Introduction

There is a general consensus among development economists and policymakers that foreign aid plays a very important role in the promotion of economic growth and development in low-income countries. Foreign aid is perceived as a means to fill the gap between the development financing needs and actual domestic resources available for the promotion of economic growth and development in poor countries (Easterly 2005; and Wako 2011). The economic importance of foreign aid is reflected in the fact that official aid inflows remain an important source of development finance for a large number of countries in sub-Saharan Africa. For many low-income countries in the region, including those from West Africa, official aid inflows constitute virtually all of the total financial inflows to the region (IMF 2010). As a result of the apparent benefits of foreign aid, the international donor community made specific pledges to increase its financial assistance to poor countries during the Gleneagles G8 and Millennium +5 summits in 2005. Over the immediate past decade, official aid inflows to the region, and particularly to low income
West African countries, have increased substantially. Part of the increase in aid received during this period has come from multilateral agencies as a response to the global financial crisis and to the food and fuel price shocks between 2007 and 2009. However, the aid inflows have also fluctuated widely over the past decade. The observed trend reflects the fact that official development assistance (ODA) and other forms of official assistance are highly unreliable and can have serious problems for the process of financial planning of the highly aid-dependent poor countries. The subsequent sub-section discusses trends in ODA and other official aid inflows and their impact on economic growth in low-income West African countries as a case study. The low-income West African countries studied in this instance are Benin, Burkina Faso, the Gambia, Guinea, Liberia, Mali, Niger, Sierra Leone, Togo and Guinea Bissau. According to the World Bank’s 2010 classification of countries by income groups, each of these countries has at most gross national income per capita of U.S $ 1,005 which places them within the group of low-income or poor countries. Download the full article