The impact of foreign aid on human development: a case study of MDG financing in Kenya

Abstract

Foreign Aid forms one of the largest components of foreign capital flows in the international system for low-income countries. Since independence in 1963, Kenya has been receiving foreign aid to compliment its budget for capital and social investments. The Paris declaration of 2005 commits donors to provide reliable, indicative commitments of aid over a multi-year framework and also disburse aid in a timely and predictive manner in line with the agreed schedules. Studies have also shown that stable macroeconomic policy environment is a requisite for aid effectiveness. However, foreign aid flows in Kenya have been unpredictable and the macroeconomic policy environment unstable. The general objective of this study is to examine the impact of foreign aid on human development in Kenya focusing on MDGs financing. This study was divided into five chapters. Chapter one begins with the background of foreign aid operations. Chapter two looks at major donors, history and impact of foreign aid globally with a focus to Africa economy and human development. Chapter three is on foreign aid in Kenya; it impacts on economic growth and human development. On the other hand chapter four and five represent data interpretation, summary, conclusion and recommendation. The study established that there is a good relationship between foreign aid and economic growth. The study concluded that, a targeting system of priority on specifics MDGs used for more impact realized on human development in Kenya in line with the World Bank latest policy on aid disbursement to developing countries.