A major global issue that our world faces is the dilemma of world poverty that millions of people around the world suffer with. Primarily the highest concentration of global poverty resides within the African continent. Many wealthier nations take it upon themselves to donate funds that attempt to combat this dilemma millions of people are faced with. The major issue with this outside funding is that the funds fail to achieve the goal of relieving the burden of poverty. This study will investigate the effectiveness of foreign aid and how changes in certain economic indicators affect African nations’ overall economies.
The efficacy of foreign aid has been the topic of a long-standing debate between those who view aid as necessary for growth and development in less developed countries and those who view it, at best, as a waste and, at worst, as harmful to development. In theory, foreign aid should provide what its moniker implies: aid. But determining the precedent conditions under which aid should be provided to make aid successful and effective are blurred. This paper aims to find the specific prescription needed so that aid produces its intended outcome in sub-Saharan Africa: to improve the public service sector thereby leading to overall growth and a reduction of those in poverty in the recipient country. Life expectancy and the primary completion rate in school are used as proxies for examining the improvements, or lack thereof, that are realized in the key sectors of public services, which are public health and education. But OLS regression results show that increasing monetary aid alone does little to realize the goal of improving life expectancy, nor does aid alone increase primary completion rates in a manner that is statistically significant. Instead, aid must be accompanied by predicate circumstances. Individual country characteristics such as financial depth, surplus as a percentage of GDP, and percentage of paved roads are the key components to improving the health and education sectors in sub-Saharan Africa.