Foreign Aid and Sustainable Development in the West African Monetary Zone: Focus on Poverty Reduction and Child Mortality.

Abstract

The study achieved a major objective of examining the effect of financial aid (FAD) on sustainable development in the West African Monetary Zone (WAMZ) countries, a comparative analysis of the effect of FAD between two sustainable development indicators: poverty reduction and under five child mortality. The study used Panel Autoregressive Distributed Lag (PARDL) to find the effect of Official Development Assistance (ODA) and Other Official Flows (OOF) on the GNI index (a measure of poverty reduction) on one hand and on under-five child mortality rate (MORT_RATE) on the other. The PARDL results showed no evidence of significant relationship
between FAD and sustainable development in terms of poverty reduction in the short run but significantly reduced child mortality. In addition, on the long run, foreign aid significantly aided poverty reduction but had mixed effects on child mortality rate. A comparison analysis shows that in both the short and the long run, there is a marked difference between the effect of foreign aid on poverty reduction and child mortality rate. The study concludes that FAD significantly impacted on sustainable development and that the effect of foreign aid variables differs across sustainable goal areas. The study recommended that countries in the West Africa Monetary Zone
can still benefit if judicious use is made of such aid flows into the countries. This will include a closer monitoring of the disbursement and spending of foreign aid towards set sustainable development goals.