
• Aid and Reform in Ethiopia Berhanu Abegaz
• Aid and Reform in Ghana By Yvonne M. Tsikata
• DR Congo case study (Aide et Réforme en Afrique: Le Cas du Congo) Jerome Chevallier and Gilbert Kiakwama
• Kenya Case Study F.S. O'Brien and Prof. T.C.I. Ryan
• Nigeria Case Study Jeffrey Herbst and Charles C. Soludo
• Aid and Reform in Tanzania Arne Bigsten, Deogratias Mutalemwa, Yvonne Tsikata, and Samuel Wangwe
• Aid and Reform in Uganda Torgny Holmgren, Louis Kasekende, Michael Atingi-Ego and Daniel Ddamulira
• The Politics of Economic Reform Implementation in Zambia Lise Rakner, Nicolas van de Walle, and Dominique Mulaisho

A paper on the theory of aid effectivness analysis is also available: Aid and Performance: A Reassessment Patrick Guillaumont and Lisa Chauvet